Labor Standards Law

7/28/2019 Labor Standards Law

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LABOR STANDARDS LAW

Construction of Labor Laws

―Retirement laws are liberally construed in favor of the persons intended to be benefited, however,such interpretation cannot be made if there is a clear lack of consensual and statutory basis of thegrant of retirement benefits.‖ [DIVINA S. LOPEZ vs. NATIONAL STEEL CORPORATION]

Limitations on Management Prerogative

The exercise of management prerogative is not absolute. While it may be conceded thatmanagement is in the best position to know its operational needs, the exercise of managementprerogative cannot be utilized to circumvent the law and public policy on labor and social justice.That prerogative accorded management could not defeat the very purpose for which our labor lawsexist. By its very nature, encompassing as it could be, management prerogative must be exercisedalways with the principles of fair play at heart and justice in mind. [PHILIPPINE AIRLINES vs JOSELITO PASCUA, ET AL.]

RA 8042; Migrant Workers and Overseas Filipinos Act of 1995

An employee of a company or corporation engage in illegal recruitment may be held liable asprincipal together with his employer, if it is shown that he actively and consciously participated inillegal recruitment The employee or agent of a corporation engage in unlawful business naturallyaids and abets in the carrying on of such business and will be prosecuted as a principal if, withknowledge of the business, its purpose and effect, he consciously contributes his efforts to itsconduct and promotion however slight his contribution may be. [EXECUTIVE SECRETARY ET.AL.vs CA]

BOOK I

Illegal Recruitment; Elements

Illegal recruitment is committed when two elements concur, namely: (1) the offender has no validlicense or authority required by law to enable one to lawfully engage in recruitment and placementof workers; and (2) he undertakes either any activity within the meaning of ―recruitment andplacement‖ defined under Art. 13(b), or any of the prohibited practices enumerated under Art. 34 ofthe Labor Code. [PEOPLE OF THE PHILIPPINES vs. FLOR GUTIERREZ Y TIMOD]

Illegal Recruitment in Large Scale; Elements

The essential elements of the crime of illegal recruitment in large scale are: (1) the accused engagesin acts of recruitment and placement of workers defined under Article 13(b) or in any prohibited

activities under Art. 34 of the Labor Code; (2) the accused has not complied with the guidelinesissued by the Secretary of Labor and Employment, particularly with respect to the securing of alicense or an authority to recruit and deploy workers, either locally or overseas; and (3) the accusedcommits the unlawful acts against three or more persons, individually or as a group. [PEOPLE OFTHE PHILIPPINES vs. ROSE DUJUA]



Illegal Recruitment in Large Scale; Elements

The elements of illegal recruitment in large scale are: (1) the person undertakes any recruitmentactivity defined under Article 13, paragraph (b), or any prohibited practice enumerated underArticle 34 of the Labor Code; (2) said person does not have a license or authority to engage in therecruitment and placement of workers; and (3) the act is committed against three or more persons,individually or as a group. The fact that the accused in an illegal recruitment did not sign nor issuesome of the receipts for amounts received from complainants has no bearing on his culpability so

long as complainants show through their respective testimonies and affidavits that the accused wasinvolved in the prohibited recruitment. [PEOPLE OF THE PHIL. vs. MARLENE OLERMO]

Solidary Liability of Employer

An employee of a company or corporation engaged in illegal recruitment may be held liable asprincipal, together with his employer, if it is shown that he actively and consciously participated inillegal recruitment. Where it is shown that the employee was merely acting under the direction ofhis superiors and was unaware that his acts constituted a crime, he may not be held criminally liablefor an act done for and in behalf of his employer. [PEOPLE OF THE PHILIPPINES V. ELIZABETHCORPUZ]

BOOK III

Double Holiday Pay

Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidaysThe provision is mandatory, regardless of whether an employee is paid on a monthly or daily basisUnlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandableunder the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact thattwo holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefitsa worker is entitled to receive. [ASIAN TRANSMISSION CORPORATION vs. COURT OF APPEALS]

Double Holiday Pay

The minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26Saturdays (or 52 half Saturdays). Any divisor below 287 days means that the workers are deprivedof their holiday pay for some or all of the ten legal holidays. [CEZAR ODANGO, ET AL. vs. NLRC, ET AL.]

Leave Credits

Despite their dismissal from the service, government employees are entitled to the leave credits that

they have earned during the period of their employment. As a matter of fairness and law, they maynot be deprived of such remuneration, which they have already earned prior to their dismissal [ANSBERTO P. PAREDES vs. FRANCISCO S. PADUA]

Liability of an Indirect Employer

When the agency as contractor failed to pay the guards, the corporation as principal becomes jointlyand severally liable for the guards' wages. Petitioner cannot evade its liability by claiming that it hadreligiously paid the compensation of guards as stipulated under the contract with the securityagency. [MARIVELES SHIPYARD CORP. vs. COURT OF APPEALS]



Wage Order and its Exemption

Section 7 of the NWPC Revised Guidelines on Exemption, which is the applicable rule on thismatter, provides that the maximum period of exemption that can be accorded to a qualifiedapplicant is only for one (1) year from the effectivity of the Wage Order. This non-extendable oneyear period of exemption is to afford protection to workers who may be unfairly affected by thedeleterious effect of a prolonged exemption which is not in accord with the very purpose of theissuance of a Wage Order. [NASIPIT LUMBER COMPANY, PHILIPPINE WALLBOARD

CORPORATION AND ANAKAN LUMBER COMPANY vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION, UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES and WESTERN AGUSAN WORKERS UNION]

Wage Distortion

A situation where an increase in prescribed wage rates results in the elimination or severecontraction of intentional quantitative differences in wage or salary rates between and amongemployee groups in an establishment as to effectively obliterate the distinctions embodied in suchwage structure based on skills, length of service, or other logical bases of differentiation [BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NATIONAL

LABOR RELATIONS COMMISSION]

Elements of Wage Distortion

―(1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change inthe salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one(3) The elimination of the distinction between the two levels; and (4) The existence of the distortionin the same region of the country.‖ [BANKARD EMPLOYEES UNION-WORKERS ALLIANCETRADE UNIONS vs. NATIONAL LABOR RELATIONS COMMISSION]

BOOK V

Money Claim

Not every controversy or money claim by an employee against the employer or vice-versa is withinthe exclusive jurisdiction of the labor arbiter. A money claim by a worker against the employer orvice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a "reasonable causaconnection" between the claim asserted and employee-employer relation. Absent such a link, thecomplaint will be cognizable by the regular courts of justice. [EDUARDO G. EVIOTA vs. COURTOF APPEALS]

Test to Determine Existence of Employer-Employee Relationship

(1) the manner of selection and engagement; (2) the payment of wages; (3) the presence orabsence of the power of dismissal; and (4) the presence or absence of the power of control. Ofthese four, the last one is the most important. [EMPERMACO B. ABANTE, JR. vs LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID]



Independent Job Contractor

Someone who (a) carries on an independent business and undertakes the contract work on his ownaccount under his own responsibility according to his own manner and method, free from thecontrol and direction of his employer or principal in all matters connected with the performance ofthe work except as to the results thereof; and (b) has substantial capital or investment in the form oftools, equipments, machineries, work premises, and other materials which are necessary in theconduct of the business. [NEW GOLDEN CITY BUILDERS & DEVELOPMENT CORPORATION

vs. COURT OF APPEALS]

Creation of Employer-Employee Relationship in Job Contracting

In legitimate job contracting, the law creates an employer-employee relationship for a limitedpurpose. The principal employer becomes jointly and severally liable with the job contractor onlyfor the payment of the employees' wages whenever the contractor fails to pay the same. [NEWGOLDEN CITY BUILDERS & DEVELOPMENT CORPORATION vs. COURT OF APPEALS]

Independent Contractor

In determining the existence of an independent contractor relationship, several factors may beconsidered. In Job-contacting, the contractor is considered merely an agent of the principal employerand the latter is responsible to the employees of the labor-only contractor as if such employees hadbeen directly employed by the principal employer. The principal employer therefore becomessolidarily liable with the labor-only contractor for all the rightful claims of the employeesPetitioner's liability is that of a direct employer and thus solidarily liable. [SAN MIGUELCORPORATION vs. MAERC INTEGRATED SERVICES, INC]

Independent Contractor; Radio and Broadcast Talents

The control test is the most important test our courts apply in distinguishing an employee from anindependent contractor. This test is based on the extent of control the hirer exercises over a worker.

The greater the supervision and control the hirer exercises, the more likely the worker is deemed anemployee. The converse holds true as well — the less control the hirer exercises, the more likely theworker is considered an independent contractor. A radio broadcast specialist who works underminimal supervision is an independent contractor. [JOSE Y. SONZA vs. ABS-CBNBROADCASTING CORP.]

Litigation on the Merits

As much as practicable, litigation should be decided on the merits and not on proceduraltechnicalities. The statement holds true especially in labor cases in which the defect has been curedby the motion for reconsideration. [NOVELTY PHILIPPINES vs. CA]

CA Cannot Annul NLRC Decision

The appellate court has no jurisdiction to entertain a petition for annulment of a final and executory judgment of the NLRC. Section 9 of BP 129 as amended, only vests in the Court of Appeals―exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.‖Moreover, annulment of judgment is allowed only where the ordinary remedies of new trial, appealpetition for relief or other appropriate remedies are no longer available through s fault ofpetitioners. [ELCEE FARMS, INC., and CORAZON SAGUEMULLER vs. PAMPILO SEMILLANO]



Final and Executory Judgments of the NLRC

Except for correction of clerical errors, final and executory judgments can neither be amended noraltered, even if the purpose is to correct erroneous conclusions of fact or of law [CECONSTRUCTION CORPORATION vs. NLRC]

Technicalities Not Strictly Applied in Labor Cases

Article 221 of the Labor Code allows the NLRC and the Labor Arbiter to decide a case on the basis ofposition papers and other documents submitted by the parties without resorting to technical rules ofevidence as observed in regular courts of justice. [PAL, INC. vs. TONGSON]

Well settled is the rule that technical rules of procedure shall not be strictly applied in labor cases.Pursuant to this policy, employers may, on cogent grounds, be allowed to present, even on appeal,evidence of business losses to justify the retrenchment of workers. [TANJUAN vs. PHILIPPINE POSTAL SAVINGS BANK, INC.]

Litigation of the Case Should be on the Merits

Cases should be determined on the merits, after full opportunity to all parties for ventilation of theircauses and defenses, rather than on technicality or some procedural imperfections. Rules ofprocedure are mere tools designed to expedite the decision or resolution of cases and other matterspending in court. A strict and rigid application of the rules that would result in technicalities thattend to frustrate rather than promote substantial justice must be avoided. [VAN MELLE PHILS vsVICTOR ENDAYA]

Perfection of Appeal

The perfection of an appeal within the reglementary period for the same is jurisdictional incharacter. [CORPORATE INN HOTEL, ET AL. vs. JENNEVIE H. LIZO]

Binding Effect of the Decision of the NLRC

A position is redundant where it is superfluous. It is not enough for a company to merely declarethat it has become overmanned. It must produce adequate proof that such is the actual situation to

justify the dismissal of the affected employees for redundancy. [BONIFACIO ASUFRIN, JR. vsSAN MIGUEL CORPORATION]

Computation of Benefits

Respondent who was illegally dismissed from work is actually entitled to reinstatement without lossof seniority rights and other privileges as well as to his full backwages, inclusive of allowances, and

to other benefits or their monetary equivalent computed from the time his compensation waswithheld from him up to the time of his actual reinstatement. ASPECT OF DUE PROCESS: ―(1) thelegality of the act of dismissal, that is, dismissal based on the grounds provided by Article 282 of theLabor Code, and (2) the legality in the manner of dismissal. The illegality of the act of dismissalconstitutes discharge without just cause, while illegality in the manner of dismissal is dismissawithout due process. [BOLINAO SECURITY AND INVESTIGATION SERVICE, INC. vs. ARSENIO M. TOSTON]



Consequence of Illegal Dismissal

Firstly, that the employee becomes entitled to reinstatement to his former position without loss ofseniority rights and secondly, the payment of backwages corresponding to the period from hisillegal dismissal up to actual reinstatement. [TOMAS CLAUDIO MEMORIAL COLLEGE, INC. vsCOURT OF APPEALS ]

Findings of Fact of the CA: When Binding to the Supreme Court

Time and again the much-repeated but not so well-heeded rule that findings of fact of the Court ofAppeals, particularly where it is in absolute agreement with that of the NLRC and the Labor Arbiteras in this case, are accorded not only respect but even finality and are deemed binding upon thisCourt so long as they are supported by substantial evidence. [GALLERA DE GUISON HERMANOS, INC., ET AL. vs. MA. ASUNCION C. CRUZ] Validity of Compromise Agreement

A compromise agreement entered into by the parties not in the presence of the Labor Arbiter beforewhom the case is pending shall be approved by him if, after confronting the parties, particularly thecomplainants, he is satisfied that they understand the terms and conditions of the settlement and

that it was entered into freely and voluntarily by them and the agreement is not contrary to lawmorals, and public policy. [R & E TRANSPORT, INC. vs. AVELINA P. LATAG, representing herdeceased husband, PEDRO M. LATAG]

Payment of Appeal Bond

Payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to the NLRCIt is only in rare instances that the court relaxes the rule upon a showing of substantial compliancewith it and to prevent patent injustice. [FILSYSTEMS INC. vs. NLRC]

Finality of Decision

Once a decision or resolution becomes final and executory, it is the ministerial duty of the court ortribunal to order its execution. Such order is not appealable. [KING INTEGRATED SECURITYSERVICES, INC. vs. GALO S. GATAN]

When Judgment has become Final and Executory

A party who has not appealed from a decision cannot seek any relief other than what is provided inthe judgment appealed from. An appellee who has himself not appealed may not obtain from theappellate court any affirmative relief other than the ones granted in the decision of the lower court [SOLIDBANK CORPORATION vs. COURT OF APPEALS and GERARDO A. GARCIA]

Exhaustion of Remedies

The remedy of an aggrieved party in a Decision or Resolution of the Secretary of the DOLE is totimely file a motion for reconsideration as a precondition for any further or subsequent remedy, andthen seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules of CivilProcedure. [UNIVERSITY OF IMMACULATE CONCEPCION, ET AL. vs.YOLIBELLE S AVINANTE, ET AL.]



Duty to Bargain

The duty to bargain collectively means the performance of a mutual obligation to meet and convenepromptly and expeditiously in good faith for the purpose of negotiating an agreement within three(3) years from the effectivity of the original CBA. [GENERAL MILLING CORPORATION vsCOURT OF APPEALS]

Surface Bargaining; Blue-Sky Bargaining

Surface bargaining is defined as ―going through the motions of negotiating‖ without any legal intentto reach an agreement.Blue-Sky Bargaining is defined as ―unrealistic and unreasonable demands innegotiations by either or both labor and management, where neither concedes anything anddemands the impossible.‖ It actually is not collective bargaining at all. [STANDARD CHARTEREDBANK EMPLOYEES UNION vs.MA. NIEVES R. CONFESOR, ET AL.]

Collective Bargaining Agreement; Signing Bonus

A bonus is not a demandable and enforceable obligation but it may nevertheless be granted onequitable considerations as when the giving of such bonus has been the company's long and regular

practice or even if not a practice, the bonus was agreed upon by the parties or unilaterally offered asan additional incentive. [PHILACOR vs. COURT OF APPEALS, ET AL.]

Interpretation of CBAContracts which are not ambiguous are to be interpreted according to their literal meaning and notbeyond their obvious intendment. [MINDANAO STEEL CORPORATION vs. MINSTEEL FREEWORKERS ORGANIZATION (MINFREWO-NFL) CAGAYAN DE ORO]

Jurisdiction of the Secretary of Labor

Decision or Resolution of the Secretary of the DOLE on appeal shall be final and executory. Uponfinality of the Decision of the Secretary, the entire records of the case shall be remanded to the office

of origin for implementation of the Decision, unless restrained by the appropriate court. The remedyof an aggrieved party in a Decision or Resolution of the Secretary of the DOLE is to timely file amotion for reconsideration as a precondition for any further or subsequent remedy. [SMC QUARRY 2 WORKERS UNION — FEBRUARY SIX MOVEMENT vs. TITAN MEGABAGS INDUSTRIALCORP.]

Jurisdiction of the Med-Arbiter and the Secretary of Labor

It is within the exclusive jurisdiction of the Med-Arbiter and the Office of the Secretary incertification election proceedings to resolve this issue. When this case was filed, the Med-Arbiterand later on the Office of the Secretary acquired jurisdiction over the subject matter of the case and

the parties to it, to the exclusion of all other adjudicating agencies. There was no longer anyemergency, urgency or a pressing necessity for the CA to still issue a writ of preliminary injunctionThere is no showing in the record that despite the assumption by the SOLE of the dispute betweenthe petitioner and the respondent, the petitioner is bent on staging a strike against the respondent indefiance by the petitioner of the order of the SOLE. [TOYOTA MOTOR PHILS. CORPORATIONWORKERS' ASSOCIATION (TMPCWA) vs. COURT OF APPEALS ]

Strike and Lockout

The respondents' claim of good faith is not a valid excuse to dispense with the procedural steps for alawful strike. Thus, even if the union acted in good faith in the belief that the company was



committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the saidstrike is illegal. Hence, the need for a union to adhere to and comply strictly with the proceduralconditions sine qua non provided for by the law in staging a strike. [GRAND BOULEVARD HOTELvs. GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES]

Consequences of an Illegal Strike

In Article 264 (a) of the Labor Code it could be gleaned that while a union officer can be terminatedfor mere participation in an illegal strike, an ordinary striking employee, like petitioners herein,must have participated in the commission of illegal acts during the strike. There must be proof thatthey committed illegal acts during the strike. Substantial evidence, which may justify the impositionof the penalty of dismissal, may suffice. [ELIZABETH C. BASCON vs. COURT OF APPEALS]

Illegal Strike

Continuing a strike in defiance of the return-to-work-order is a prohibited activity under Article 264of the Labor Code. Hence, the dismissal of the union‘s officers is in order. [SAN JUAN DE DIOS EDUCATIONAL FOUNDATION EMPLOYEES UNION-ALLIANCE OF FILIPINO WORKERSet.al. vs. SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC. (HOSPITAL) and NATIONAL LABOR RELATIONS COMMISSION]

Consequence of an Illegal Strike

Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes adistinction between union officers and members who participated thereon. Thus, knowinglyparticipating in an illegal strike is a valid ground for termination from employment of a unionofficer. However, mere participation in an illegal strike is not a sufficient ground for termination ofthe services of the union members. But the employer must still comply with the two-notice rule indismissing the union officer. [STAMFORD MARKETING CORP. vs. JOSEPHINE JULIAN ]

BOOK VI

Probationary Period under Section 2, Rule VII, of the Rules Implementing the Civil Service Law

An employee with original appointment must serve a 6-month probationary period and theemployee may be dropped from the service for unsatisfactory conduct or want of capacity anytimebefore the expiration of the probationary period: Provided, that such action is appealable to theCommission. [GALLARDO U. LUCERO vs. COURT OF APPEALS]

Probationary Employee

Probationary employee is one who, for a given period of time, is under observation and evaluationto determine whether or not he is qualified for permanent employment. During the probationaryperiod, the employer is given the opportunity to observe the skill, competence and attitude of theemployee while the latter seeks to prove to the employer that he has the qualifications to meet thereasonable standards for permanent employment. [FLORENCIO M. DE LA CRUZ, JR. vs. NLRC ]

Probationary Employment; ComputationOur computation of the 6-month probationary period is reckoned from the date of appointment upto the same calendar date of the 6th month following. [RADIN C. ALCIRA vs. NLRC, ET AL.]



Summary Hearing of Labor Cases

Formal hearing of the case on its merits is not mandatory in labor cases but is dependent on thediscretion of the labor arbiter who has the sole power to determine whether or not there is a need fora hearing. [SHOPPES MANILA, INC vs. NLRC]

Two-Notice Requirement

(a) A written notice containing a statement of the cause for the termination to afford theemployee ample opportunity to be heard and defend himself with the assistance of hisrepresentative, if he so desires; (b) If the employer decides to terminate the services of theemployee, the employer must notify him in writing of the decision to dismiss him, statingclearly the reason therefor. [SHOPPES MANILA, INC vs. NLRC]

Illegal Dismissal; Abandonment of Work

For abandonment of work to exist, it is essential (1) that the employee must have failed to report forwork or must have been absent without valid or justifiable reason; and (2) that there must have beena clear intention to sever the employer-employee relationship manifested by some overt acts. [ACD

INVESTIGATION SECURITY AGENCY, INC. vs. PABLO D. DAQUERA]

Illegal Dismissal; Two Notice Rule

Singer has shown compliance with the two-notice requirement — first, of the intention to dismissindicating therein the acts or omissions complained against; and second, of the decision to dismissan employee — and in between such notices, an opportunity for him to answer and rebut thecharges against him. [GUTIERREZ vs. SINGER SEWING MACHINE]

Constructive Dismissal

Constructive dismissal exists where there is a cessation of work because continued employment is

rendered impossible, unreasonable or unlikely. It is also present when an employee's functions andsuch reduction is not grounded on valid grounds such as genuine business necessity. [FERNANDOGO vs. COURT OF APPEALS and MOLDEX PRODUCTS, INC.]

Closure of Establishment

It is only in instances of ―retrenchment to prevent losses and in cases of closures or cessation ofoperations of establishment or undertaking not due to serious business losses or financial reverses‖that employees whose employment has been terminated as a result are entitled to separation pay [JOSEFINA A. CAMA vs. JONI’S FOOD SERVICES, INC. ]

Closure of Establishment for a Lawful Cause; When Made

The owner, for any bona fide reason, can lawfully close shop at anytime. Just as no law forcesanyone to go into business, no law can compel anybody to continue in it. It would indeed bestretching the intent and spirit of the law if SC were to unjustly interfere with the management'sprerogative to close or cease its business operations, just because said business operation orundertaking is not suffering from any loss or simply to provide the workers continued employment.And since private respondents' cessation and closure of business was lawful, there was no illegaldismissal to speak of. This fact negated the obligation to pay backwages. Instead privaterespondents were required to give separation pay, which they already did, to all their regular



employees. [MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT vs. MAC ADAMS METAL ENGINEERING]

Retrenchment; Valid Causes

Retrenchment is a management prerogative consistently recognized and affirmed by this Court. It ishowever, subject to faithful compliance with the substantive and the procedural requirements laiddown by law and jurisprudence. It must be exercised essentially as a measure of last resort, after less

drastic means have been tried and found wanting. [EMCO PLYWOOD CORPORATION vs PERFERIO ABELGAS et. al.]

Judicial Review of Labor Cases

The findings of facts and conclusion of the NLRC are generally accorded not only great weight andrespect but even clothed with finality and deemed binding on this Court as long as they aresupported by substantial evidence. [CBL TRANSIT, INC. vs. NLRC]

Cessation

Simply asserting a state of insolvency is not enough to show serious financial losses. [CBLTRANSIT, INC. vs. NLRC]

Backwages

An employee who is unjustly dismissed is entitled to reinstatement, without loss of seniority rightsand other privileges, and to the payment of his full backwages, inclusive of allowances, and otherbenefits or their monetary equivalent, computed from the time his compensation was withheld fromhim (which, as a rule, is from the time of his illegal dismissal) up to the time of his actualreinstatement. [PHIL. JOURNALISTS, INC. vs. MICHAEL MOSQUEDA]

Backwages; Period Covered for Payment

The Court's decision in G.R. No. 114290, which directed the payment of the petitioners' backwagesfrom the time they were dismissed up to the time they are actually reinstated, has become the "lawof the case" which now binds the NLRC and the private respondent. The "law of the case" doctrinehas been defined as "a term applied to an established rule that when an appellate court passes on aquestion and remands the case to the lower court for further proceedings, the question there settledbecomes the law of the case upon subsequent appeal. [FULGENCIO vs. NLRC]

Full Backwages; Definition

The clear legislative intent of the law amending the Labor Code (Rep. Act. No. 6715) is to give more

benefits to workers than was previously given them under the Mercury Drug rule or the 'deductionof 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 theearnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Inother words, the provision calling for 'full backwages' to illegally dismissed employees is clear, plainand free from ambiguity and, therefore, must be applied without attempted or strainedinterpretation. Index animi sermo est. [JACINTO RETUYA vs. DUMARPA]



Retirement Benefits and Separation Pay

The right of the concerned employees to receive both retirement benefits and separation paydepends upon the provisions in the Retirement Plan . [JOSE B. CRUZ et.al. vs. PHILIPPINEGLOBAL COMMUNICATIONS, INC. AND/OR ALFREDO PARUNGAO]

Illegal Dismissal; Backwages

In the present case, petitioners were dismissed because of a "change of management." They were notgiven any prior written notice, but simply told that their services were terminated on the day theystopped working for Insular Builders, Inc. Under the circumstances, the CA was correct inupholding the labor arbiter's finding that they had been illegally dismissed. Having been illegallydismissed, petitioners should be awarded back wages. The fact that they worked for a sistercompany immediately after being dismissed from Insular Builders, Inc. should not preclude suchaward. [JACINTO RETUYA vs. DUMARPA]

SPECIAL LAWSPD 626; Death Benefits

It serves to mitigate the effects of compulsory land acquisition by balancing the rights of thelandowner and the tenant and by implementing the doctrine that social justice was not meant toperpetrate an injustice against the landowner. A retained area, as its name denotes, is land which isnot supposed to leave the landowner's dominion, thus sparing the government from theinconvenience of taking land only to return it to the landowner afterwards, which would be apointless process. [GSIS vs. TEODOSIO CUANANG]

Permanent Total Disability

The test of whether or not an employee suffers from permanent total disability is the capacity of theemployee to continue performing his work notwithstanding the disability he incurred. Permanenttotal disability does not mean a state of absolute helplessness, but means disablement of an

employee to earn wages in the same kind of work, or work of similar nature, that he was trained foror any work which a person of similar mentality and attainment could do. [GOVERNMENT SERVICE INSURANCE SYSTEM vs. LEO L. CADIZ]

Requisites of Agrarian Tenancy Relationship; PARAB’S Jurisdiction

(1) the subject matter should be agricultural land; (2) the purpose should be agriculturalproduction; and (3) there should be personal cultivation done by the tenants themselves [SPS. NUMERIANO and CARMELITA ROMERO vs. MERCEDES L. TAN]

Comprehensive Agrarian Reform Program

It serves to mitigate the effects of compulsory land acquisition by balancing the rights of thelandowner and the tenant and by implementing the doctrine that social justice was not meant toperpetrate an injustice against the landowner. A retained area, as its name denotes, is land which isnot supposed to leave the landowner's dominion, thus sparing the government from theinconvenience of taking land only to return it to the landowner afterwards, which would be apointless process. [SAMAHAN NG MAGSASAKA SA SAN JOSEP vs. MARIETTA VALISNO, ET AL.]



P.D. 626The present law has not ceased to be an employees' compensation law or a social legislation; hencethe liberality of the law in favor of the working man and woman still prevails, and the officialagency charged by law to implement the constitutional guarantee of social justice should adopt aliberal attitude in favor of the employee in deciding claims for compensability, especially in light ofthe compassionate policy towards labor which the 1987 Constitution vivifies and enhances[ AZUCENA O. SALALIMA vs. EMPLOYEES COMPENSATION COMMISSION, ET AL.]

PRELIMINARY TITLECONSTRUCTION OF LABOR LAWSDIVINA S. LOPEZ vs. NATIONAL STEEL CORPORATION[G.R. No. 149674. February 16, 2004]SANDOVAL-GUTIERREZ:

FACTS: The National Steel Corporation, herein respondent, embarked on two (2) massive projects,the Five-Year Expansion Program (Phase II-B) and the Integrated Steel Mill Project. Consequently,respondent employed and trained several employees for the operation of the projects. One of themwas Divina S. Lopez, herein petitioner. She was appointed researcher, she was promoted as a seniorresearcher at respondent‘s Market Research Department. With this development, respondent

adopted an organizational streamlining program. Respondent issued a memorandum announcingthe retrenchment of several workers at its Iligan and Pasig Plants and Makati Head Office.Respondent terminated petitioner‘s services and having rendered twelve (12) years of service, waspaid by respondent representing her separation benefits at the rate of ―two months basic salary peryear of service.‖ Additionally, she received her leave credits, 13th month pay, and uniform and ricesubsidy differential. And after having been paid her separation benefits, she executed and signed aRelease and Quitclaim. Barely three (3) years thereafter, petitioner filed with the Labor Arbiter acomplaint for payment of retirement benefits against respondent, docketed and was consolidatedwith case entitled ―Benito Anievas et al. vs. National Steel Corporation.‖ The complainants here are alsoretrenched employees of respondent.

The Labor Arbiter rendered a Decision dismissing the complaints. On appeal, the National LaborRelations Commission (NLRC), affirmed the Labor Arbiter‘s Decision. Petitioner filed a motion forreconsideration but was denied. Hence, she filed with the Court of Appeals a petition for certiorarialleging that the NLRC committed grave abuse of discretion in declaring that she is not entitled toretirement benefits and in holding that she is precluded from claiming such benefits because of herquitclaim. The Court of Appeals promulgated its Decision affirming the assailed Resolutions of theNLRC. The Court of Appeals issued a Resolution denying the petitioner‘s motion forreconsideration.

ISSUE: Whether or not petitioner is entitled to retirement benefits.

HELD: While it is axiomatic that retirement laws are liberally construed in favor of the persons

intended to be benefited, however, such interpretation cannot be made in this case in light of theclear lack of consensual and statutory basis of the grant of retirement benefits to petitioner. It bearsstressing that as held by the Labor Arbiter, the NLRC and the Court of Appeals, there is noprovision in the parties‘ CBA authorizing the payment to petitioner retirement benefits in additionto her retrenchment pay; and that there is no indication that she was forced or ―duped‖ byrespondent to sign the Release and Quitclaim. The Court of Appeals also ruled that petitioner, nothaving reached the retirement age, is not entitled to retirement benefits under Article 287 of theLabor Code.

This Court has always accorded respect and finality to the findings of fact of the Court of Appeals,particularly if they coincide with those of the Labor Arbiter and the NLRC when supported by



substantial evidence, as in this case. The reason for this is that quasi-judicial agencies, like theArbitration Board and the NLRC, have acquired a unique expertise because their jurisdictions areconfined to specific matters.

LIMITATIONS ON MANAGEMENT PREROGATIVEPHILIPPINE AIRLINES vs. JOSELITO PASCUA, ET AL.[G.R. No. 143258. August 15, 2003.]

FACTS: PAL hired private respondents as station attendants on a four or six-hour work-shift a dayat five to six days a week. On certain occasions, PAL compelled private respondents to workovertime because of urgent necessity. The contracts with private respondents were extended twice,the last of which appears to have been for an indefinite period. Private respondent Joselito Pascua,in his and on behalf of other 79 part-time station attendants, filed with the Department of Labor andEmployment a complaint for regularization and other benefits. During the pendency of the case,PAL President Garcia and PAL Chairman & Corporate Executive Officer Dominguez converted theemployment status of private respondents from temporary part-time to regular part-time. Privaterespondents dropped their money claim then pending before the Office of Executive Labor ArbiterGuanio, thus leaving for consideration their complaint for "regularization" — conversion of theiremployment status from part-time to regular (working on an 8-hour shift). Finding private

respondents' remaining cause of action was rendered "moot and academic" by their superveningregularization, the Executive Labor Arbiter dismissed the former‘s complaint. On appeal, the NLRCfinding for private respondents, declared them as regular employees of PAL with an eight-hourwork-shift.

Petitioner filed a motion for reconsideration of the NLRC decision, which was denied.

Petitioner filed with the Court of Appeals a special civil action for certiorari to annul the NLRCdecision but was dismissed and petitioner's motion for reconsideration was denied. Hence, thisappeal.

ISSUE: Whether or not the appellate court erred when it upheld the decision of the NLRC to accordrespondents regular full-time employment although petitioner, in the exercise of its managementprerogative, requires only part-time services.

HELD: It must be borne in mind that the exercise of management prerogative is not absolute. Whileit may be conceded that management is in the best position to know its operational needs, theexercise of management prerogative cannot be utilized to circumvent the law and public policy onlabor and social justice. That prerogative accorded management could not defeat the very purposefor which our labor laws exist: to balance the conflicting interests of labor and management, not totilt the scale in favor of one over the other, but to guaranty that labor and management stand onequal footing when bargaining in good faith with each other. By its very nature, encompassing as itcould be, management prerogative must be exercised always with the principles of fair play at heart

and justice in mind. Article 280 of the Labor Code 13 provides that any employee who has renderedat least one year of service, whether such service is continuous or broken, shall be considered aregular employee with respect to the activity in which he is employed, and his employment shallcontinue while such activity actually exists. It is basic to the point of being elementary thatnomenclatures assigned to a contract shall be disregarded if it is apparent that the attendantcircumstances do not support their use or designation. The same is true with greater forceconcerning contracts of employment, imbued as they are with public interest. Although respondentswere initially hired as part-time employees for one year, thereafter the over-all circumstances withrespect to duties assigned to them, number of hours they were permitted to work including over-time, and the extension of employment beyond two years can only lead to one conclusion: that theyshould be declared full-time employees. Thus, not without sufficient and substantial reasons, the



claim of management prerogative by petitioner ought to be struck down for being contrary to lawand policy, fair play and good faith.

RA 8042EXECUTIVE SECRETARY, et. al. vs. COURT OF APPEALS(May 25, 2004)CALLEJO, SR., J.:

FACTS: ACRO-Phil filed a petition for declaratory relief with the RTC to declare as unconstitutionaSec.2, par.(g), Sec. 6, pars.(a)-(j),(l),&(m), Sec. 7, pars.(a)&(b),Secs. (9)&(10) of RA 8042 (The MigrantWorkers and Overseas Filipinos Act of 1995), with a plea for the issuance of a temporary restrainingorder and/or writ of preliminary injunction enjoining the respondents therein from enforcing theassailed provisions of the law.

The respondents contends that, (1) the law discriminated against unskilled workers and theirfamilies as the law encourage the deployment skilled Filipino workers, (2) the grant of incentives toservice contractors and manning agencies to the exclusion of all other licensed and authorizedrecruiters is an invalid qualification, (3) the penalty imposed by law, being disproportionate to theprohibited acts, discourage the business of licensed and registered recruitment agency, (4) the law

violates the prohibition against ex-post facto law and bill of attainder because it presumes that alicensed and registered recruitment agency is guilty of illegal recruitment involving economicsabotage, upon a finding that it committed any of the prohibited acts under the law, (5) the 90-dayperiod which the labor arbiter should decide a money claim is relatively short, and could deprived alicensed and registered recruiters of their right to due process, (6) the law impair the power of theSupreme Court to promulgate rules of procedure, (7) the law abridge freedom to contract, (8) thesingling out of entertainers and performing artist under the assailed department orders(implementing rules and regulations of RA 8042) constitutes class legislation and violates the equalprotection clause. The respondent justified its plea for injunctive relief on the allegation in itsamended petition that its members are exposed to the immediate and irreparable danger of beingdeprived of their right to a livelihood and other constitutional rights without due process, on itsclaim that a great number of duly licensed recruitment agencies have stopped and suspended forfear that (a) their officers and employees would be prosecuted under the unjust and unconstitutionapenal provisions af RA 8042 and meted equally unjust and excessive penalties, including lifeimprisonment, for illegal recruitment without regard to whether the recruitment agencies involvedare licensed and/or authorized and (b) if the members of the respondent, which are licensed andauthorized, decide to continue with their business, they face the stigma and the coursed of beinglabeled ―illegal recruiters‖.

Petitioners contend that the petitioners has no locus standi, it failed to adduce in evidence a certifiedcopy of its Articles of Incorporation and the resolution of said members authorizing it to representthe said agencies in the proceedings. The petitioners assert that the law is presumed constitutionaand, as such, the respondent was burdened to make a case strong enough to overcome such

presumption and establish a clear right to injunctive relief.

ISSUE: Whether or not the CA erred in affirming the trial courts order and the writ of preliminaryinjunction issued by it enjoining the petitioners from implementing the the provisions of RA 8042.

HELD: The assailed order and writ of preliminary injunction is mooted by case law. In People vsChowdury, it was held that illegal recruitment is a crime of economic sabotage and must beenforced. The court in this case upheld the validity of Sec. 6 of RA 8042 which provides thatemployees of recruitment agencies may be criminally liable for illegal recruitment. An employee of acompany or corporation engage in illegal recruitment may be held liable as principal together withhis employer, if it is shown that he actively and consciously participated in illegal recruitment. The



employee or agent of a corporation engage in unlawful business naturally aids and abets in thecarrying on of such business and will be prosecuted as a principal if, with knowledge of thebusiness, its purpose and effect, he consciously contributes his efforts to its conduct and promotionhowever slight his contribution may be.

In People vs. Diaz, the SC held that RA 8042 is but an amendment of the Labor Code of thePhilippines and is not an ex-post facto law because it is not applied retroactively. In JMM Promotionand Management, Inc. vs. CA, the issue of the extent of the police power of the state to regulate a

business, profession or calling vis-a-vis the equal protection clause and the non-impairment clausewere raised and it was held that, a profession, trade or calling is a property right within the meaningof our constitutional guarantees. One cannot be deprived of the right to work and the right to makea living because this are property rights, the arbitrary and unwarranted deprivation of whichnormally constitutes an actionable wrong. Nevertheless, no right is absolute, and the properregulation of a profession, calling, business or trade has always been upheld as legitimate subject ofa valid exercise of the police power by the state particularly when their conduct affects either theexecution of legitimate governmental functions, the preservation of the state, the public health andwelfare and public morals.

In Philippine Association of Service Exporters, Inc. vs. Drillon, the court held that the non-

impairment clause of the Constitution must yield to the loftier purposes targeted by thegovernment. Equally important, into every contract is read provisions of existing law and always areservation of the police power for so long as the agreement deals with a subject impressed withpublic welfare.

The equal protection clause is directed principally against undue favor and individual or classprivilege. It is not to prohibit legislation which is limited to the object to the object to which it isdirected and by the territory in which it is to operate. It does not require absolute equality, butmerely all persons be treated alike under like conditions both as to privileges conferred andliabilities imposed.

By its rulings, the court thereby affirmed the validity of the assailed penal and proceduralprovisions of RA 8042, including the imposable penalties therefore. Until the court, by final judgment, declares that the said provisions are unconstitutional, the enforcement of said provisionscannot be enjoined.

BOOK 1ILLEGAL RECRUITMENT IN LARGE SCALE; ELEMENTS

PEOPLE OF THE PHILIPPINES vs. FLOR GUTIERREZ Y TIMOD[G.R. No. 124439. February 5, 2004]TlNGA, J.:

FACTS: With the promises of jobs abroad unfulfilled, complainants decided to verify if the accusedwas a licensed recruiter. Upon learning from the POEA that she was not so licensed, they proceededto the Philippine Anti-Crime Commission (PACC) to execute their respective affidavits. Theinvestigator confirmed with the POEA that the accused was not licensed or authorized to recruitoverseas contract workers. The accused was arrested on an entrapment operation. In her defense,the accused claimed that as an ―employee‖ of a duly licensed agency who was tasked to recruit andoffer job placements abroad, she could not be held liable for illegal recruitment. She admitted thatshe had no authority to recruit in her personal capacity, but that her authority emanated from aSpecial Power of Attorney (SPA) and a Certification issued by a licensed agency. At the timecomplainants applied for overseas employment, the accused was ―employed‖ as a MarketingDirectress of Sarifudin Manpower and General Services, a duly licensed agency with License No.



OS-91-LB-61193-NL issued by the Department of Labor and Employment.[58] A Special Power ofAttorney (SPA) from Sarifudin, dated May 1, 1994, states that she was authorized. Accused FlorGutierrez filed the present appeal seeking the reversal of her conviction.

ISSUE: Whether or not, the conviction of the accused should be upheld even though she is licensedrecruiter.

HELD: Illegal recruitment is committed when two elements concur, namely: (1) the offender has no

valid license or authority required by law to enable one to lawfully engage in recruitment andplacement of workers; and (2) he undertakes either any activity within the meaning of ―recruitmenand placement‖ defined under Art. 13(b), or any of the prohibited practices enumerated underArt. 34 of the Labor Code. Art. 13(b) of the Labor Code defines ―recruitment and placement‖ as ―anyact of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, andincludes referrals, contract services, promising or advertising for employment, locally or abroadwhether for profit or not: Provided, That any person or entity which, in any manner, offers orpromises for a fee employment to two or more persons, shall be deemed engaged in recruitment andplacement.

The crime becomes Illegal Recruitment in Large Scale when the two elements concur, with the

addition of a third element: the recruiter committed the same against three or more personsindividually or as a group. As found by the trial court, the evidence on record, notably appellant‘s own version, indicates that she was running her own labor recruitment business.

Appellant cannot escape liability by claiming that she was not aware that before working for heremployer in the recruitment agency, she should first be registered with the POEA. Illegalrecruitment in large scale is malum prohibitum, not malum in se. Good faith is not a defense. Asappellant committed illegal recruitment against three or more persons, she is liable for IllegalRecruitment in Large Scale.

ILLEGAL RECRUITMENT IN LARGE SCALE; ELEMENTS

PEOPLE OF THE PHILIPPINES vs. ROSE DUJUA[G.R. Nos. 149014-16. February 5, 2004]TINGA, J.:

FACTS: Complainant Beldon Caluten, went to the accused‘s office, the World Pack Travel andTours. Upon Beldon‘s inquiry, Ramon Dujua said that he sends applicants abroad and gave Beldonan application form. Beldon filled up the form and submitted it to Ramon, who told him that hemust pay a processing fee and make an advance payment. Beldon was promised work as a factoryworker in Japan. He advanced money for his processing fees and other expenses. Despite suchpayments, the promise to send Beldon to work in Japan remained unfulfilled, Beldon asked Ramonto give him back his money. Beldon never recovered his payments, however, prompting him and hisfellow applicants to file a complaint at the National Bureau of Investigation (NBI). Private

complainants Jaime Cabus, Roberto Perlas and Romulo Partos suffered the same fate as Beldon. Healso filed a complaint against the accused.

The prosecution presented a Certification issued by Hermogenes C. Mateo, Director II, LicensingBranch of the POEA, stating that Ramon Dujua is not licensed or authorized by the POEA to recruitworkers abroad. Another Certification, of even date shows that neither is the World Pack Travel andTours authorized to recruit workers abroad. The accused Ramon Dujua denied that he was arecruiter. He claimed that he was a mere janitor, messenger and errand boy of the World PackTravel and Tours. The company is owned by his aunt, Editha Singh, and managed by his motherRose Dujua. He admitted he did not have a license to recruit,but acknowledged receiving the money



given by complainants but denied knowing what it was for. He said, however, that his mother onlyasked him to count the money.

RTC convicted Dujua of illegal recruitment in large scale, committed against Jaime Cabus, BeldonCaluten and Roberto Perlas, and of two counts of estafa, committed against Cabus and Perlas.

ISSUE: Whether or not, the prosecution proved the guilt of the accused in illegal recruitment inlarge scale by means of proof beyond reasonable doubt.

HELD: Yes. The essential elements of the crime of illegal recruitment in large scale are: (1) theaccused engages in acts of recruitment and placement of workers defined under Article 13(b) or inany prohibited activities under Art. 34 of the Labor Code; (2) the accused has not complied with theguidelines issued by the Secretary of Labor and Employment, particularly with respect to thesecuring of a license or an authority to recruit and deploy workers, either locally or overseas; and

First, the testimonies of the complaining witnesses satisfactorily prove that appellant promised thememployment and assured them placement overseas. Complainants were firm and categorical. All ofthem positively identified appellant as the person who recruited them for employment abroadTheir testimonies dovetail each other on material points. There is no adequate showing that any of

them was impelled by any ill motive to testify against appellant.

Second, appellant did not have any license or authority to recruit persons for overseas work, asshown by the Certification issued by the POEA. Neither did his employer, the World Pack Traveland Tours, possess such license or authority.

ILLEGAL RECRUITMENT IN LARGE SCALE; ELEMENTSPEOPLE OF THE PHIL. vs. MARLENE OLERMO[G.R. No. 127848. July 17, 2003.] AZCUNA, J.:

FACTS: In separate informations filed before the RTC of Valenzuela, Marlene Olermo a.k.a. MarleneTolentino was accused of illegal recruitment in large scale as defined and penalized under Article38 in relation to Article 39 (a) of the Labor Code, as amended by P.D. 2018, and five counts of estafa.Appellant Olermo denied all the charges against her. She alleged that she was engaged only in visaassistance. She denied ever having represented herself as possessing authority to deploy workers foroverseas employment. She thus explained that she only offered complainants Villanueva, Aquino-Villanueva, Aparicio and Majarucon assistance in processing their tourist visas. With respect to theaccusation of complainant Berador, appellant alleged that she was only helping him process histrainee's visa. However, the trial court rendered a decision convicting appellant of the crimescharged. Hence, this appeal.

It is the contention of the appellant that the prosecution failed to prove beyond reasonable doubt all

the essential elements of the crime of illegal recruitment in large scale. Furthermore, she contendsthat her alleged act of illegally recruiting at least three persons was not sufficiently established bythe testimonies of the witnesses for the prosecution.

ISSUES:a) Whether or not appellant was engaged in recruitment and placement.b) Whether or not appellant Olermo is guilty of the crime of illegal recruitment in large scale.

HELD: a) YES. Appellant's acts of promising, offering and assuring employment overseas tocomplainants fall squarely within the ambit of recruitment and placement as defined in Article 13,paragraph (b) of the Labor Code, as amended. The fact that she did not sign nor issue some of the



receipts for amounts received from complainants has no bearing on her culpability. Thecomplainants have shown through their respective testimonies and evidence that she was indeedinvolved in the prohibited recruitment. In fact, it was even proven that appellant advertised herservices in a newspaper.b) YES. Article 38 of the Labor Code renders illegal those recruitment activities without thenecessary license or authority from the POEA. The elements of illegal recruitment in large scale are(1) the person undertakes any recruitment activity defined under Article 13, paragraph (b), or anyprohibited practice enumerated under Article 34 of the Labor Code; (2) said person does not have a

license or authority to engage in the recruitment and placement of workers; and (3) the act iscommitted against three or more persons, individually or as a group.

All these three elements were proven by the prosecution beyond reasonable doubt. First, thecomplaining witnesses have satisfactorily established that appellant promised them employmentand assured them of placement overseas. Appellant even had her services advertised in anewspaper, undoubtedly to reach more people seeking jobs abroad. Second, appellant did not haveany license to recruit persons for overseas work. The Licensing Division of the POEA issued acertification to this effect. Third, appellant undertook the recruitment of not less than three workersThe complainants herein were recruited individually on different occasions. The law applieswhether the workers were recruited individually or as a group.

SOLIDARY LIABILITY OF EMPLOYERSPEOPLE OF THE PHILIPPINES vs. ELIZABETH CORPUZG.R. No. 148198. October 1, 2003YNARES-SANTIAGO, J.:

FACTS: Private complainants Belinda Cabantog, Concepcion San Diego, Erlinda Pascual andRestian Surio went to Alga-Moher International Placement Services Corporation to apply foremployment in Taiwan. They were introduced by an ―Aling Josie‖ to the agency's President andGeneral Manager Mrs. Evelyn Gloria H. Reyes. Mrs. Reyes asked them to accomplish the applicationforms. Thereafter, they were told to return to the office with P10,000.00 each as processing feePrivate complainants returned to the agency to pay the processing fees. Mrs. Reyes was not at theagency that time, but she called her secretary of three months, herein appellant Elizabeth Corpuz, onthe telephone and told the latter to receive private complainants' processing fees. In compliance withthe order of her employer and since the cashier was absent, appellant received the processing feesof private complainants. Thereafter, appellant advised the private complainants to wait for thecontracts to arrive from the Taiwan employers. Two months later, nothing happened to theirapplications. Thus, private complainants decided to ask for the refund of their money fromappellant who told them that the processing fees they had paid were already remitted to Mrs. ReyesWhen they talked to Mrs. Reyes, she told them that the money she received from appellant was inpayment of the latter's debt. Thus, private complainants filed their complaint for illegal recruitmentin large scale against appellant. For her part, appellant resolutely denied having a hand in the illegarecruitment and claimed that she merely received complainants' processing fees in compliance with

the order of her employer. Moreover, she had no knowledge that the agency's license wassuspended by the POEA on July 29, 1998, the day before the fact. The trial court found appellantguilty.

ISSUE: Whether or not the appellant guilty of the crime charged.

HELD: No. An employee of a company or corporation engaged in illegal recruitment may be heldliable as principal, together with his employer, if it is shown that he actively and consciouslyparticipated in illegal recruitment. Settled is the rule that the existence of the corporate entity doesnot shield from prosecution the corporate agent who knowingly and intentionally causes thecorporation to commit a crime. The culpability of the employee therefore hinges on his knowledge



of the offense and his active participation in its commission. Where it is shown that the employeewas merely acting under the direction of his superiors and was unaware that his acts constituted acrime, he may not be held criminally liable for an act done for and in behalf of his employer.The prosecution failed to adduce sufficient evidence to prove appellant's active participation in theillegal recruitment activities of the agency. As already established, appellant received the processingfees of the private complainants for and in behalf of Mrs. Reyes who ordered her to receive thesame. She neither gave an impression that she had the ability to deploy them abroad nor convincedthem to part with their money. More importantly, she had no knowledge that the license was

suspended the day before she received the money. Their failure to depart for Taiwan was due to thesuspension of the license, an event which appellant did not have control of. Her failure to refundtheir money immediately upon their demand was because the money had been remitted to Mrs.Reyes on the same day she received it from them. While we strongly condemn the pervasiveproliferation of illegal job recruiters and syndicates preying on innocent people anxious to obtainemployment abroad, nevertheless, we find the pieces of evidence insufficient to prove the guilt ofappellant beyond reasonable doubt.

BOOK IIIDOUBLE HOLIDAY PAYASIAN TRANSMISSION CORPORATION vs. COURT OF APPEALS

[G. R. No. 144664. March 15, 2004]CARPIO-MORALES, J.:

FACTS: The Department of Labor and Employment (DOLE), issued an Explanatory Bulletinwherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9,1993, whether unworked, which apart from being Good Friday [and, therefore, a legal holiday], isalso Araw ng Kagitingan [which is also a legal holiday]. Despite the explanatory bulletin, petitioner[Asian Transmission Corporation] opted to pay its daily paid employees only 100% of their basicpay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. Inaccordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA)existing between petitioner and BATLU, the controversy was submitted for voluntary arbitrationThe Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its coveredemployees ―200% and not just 100% of their regular daily wages for the unworked April 9, 1998which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday.‖ The Court of Appeals upheld the findings of the Voluntary Arbitrator.further adding that theCollective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing therelations between them, clearly recognizes their intent to consider Araw ng Kagitingan and MaundyThursday, on whatever date they may fall in any calendar year, as paid legal holidays during theeffectivity of the CBA and that ―there is no condition, qualification or exception for any variance from the clear intent that all holidays shall be compensated.‖

ISSUE: Whether or not, Relief under Rule 65 is the proper remedy of the petitioner; 2. Whether ornot, the Secretary of Labor committed grave abuse of discretion in issuing an explanatory bulletin

interpreting Art. 94 of the Labor Code.

HELD:The petition is devoid of merit. Since the Court of Appeals had jurisdiction over the petition underRule 65, any alleged errors committed by it in the exercise of its jurisdiction would be errors of

judgment which are reviewable by timely appeal and not by a special civil action of certiorari. Theappeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 andnot a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectivelyof the 1997 Rules of Civil Procedure. For the writ of certiorari under Rule 65 of the Rules of Court toissue, a petitioner must show that he has no plain, speedy and adequate remedy in the ordinarycourse of law against its perceived grievance. A remedy is considered ―plain, speedy and adequate‖



if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of thelower court or agency. In this case, appeal was not only available but also a speedy and adequateremedy. Technicality aside, this Court finds no ground to disturb the assailed decision. Holiday payis a legislated benefit enacted as part of the Constitutional imperative that the State shall affordprotection to labor. Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of tenpaid regular holidays. The provision is mandatory, regardless of whether an employee is paid on amonthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is astatutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid

regular holidays, the fact that two holidays fall on the same date should not operate to reduce tonine the ten holiday pay benefits a worker is entitled to receive.In any event, Art. 4 of the Labor Code provides that all doubts in the implementation andinterpretation of its provisions, including its implementing rules and regulations, shall be resolvedin favor of labor. Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the LaborCode provides that ―Nothing in the law or the rules shall justify an employer in withdrawing orreducing any benefits, supplements or payments for unworked regular holidays as provided inexisting individual or collective agreement or employer practice or policy.‖ The provision of theCBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays asrequired by law.

DOUBLE HOLIDAY PAYCEZAR ODANGO, ET AL. vs. NLRC, ET AL.[G.R. No. 147420. June 10, 2004.]CARPIO, J.:

FACTS: Petitioners are monthly-paid employees of ANTECO. DOLE found ANTECO liable forunderpayment of the monthly salaries of its employees. The DOLE directed ANTECO to pay itsemployees wage differentials which ANTECO failed to pay. Thus, thirty-three (33) monthly-paidemployees filed complaints with the NLRC Sub-Regional Branch VI, Iloilo City, praying forpayment of wage differentials, damages and attorney's fees. Labor Arbiter rendered a Decision infavor of petitioners granting them wage differentials. ANTECO appealed reversed the LaborArbiter's Decision. Petitioners' motion for reconsideration was denied. Petitioners then elevated thecase to this Court through a petition for certiorari, which the Court dismissed for petitioners' failureto comply with Section 11, Rule 13 of the Rules of Court. On Motion for reconsideration, the Courtset aside the dismissal and referred the case to CA following the doctrine in St. Martin FuneralHome v. NLRC. CA then dismissed the complaint. The MR was also denied. Hence, this petition.

ISSUE: Whether or not, the petitioners are entitled to their money claim.

HELD: No. Even assuming that Section 2, Rule IV of Book III is valid, petitioners' claim will still fail.The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days isgenerally limited to the ten legal holidays in a year. Petitioners' claim is based on a mistaken notionthat Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten

legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, theunworked half of Saturdays and other days that they do not work at all. Petitioners' line ofreasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidiousclassification, a violation of the equal protection clause. Sustaining petitioners' argument will makemonthly-paid employees a privileged class who are paid even if they do not work.The use of a divisor less than 365 days cannot make ANTECO automatically liable forunderpayment. The facts show that petitioners are required to work only from Monday to Fridayand half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days,less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means thatANTECO's workers are deprived of their holiday pay for some or all of the ten legal holidays. The304 days divisor used by ANTECO is clearly above the minimum of 287 days.



LEAVE CREDITS

ANSBERTO P. PAREDES vs. FRANCISCO S. PADUAA.M. No. CA-91-3-P April 14, 2004PANGANIBAN, J.:

FACTS: Judge Ansberto Paredes filed a complaint against his cousin, Respondent Padua, for havingfalsified the former's signature on a document captioned "Authority to Sell" and for having obtained

money with the use of that document. The Court dismissed respondent from the service andforfeited his retirement benefits.

The Court referred the Petition to the OCA for evaluation, report and recommendation. The CourtAdministrator observed that twelve and one-half (12 ½) years had passed since the filing of theComplaint, and ten (10) years since the finality of respondent‘s dismissal from the service. TheCourt, however, has modified and even reduced the penalties already imposed on some offenders,owing to some intervening factors or circumstances that merited the mitigation of their sentences.

ISSUE: Whether or not respondent is entitled to leave benefits after dismissal from service.

HELD: As regards the leave benefits, we concur with the court administrator. The dismissal ofrespondent has exposed him to the attendant humiliation and tremendous suffering and virtuallystripped him of his dignity and livelihood. Further, his destitution is aggravated by the bad state ofhis health, considering that he is already in the twilight of his life. In the interest of justice and inconsideration of the present plight of respondent, the application of the aforementioned cases andof the amended Civil Service Rules is in order. He should be granted the leave credits that he earnedduring the period of his government service. We allow him to claim such credits in order to providehim and his family a lifeline and possibly to keep him from again succumbing to the darktemptations sometimes caused by financial woes.

LIABILITY OF AN INDIRECT EMPLOYER

MARIVELES SHIPYARD CORP. vs. COURT OF APPEALSG.R. No. 144134 November 11, 2003QUISUMBING, J.:

FACTS: In October 1993, petitioner corporation engaged the services of Longest Force Investigationand Security Agency, Inc. to render security services at its premises. Longest Force deployed itssecurity guards at petitioner‘s shipyard at Mariveles, Bataan. According to petitioner, it religiously complied with the terms of the security contract with Longest Force (LF). However, it found theservices unsatisfactory and inadequate, causing it to terminate its contract with LF. LF, in turnterminated the security guards (private respondents). These private respondents filed a complaintfor illegal dismissal, underpayment of wages, nonpayment of overtime pay, premium pay for

holiday and rest day, service incentive leave pay, 13th month pay, and attorney‘s fees against LF and petitioner before the Labor Arbiter. LF filed a crossclaim against petitioner. Petitioner deniedliability on account of illegal dismissal, stressing that no employer-employee relationship existedbetween it and the private respondents. They also wanted the cross-claim be dismissed. The Laborarbiter declared LF and petitioner jointly and severally liable to pay the money claims ofcomplainants. Ordered also LF to reinstate to former or equivalent positions the respondentswithout loss of seniority rights and privileges with full backwages. NLRC affirmed in toto. CAdenied petitioner‘s special civil action for certiorari.



ISSUE: Whether or not the CA erred in affirming that LF and petitioner corporation is jointly andseverally liable for payment when there is clear showing that petitioner honored its contract withLF.

HELD: No. Petitioner‘s liability is joint and several with LF pursuant to Articles 106, 107 and 109 of the Labor Code. In this case, when petitioner contracted for security services with Longest Force asthe security agency that hired private respondents to work as guards for the shipyard corporation,petitioner became an indirect employer of private respondents pursuant to Article 107 abovecited

Following Article 106, when the agency as contractor failed to pay the guards, the corporation asprincipal becomes jointly and severally liable for the guards' wages. Petitioner cannot evade itsliability by claiming that it had religiously paid the compensation of guards as stipulated under thecontract with the security agency. Labor standards are enacted by the legislature to alleviate theplight of workers whose wages barely meet the spiraling costs of their basic needs. Labor laws areconsidered written in every contract. Stipulations in violation thereof are considered null. Similarlylegislated wage increases are deemed amendments to the contract. Thus, employers cannot hidebehind their contracts in order to evade their (or their contractors' or subcontractors') liability fornoncompliance with the statutory minimum wage. CASE DOCTRINE: When the agency ascontractor failed to pay the guards, the corporation as principal becomes jointly and severally liablefor the guards' wages. Petitioner cannot evade its liability by claiming that it had religiously paid the

compensation of guards as stipulated under the contract with the security agency.

WAGE ORDER AND ITS EXEMPTION

NASIPIT LUMBER COMPANY vs. NATIONAL WAGES AND PRODUCTIVITYCOMMISSIONG.R. No. 128296 September 8, 2003SANDOVAL-GUTIERREZ, J.:

FACTS: The Regional Tripartite Wages and Productivity Board (RTWPB) of Region X, NorthernMindanao, Cagayan de Oro City, issued Wage Order No. RX-03. This Wage Order mandated a P7.00increase in the minimum daily wage of all workers and employees in the private sector in Region Xreceiving a daily wage of not more than P130.00 per day and an additional P10.00 allowance perday. Subsequently, petitioners filed their separate application for exemption from compliance withWage Order No. RX-03, claiming they are distressed establishments whose paid-up capital has beenimpaired by at least twenty-five percent (25%). The RTWPB granted petitioners a full exemptionfrom compliance with the said Wage Order for a period of one (1) year or from December 8, 1993 toDecember 7, 1994. On December 8, 1994, petitioners, citing the continuous business decline in thewood processing industry, filed for extension of their full exemption for another year. Petitionerscontend they are entitled to an extension for another year of their full exemption as distressedestablishments on the basis of paragraph 4, Section 3 of Wage Order No. RX-03. Petitioners claimthat the NWPC exceeded its jurisdiction (1) in deleting the phrase "renewable for another yearprovided the conditions still persist and warrant the exemption" from paragraph 4, Section 3 of

Wage Order No. RX-03. RTWPB denied the application. On appeal, it was affirmed by NWPC.

ISSUE: Whether or not the period of exemption under Wage Order RX-03 can be extended for morethan one (1) year.

HELD: We rule in the negative. Section 7 of the NWPC Revised Guidelines on Exemption, which isthe applicable rule on this matter, provides that the maximum period of exemption that can beaccorded to a qualified applicant is only for one (1) year from the effectivity of the Wage Order.This non-extendable one year period of exemption is to afford protection to workers who may beunfairly affected by the deleterious effect of a prolonged exemption which is not in accord with thevery purpose of the issuance of a Wage Order.



Moreover, the NWPC has the power not only to prescribe guidelines to govern wage orders,but also to issue exemptions therefrom. In short, the NWPC lays down the guidelines which theRTWPB implements. In affirming the RTWPB's Resolution denying petitioners' application forextension for another year of their full exemption from compliance with Wage Order No. RX-03, theNWPC did not act with grave abuse of discretion.

WAGE DISTORTION; ELEMENTSBANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NLRC

[G.R. No. 140689. February 17, 2004]CARPIO-MORALES, J.:

FACTS: Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III,Level IV, and Level V. On May 28, 1993, its Board of Directors approved a ―New Salary Scale‖,made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in theindustry‘s labor market. The ―New Salary Scale‖ increased the hiring rates of new employees, to witLevels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos(P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were alsoadjusted to reach such rates under their levels. Bankard‘s move drew the Bankard EmployeesUnion-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file

employees of Bankard, to press for the increase in the salary of its old, regular employees. Bankardtook the position, however, that there was no obligation on the part of the management to grant toall its employees the same increase in an across-the-board manner. As the continued request ofpetitioner for increase in the wages and salaries of Bankard‘s regular employees remainedunheeded, it filed a Notice of Strike on August 26, 1993 on the ground of discrimination and otheracts of Unfair Labor Practice (ULP).

A director of the National Conciliation and Mediation Board treated the Notice of Strike as a―Preventive Mediation Case‖ based on a finding that the issues therein were ―not strikeable‖. Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain,discrimination, and other acts of ULP - union busting. The strike was averted, however, when thedispute was certified by the Secretary of Labor and Employment for compulsory arbitration. TheNLRC, finding no wage distortion, dismissed the case for lack of merit. Petitioner‘s motion for reconsideration of the dismissal of the case was denied.

Petitioner thereupon filed a petition for certiorari before this Court. In accordance with itsruling in St. Martin Funeral Homes v. NLRC, the petition was referred to the Court of Appealswhich, by October 28, 1999, denied the same for lack of merit.

ISSUE: Whether or not the unilateral adoption by an employer of an upgraded salary scale thatincreased the hiring rates of new employees without increasing the salary rates of old employeesresulted in wage distortion within the contemplation of Article 124 of the Labor Code.

HELD: Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, amongothers, Article 124 of the Labor Code) on June 9, 1989, the term ―wage distortion‖ was explicitly defined as: ―A situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and amongemployee groups in an establishment as to effectively obliterate the distinctions embodied in suchwage structure based on skills, length of service, or other logical bases of differentiation.‖ Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage distortion, towit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant changein the salary rate of a lower pay class without a concomitant increase in the salary rate of a higherone; (3) The elimination of the distinction between the two levels; and (4) The existence of thedistortion in the same region of the country.



In a problem dealing with ―wage distortion,‖ the basic assumption is that there exists a grouping orclassification of employees that establishes distinctions among them on some relevant or legitimatebases. The differing wage rate for each of the existing classes of employees reflects this classificationTo determine the existence of wage distortion, the ―historical‖ classification of the employees priorto the wage increase must be established. Thus the employees of private respondent have been―historically‖ classified into levels, i.e. I to V, and not on the basis of their length of service. Putdifferently, the entry of new employees to the company ipso facto place[s] them under any of thelevels mentioned in the new salary scale which private respondent adopted retroactive [to] April 1

1993. It is thus clear that there is no hierarchy of positions between the newly hired and regularemployees of Bankard, hence, the first element of wage distortion provided in Prubankers is wantingAs did the Court of Appeals, this Court finds that the third element provided in Prubankers is alsowanting. Even assuming that there is a decrease in the wage gap between the pay of the oldemployees and the newly hired employees, to our mind said gap is not significant as to obliterateor result in severe contraction of the intentional quantitative differences in the salary rates betweenthe employee group. As already stated, the classification under the wage structure is based on therank of an employee, not on seniority. For this reason, ,wage distortion does not appear to existApart from the findings of fact of the NLRC and the Court of Appeals that some of the elements ofwage distortion are absent, petitioner cannot legally obligate Bankard to correct the alleged ―wagedistortion‖ as the increase in the wages and salaries of the newly -hired was not due to a prescribed

law or wage order. Wage distortion is a factual and economic condition that may be brought aboutby different causes. The mere factual existence of wage distortion does not, however, ipso facto resultto an obligation to rectify it, absent a law or other source of obligation which requires itsrectification.

Bankard‘s right to increase its hiring rate, to establish minimum salaries for specific jobs, and toadjust the rates of employees affected thereby is embodied under Section 2, Article V (Salary andCost of Living Allowance) of the parties‘ Collective Bargaining Agreement. This CBA provisionwhich is based on legitimate business-judgment prerogatives of the employer, is a valid and legallyenforceable source of rights between the parties.

BOOK V JURISDICTION OF THE LABOR ARBITER; MONEY CLAIM

EDUARDO G. EVIOTA vs. COURT OF APPEALS[G.R. No. 152121. July 29, 2003.]CALLEJO, SR., J.:

FACTS: The respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed acontract of employment under which the petitioner was employed by the respondent bank asCompensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned from therespondent bank barely a month after his employment and rejoined his former employer. Hisresignation, which did not comply with the 30-day prior notice rule under the law and under the

Employment Contract, was so unexpected that it disrupted plans already in the pipeline. As a resultthe Bank incurred expenses in carrying out its part of the contract. Eviota never complied with theBank's demand that he reimburse the latter for the expenses incurred on his account. Hence, therespondent bank filed a complaint against the petitioner with the RTC of Makati City for actual,moral and exemplary damages.

The petitioner filed a motion to dismiss the complaint on the ground that the action for damages ofthe respondent bank was within the exclusive jurisdiction of the Labor Arbiter under paragraph 4,Article 217 of the Labor Code of the Philippines, as amended.

ISSUE: Whether or not the labor arbiter has jurisdiction to award the damages.



HELD: None. Not every controversy or money claim by an employee against the employer orviceversa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker againstthe employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a"reasonable causal connection" between the claim asserted and employee-employer relation.Absent such a link, the complaint will be cognizable by the regular courts of justice. In the case atbar, Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recoverdamages agreed upon in the contract as redress for private respondent's breach of his contractuaobligation to its "damage and prejudice." Such cause of action is within the realm of Civil Law, and

jurisdiction over the controversy belongs to the regular courts. The fact that the private respondenwas the erstwhile employer of the petitioner under an existing employment contract before the latterabandoned his employment is merely incidental.

TEST TO DETERMINE THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

ABANTE, JR. vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID[G.R. No. 159890. May 28, 2004.]YNARES-SANTIAGO, J.::

FACTS: Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation

as a salesman earning a commission of 3% of the total paid-up sales covering the whole area ofMindanao. Aside from selling the merchandise of respondent corporation, he was also tasked tocollect payments from his various customers. Sometime in 1998, petitioner encountered fivecustomers/clients with bad accounts. Petitioner was confronted by respondent Lamadrid over thebad accounts. Not contented with the issuance of checks as security for the bad accounts,respondents ―tricked‖ petitioner into signing two documents, which he later discovered to be aPromissory Note and a Deed of Real Estate Mortgage.Respondent deposited the remaining checks which were dishonored by the drawee bank due to―Account Closed.‖ Counsel for respondent corporation sent a letter to petitioner demanding that hemake good the dishonored checks or pay their cash equivalent. In response, petitioner sent a letteraddressed to the counsel for respondent corporation, which directed the corporation to off-set theamount to his commission. Petitioner sent another letter to respondent Lamadrid that he intends toseek legal advice regarding the matter. While doing his usual rounds as commission salesmanpetitioner was handed by his customers a letter from the respondent company warning them not todeal with petitioner since it no longer recognized him as a commission salesman. In the interim,petitioner received a subpoena from the Office of the City Prosecutor of Manila for violations ofBatas Pambansa Blg. 22 filed by respondent Lamadrid. Petitioner thus filed a complaint for illegaldismissal with money claims against respondent company and its president, Jose Lamadrid, beforethe NLRC. The Labor Arbiter declared respondents to pay jointly and severally complainantEMPERMACO B. ABANTE his awarded separation pay, back wages (partial) unpaid commissions,refund of deductions, damages and attorney‘s fees. On appeal, the National Labor RelationsCommission reversed the decision of the Labor Arbiter. Petitioner challenged the decision of theNLRC before the Court of Appeals which denied the petition.

ISSUE: Whether or not petitioner, as a commission salesman, is an employee of respondentcorporation.

HELD: NO. To ascertain the existence of an employer-employee relationship, jurisprudence hasinvariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) thepayment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence orabsence of the power of control. Of these four, the last one is the most important. The so-called―control test‖ is commonly regarded as the most crucial and determinative indicator of the presenceor absence of an employer-employee relationship. Under the control test, an employeremployee



relationship exists where the person for whom the services are performed reserves the right tocontrol not only the end achieved, but also the manner and means to be used in reaching that end.Applying the aforementioned test, an employer-employee relationship is notably absent in this caseIt is undisputed that petitioner Abante was a commission salesman who received 3% commission ofhis gross sales. Yet no quota was imposed on him by the respondent; such that a dismalperformance or even a dead result will not result in any sanction or provide a ground for dismissalHe was not required to report to the office at any time or submit any periodic written report on hissales performance and activities. Although he had the whole of Mindanao as his base of operation,

he was not designated by respondent to conduct his sales activities at any particular or specificplace. He pursued his selling activities without interference or supervision from respondentcompany and relied on his own resources to perform his functions. Respondent company did notprescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy toentice his customers. While it is true that he occasionally reported to the Manila office to attendconferences on marketing strategies, it was intended not to control the manner and means to beused in reaching the desired end, but to serve as a guide and to upgrade his skills for a moreefficient marketing performance. Moreover, petitioner was free to offer his services to othercompanies engaged in similar or related marketing activities as evidenced by the certificationsissuedby various customers.Petitioner decried the alleged intimidation and trickery employed by respondents to obtain from

him a Promissory Note and to issue forty-seven checks as security for the bad accounts incurred byfive customers. While petitioner may have been coerced into executing force to issue the saiddocuments, it may equally be true that petitioner did so in recognition of a valid financial obligation

INDEPENDENT JOB CONTRACTOR; CREATION OF EMPLOYER-EMPLOYEERELATIONSHIP

NEW GOLDEN CITY BUILDERS & DEVELOPMENT CORPORATIONvs. COURT OF APPEALS[G.R. No. 154715. December 11, 2003.]YNARES-SANTIAGO, J.:

FACTS: Petitioner New Golden City Builders and Development Corporation, a corporation engagedin the construction business, entered into a construction contract with Prince David DevelopmentCorporation for the construction of a 17-storey office and residential condominium building alongKatipunan Road, Loyola Heights, Quezon City, Metro Manila. Petitioner engaged the services ofNilo Layno Builders to do the specialized "concrete works, form works and steel rebars works", inconsideration of the total contract price of P5 Million. Pursuant to the contract, Nilo Layno Buildershired private respondents to perform work at the project. After the completion of the phase forwhich Nilo Layno Builders was contracted, sometime in 1996, private respondents filed a complaintcase against petitioner and its president, Manuel Sy, with the Arbitration Branch of the NLRC for"unfair labor practice, non-payment of 13th month pay, non-payment of 5 days service incentiveleave, illegal dismissal and severance pay in lieu of reinstatement."

Labor Arbiter Felipe Garduque rendered a decision finding that Nilo Layno Builders was a labor-only-contractor; thus, private respondents were deemed employees of the petitioner. Both partiesappealed the decision of the Labor Arbiter to the NLRC. The NLRC affirmed with modification theLabor Arbiter's decision. As modified, the NLRC held that private respondents were illegallydismissed and ordered petitioner to reinstate them and to pay their full backwages. Sincepetitioner's motion for a reconsideration of the decision was denied, it instituted a special civil actionfor certiorari with the Court of Appeals, alleging that the NLRC gravely abused its discretion intotally discarding uncontroverted evidence and in relying merely on conjectures and assumptionsnot supported by facts. The Court of Appeals denied the petition.



ISSUES:1. Whether Nilo Layno Builders was an "independent contractor" or a "labor-only" contractor;2. Whether there existed an employer-employee relationship between petitioner and privaterespondents.

HELD: The Court finds partial merit in the petition.(1) Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor Code, anindependent contractor is one who undertakes "job contracting," i.e., a person who: (a) carries on an

independent business and undertakes the contract work on his own account under his ownresponsibility according to his own manner and method, free from the control and direction of hisemployer or principal in all matters connected with the performance of the work except as to theresults thereof; and (b) has substantial capital or investment in the form of tools, equipments,machineries, work premises, and other materials which are necessary in the conduct of the businessThe test to determine the existence of independent contractorship is whether one claiming to be anindependent contractor has contracted to do the work according to his own methods and withoutbeing subject to the control of the employer, except only to the results of the work. This is exactlythe situation obtaining in the case at bar. Nilo Layno Builders hired its own employees, the privaterespondents, to do specialized work in the Prince David Project of the petitioner. The means andmethods adopted by the private respondents were directed by Nilo Layno Builders except that, from

time to time, the engineers of the petitioner visited the site to check whether the work was in accordwith the plans and specifications of the principal. As admitted by Nilo G. Layno, he undertook thecontract work on his own account and responsibility, free from interference from any other personsexcept as to the results; that he was the one paying the salaries of private respondents; and that asemployer of the private respondents, he had the power to terminate or dismiss them for just andvalid cause. Indubitably, the Court finds that Nilo Layno Builders maintained effective supervisionand control over the private complainants.

(2) We hold that there existed an employer-employee relationship between petitioner andprivate respondents albeit for a limited purpose. In legitimate job contracting, the law createsan employer-employee relationship for a limited purpose, i.e., to ensure that the employeesare paid their wages. The principal employer becomes jointly and severally liable with the

job contractor only for the payment of the employees' wages whenever the contractor fails topay the same. Other than that, the principal employer is not responsible for any claim madeby the employees. From the foregoing disquisition, the petitioner did not, as it could notillegally dismissed the private complainants. Hence, it could not be held liable for backwagesand separation pay. Nevertheless, it is jointly and severally liable with Nilo Layno Buildersfor the private complainants' wages, in the same manner and extent that it is liable to itsdirect employees. The joint and several liability of the employer or principal was enacted toensure compliance with the provisions of the Code, principally those on statutory minimumwage. The contractor or subcontractor is made liable by virtue of his or her status as a directemployer, and the principal as the indirect employer of the contractor's employees.

INDEPENDENT CONTACTOR

SAN MIGUEL CORPORATION, vs. MAERC INTEGRATED SERVICES, INC.[G.R. No. 144672. July 10, 2003.]BELLOSILLO, J.:

FACTS: Respondents were workers hired by San Miguel Corporation (SMC) through its agent orintermediary Maerc Integrated Services, Inc. (MAERC) an alleged an independent contractor whoseprimary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying,etc., glass and metal containers. They washed and segregated various kinds of empty bottles usedby SMC to sell and distribute its beer beverages to the consuming public. They were paid on a perpiece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis.



It appears that SMC entered into a Contract of Services with MAERC engaging its services on anonexclusive basis for a year and was renewed for two (2) more years. It also provided for itsautomatic renewal on a month-to-month basis after the two (2)-year period and required that awritten notice to the other party be given thirty (30) days prior to the intended date of termination,should a party decide to discontinue with the contract. Subsequently, SMC informed MAERC of thetermination of their service contract, citing its plans to phase out its segregation activities due to theinstallation of labor and cost-saving devices. When the service contract was terminated, SMCstopped them from performing their jobs. The workers filed their complaints against San Miguel

Corporation (petitioner herein) and Maerc Integrated Services, Inc. (respondent herein), for illegaldismissal, underpayment of wages, nonpayment of service incentive leave pays and other laborstandards benefits, and for separation pays.The Labor Arbiter rendered a decision holding that MAERC was an independent contractor anddismissed the complaints for illegal dismissal but ordered MAERC to pay complainants' separationbenefits. MAERC and SMC were also ordered to jointly and severally pay complainants their wagedifferentials and to pay attorney's fees. The National Labor Relations Commission (NLRC) ruledthat MAERC was a labor-only contractor and that complainants were employees of SMC.Petitioner filed a petition for certiorari with prayer for the issuance of a temporary restraining orderand/or injunction with this Court which then referred the petition to the Court of Appeals. Court ofAppeals denied the petition and affirmed the decision of the NLRC. The appellate court also denied

SMC's motion for reconsideration. Hence, petitioner seeks this petition for review.

ISSUE: Whether or not MAERC is a labor-only contractor and that complainants were employees ofSMC.

HELD: YES. MAERC is a labor-only contractor and not an independent labor contractor. While it istrue that MAERC had investments consisting of buildings, machinery and equipment, the SupremeCourt, however, in Vinoya v. NLRC, clarified that it was not enough to show substantialcapitalization or investment in the form of tools, equipment, machinery and work premises, etc., tobe considered an independent contractor. In fact, jurisprudential holdings were to the effect that indetermining the existence of an independent contractor relationship, several factors may

beconsidered, such as, but not necessarily confined to, whether the contractor was carrying on anindependent business; the nature and extent of the work; the skill required; the term and durationof the relationship; the right to assign the performance of specified pieces of work; the control andsupervision of the workers; the power of the employer with respect to the hiring, firing andpayment of the workers of the contractor; the control of the premises; the duty to supply premises,tools, appliances, materials and labor; and the mode, manner and terms of payment. MAERC,displayed the characteristics of a labor-only contractor and in labor-only contracting, the statutecreates an employer-employee relationship for a comprehensive purpose: to prevent acircumvention of labor laws. The contractor is considered merely an agent of the principal employerand the latter is responsible to the employees of the labor-only contractor as if such employees hadbeen directly employed by the principal employer. The principal employer therefore becomessolidarily liable with the labor-only contractor for all the rightful claims of the employees.Petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.

INDEPENDENT JOB-CONTRACTOR; RADIO AND BROADCAST TALENTS

JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORP.G.R. No. 138051. June 10, 2004CARPIO, J.:

FACTS: Respondent ABS-CBN signed an Agreement with the Mel and Jay Management andDevelopment Corporation. Referred to in the Agreement as "AGENT," MJMDC agreed to provideSONZA's services exclusively to ABS-CBN as talent for radio and television. Sonza resigned as a



talent for ABS-CBN and sent a letter to Eugenio Lopez III rescinding the agreement of May 1994.SONZA filed a complaint against ABS-CBN before DOLE NCR. He complained that ABS-CBNdid not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus,travel allowance and amounts due under the Employees Stock Option Plan ("ESOP"). ABS-CBNfiled a Motion to Dismiss on the ground that no employer-employee relationship existed betweenthe parties and that Sonza was an independent contractor. The labor arbiter dismissed the complaintfor lack of jurisdiction. SONZA appealed to the NLRC, but it affirmed the Labor Arbiter's decision.Sonza‘s motion for reconsideration, was denied by the NLRC. Sonza filed special civil action for

certiorari with the CA which was likewise dismissed. Hence, this petition.

ISSUE: Whether or not, Sonza is an independent contractor.

HELD: Yes. There is no case law stating that a radio and television program host is an employee ofthe broadcast station. SONZA maintains that all essential elements of an employer-employeerelationship are present in this case. Case law has consistently held that the elements of anemployer-employee relationship are: (a) the selection and engagement of the employee; (b) thepayment of wages; (c) the power of dismissal; and (d) the employer's power to control theemployee on the means and methods by which the work is accomplished. The last element, the so-called "control test", is the most important element.

A. Selection and Engagement of EmployeeThe specific selection and hiring of SONZA, because of his unique skills, talent and celebritystatus not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of anindependent contractual relationship. In any event, the method of selecting and engaging SONZAdoes not conclusively determine his status. We must consider all the circumstances of therelationship, with the control test being the most important element.B. Payment of WagesABS-CBN directly paid SONZA his monthly talent fees. Sonza alleges that the mode of feepayment shows that he was an employee of ABS-CBN. However, all the talent fees and benefitspaid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN's employee, there would be no need for the parties to stipulate on benefits such as "SSS

Medicare, and 13th month pay" which the law automatically incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of anemployer-employee relationship. Further, Sonza‘s huge talent fees indicate more an independentcontractual relationship rather than an employer-employee relationship. It was paid because of hisskills, talent and celebrity status. Bargaining power of fees way above the salary scales of ordinaryemployees is a circumstance indicative, but not conclusive, of an independent contractualrelationship.C. Power of ControlApplying the control test to the present case, we find that SONZA is not an employee butan independent contractor. The control test is the most important test our courts apply indistinguishing an employee from an independent contractor. This test is based on the extent ofcontrol the hirer exercises over a worker. The greater the supervision and control the hirerexercises, the more likely the worker is deemed an employee. We find that ABS-CBN was notinvolved in the actual performance that produced the finished product of SONZA's work. ABS-CBNdid not instruct SONZA how to perform his job. Clearly, ABS-CBN did not exercise control over themeans and methods of performance of SONZA's work. ABS-CBN's control was limited only to theresult of SONZA's work, whether to broadcast the final product or not. In either case, ABS-CBNmust still pay SONZA's talent fees in full until the expiry of the Agreement. Even though ABS-CBNprovided SONZA with the place of work and the necessary equipment, SONZA was still anindependent contractor since ABS-CBN did not supervise and control his work. ABS-CBN's soleconcern was for SONZA to display his talent during the airing of the programs.



LITIGATION ON THE MERITS

NOVELTY PHILIPPINES vs. COURT OF APPEALS[G.R. No. 146125. September 17, 2003]PANGANIBAN, J.:

FACTS: Reform the Union Movement in Novelty (RUMN), the labor union of petitioner NoveltyPhilippines Inc (Novelty) started assessing penalties against its erring members. RUMN‘s executive

board adopted a resolution sanctioning union officers and members who failed to join big rallies,with a penalty equivalent to their salary for one day. Novelty issued a Memorandum announcingthat it would deduct from the salaries of union members who failed to attend the mobilizationamounts equivalent to their one-day salary pursuant to the resolution of the RUMN. When somemembers of the union allegedly complained of the salary deduction, petitioner temporarily held inabeyance the implementation of the check-off on the special assessment made by RUMN. Petitioneralso requested the DOLE Sec. his opinion on the matter. RUMN continued to insist on theimplementation of the checkoff. Nevertheless, citing an Opinion rendered by the legal office of theDOLE, petitioner rejected RUMN‘s persistent demand of a checkoff. Consequently, RUMN raisedthe matter for grievance. Since no settlement was reached during the grievance procedure, the casewas elevated to the NCMB. The voluntary arbitrators held that there was sufficient compliance on

the part of RUMN with the provisions of the Labor Code and the CBA provisions between theparties. After the denial of the petitioner‘s motion for reconsideration with the panel of voluntary arbitrators, petitioner Novelty elevated the matter to the CA by way of petition for certiorari underRule 65. The CA, however, denied the course to the petition for failure of the personnel office ofpetitioner to attach (1) his authority to institute the action and (2) the required proof of service.The MR was also denied by the CA because the required authority to file had been executed onlyafter 20 days from filing.

ISSUE: Whether or not the CA justified in dismissing the case despite petitioner‘s substantial compliance with the requirements of the rules.

HELD: No. Procedural niceties should be avoided in labor cases in which the provisions of theRules of Court are applied only in suppletory manner. Indeed, rules of procedure may be relaxed torelieve a part of an injustice not commensurate with the degree of noncompliance with the processrequired. The foregoing judicial policy acquires greater significance where there has beensubsequent compliance with the requirements of the rules, as in this case in which petitioner hassubmitted the Special Power of Attorney together with its Motion for Reconsideration.

ANNULMENT OF JUDGMENTS OF NLRC

ELCEE FARMS, INC. vs. PAMPILO SEMILLANO and NLRC[G.R. No. 150286. October 17, 2003] AUSTRIA-MARTINEZ, J.:

FACTS: A complaint for illegal dismissal was filed by 144 employees before the RegionalArbitration Branch of Bacolod City against (a) petitioners Elcee Farms and Saguemuller; and (b)Hilla Corporation, Rey Hilado and Roberto Montaño. Of the 144 named complainants, only 28submitted their affidavits and evidence of employment. The Labor Arbiter ordered HillaCorporation to pay each of the 28 complainants their separation pay but dismissed all claims againstElcee Farms, Saguemuller, Hilado and Montaño, for lack of merit. Not satisfied with the decision,private respondents and Hilla Corporation appealed to the NLRC, which modified the decision ofthe Labor Arbiter by holding all defendants liable for the payment of separation pay and adding thepayment of P5,000.00 as moral damages to each complainant for all the troubles and sufferings from



the disturbance of their rights to labor. All the parties moved for reconsideration. The NLRC issueda Resolution modifying its decision by: (a) absolving Hilla Corporation from liability and held onlypetitioners Elcee Farms and Saguemuller liable for the separation pay, moral and exemplarydamages; and (b) increasing the number of awardees from 28 to 131 based on the list of remittedSSS contributions as of 1990. Petitioners filed petitions for certiorari with the Supreme Court underRule 65 of the Rules of Court through different counsels. The First Division of the SC gave duecourse to the second petition for certiorari and required: (a) the petitioners to pay the deposit forcosts; and, (b) both parties to submit their respective memoranda. However, the said resolution was

sent at another address instead of the address provided for in the petition for certiorari. Thus,petitioners failed to comply. The Court dismissed the petition for certiorari for non-compliance withsaid resolution requiring abovementioned deposit for costs and memorandum. Said resolution wasalso sent to the wrong address. With the dismissal of the petition for certiorari, the NLRC Resolutionbecame final and executory. Petitioner Saguemuller filed before the NLRC a Motion to StayExecution on the ground of absolute nullity of decision. But, without awaiting the resolution of itspending motion with the NLRC, petitioner Saguemuller together with Elcee Farms filed a petitionfor annulment of judgment with the Court of Appeals. The Court of Appeals dismissed the petitionfor annulment of judgment on ground of lack of jurisdiction. It held that petitioners cannot invokethe jurisdiction of the said court pursuant to Rule 47 of the Rules of Court because said rule refers todecisions of regional trial courts and not to quasi-judicial bodies. The appellate court also noted that

petitioners had availed of the relief of certiorari under Rule 65 before the Supreme Court but theywere not diligent in pursuing the same, to their prejudice. Petitioners filed a Motion forReconsideration but the Court of Appeals denied the same. Hence, this petition for review oncertiorari anchored on the ground that the Court of Appeals committed a reversible error when itrefused to assume jurisdiction and annul a patently unjust decision of the NLRC.

ISSUE: Whether or not the Court of Appeals has jurisdiction over petitions for annulment of judgments of NLRC.

HELD: The appellate court has no jurisdiction to entertain a petition for annulment of a final andexecutory judgment of the NLRC. Section 9 of BP 129 as amended, only vests in the Court of

Appeals ―exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.‖ Moreover, annulment of judgment is allowed only where the ordinary remedies of new trial,appeal, petition for relief or other appropriate remedies are no longer available through no fault ofpetitioners. In this case, petitioners were well-aware that they had the available remedy of apetition for certiorari to this Court under Rule 65 of the Rules of Court. In fact, they twice soughtrecourse with this Court via petitions for certiorari but both petitions were dismissed.The Court entertains serious apprehensions on the validity of the service of the Resolutionwhich required petitioners to deposit for costs and to submit their memorandum, non-complianceof which inevitably caused the dismissal of their petition for certiorari. Petitioners claim that theResolution was not sent to the address of his counsel as expressly stated in the petition itself but tocounsel‘s former address when the case was still with the NLRC. The Court is even more concerned with the Resolution of the NLRC increasing the number of awardees from 28 to 131 which wasapparently based only on the list of remitted SSS contributions as of 1990 when it is an undisputedfact that only 28 employees submitted their affidavits and evidence of employment before theLabor Arbiter.Be that as it may, such concerns cannot be raised and resolved in a petition for annulmentof judgment before the Court of Appeals or in the instant petition for review. They are properquestions for resolution in the petition for certiorari before the First Division of this Court should itdecide to reinstate the petition, upon proper showing that the subject Resolution was indeed sentto an incorrect address without the fault of petitioners but which unduly deprived petitioners ofopportunity to present their case .Consequently, it is likewise not within the jurisdiction of thisCourt in the present petition to act on private respondents‘ motion for remand of the records and forthe issuance of an order directing the Labor Arbiter to issue a writ of execution.



The petition for review on certiorari is DENIED for lack of merit but without prejudice to amore appropriate remedy, if any.

FINAL AND EXEUTORY JUDGEMENTS OF NLRC

C-E CONSTRUCTION CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSIONand GILBERT SUMCADPANGANIBAN, J.:

FACTS: Private Respondent Sumcad filed a Complaint for illegal dismissal against Petitioner,alleging that he was a regular employee dismissed without cause and proper notice, and prayed forreinstatement to his former position without loss of seniority rights, other privileges and benefits,full back wages from the time of his illegal dismissal until his actual reinstatement, and attorney'sfees. Petitioner claimed that private respondent was a project — not a regular — employee, whoseservices had been fully paid upon the completion of the project. It alleged that the Complaintshould be dismissed.The Labor Arbiter (LA) ruled in favor of Sumcad. Petitioner was ordered to reinstateSumcad to his former position, with payment of full back wages from the time his salary had beenwithheld until his actual reinstatement, pay differential, premium pay for holidays and rest days,

service incentive leaves, and 13th month pay for three (3) years counted backward from the datethe Complaint was filed, as well as attorney's fees. Unconvinced, petitioner appealed to the NLRC.NLRC found Sumcad to be a regular employee and ordered the payment of his back wagesfor one (1) year.NLRC issued an Entry of Judgment certifying that its Resolution had become finaland executory. Petitioner appealed to the CA. The CA held that, the Decision and Resolution,being already final and executory, could no longer be subjected to a new trial and hearing. The CAthen ordered the LA to issue a writ of execution for the immediate reinstatement of privaterespondent and the payment of his back wages. Hence, this Petition.

ISSUE: Whether or not the Court of Appeals may still modify a Final and Executory Decision of theNLRC.

HELD: True, even after a judgment has become final and executory, an appellate court may stillmodify or alter it when intervening circumstances render execution of that decision unjust andinequitable. This principle does not apply, however, when the basis for modification is previouslyexisting evidence that a party fails to adduce during the hearing on the merits, despite ampleopportunity to do so. Here, there are no supervening events that would make the issuance of a writof execution unjust.Settled is the rule that, except for correction of clerical errors, final and executor judgments canneither be amended nor altered, even if the purpose is to correct erroneous conclusions of fact or oflaw. Thus, petitioner cannot be allowed to present evidence again, especially when that which itseeks to present is unnecessary. Under Republic Act No. 6715, an illegally dismissed employee isentitled to full back wages, without any diminution or reduction by earnings derived elsewhere

during the period of illegal dismissal.



ART. 221: TECHNICALITIES ARE NOT STRICTLY APPLIED IN LABOR CASES

PHILIPPINE AIRLINES, INC. vs. ARTHUR B. TONGSON[G.R. No. 153157. October 14, 2003.]SANDOVAL-GUTIERREZ, J.:

FACTS: Jacqueline Tanedo and her family were at counter No. 29 of the Manila Station Internationato check-in for flight No. 102 of PAL bound for Los Angeles, California, when one of its employees

Joseph Arriola, approached her and asked if they have already paid the required travel taxesResponding in the negative, Ms. Tanedo and her family followed Arriola at counter No. 36 for theprocessing of their travel documents and gave him their travel documents and the amount ofP2,000.00 as payment for their discounted travel taxes.He did not issue the corresponding receiptbut issued boarding passes to her children.At about the same time, another PAL employee, Arthur B. Tongson volunteered to assist Ms.Tanedo and her family in completing their travel documents and in obtaining the boarding passesfor her and her husband. Upon receipt of their boarding passes, Ms. Tanedo realized that their seatswere apart from each other. Arriola assured her that the stewardess would make the necessaryarrangement to enable them to be seated together. But when they boarded the plane, no sucharrangement was made. Thus, they opted to take the succeeding flight scheduled the following day

When Ms. Tanedo and her family were checking-in they were again charged the amount ofP3,240.00, representing their travel taxes, which they reluctantly paid. This prompted Ms. Tanedo tofile with the Philippine Airlines, Inc., herein petitioner, a written complaint against Arriola andrespondent Tongson. After a thorough investigation, petitioner charged both Arriola andrespondent Tongson with corruption, extortion and bribery under the company's Code ofDiscipline. Subsequently petitioner conducted clarificatory hearings, but respondent and Arriolafailed to appear despite notice. PAL found them guilty of serious misconduct (corruption, extortionbribery) Respondent filed with the Labor Arbiter a complaint against petitioner for illegal dismissal.After the submission of the parties' pleadings and position papers, the Labor Arbiter rendered aDecision finding respondent guilty of serious misconduct and upholding petitioner's noticedismissing him from the service, which was subsequently affirmed by the NLRC. However theCourt of Appeals reversed it on the ground that "Jacqueline's complaint/report cannot beconsidered as substantial evidence of the commission of corruption by conspiracy for not only wasthis not verified or sworn under oath. Jacqueline was never presented or her deposition taken inorder to give Tongson a chance to cross-examine her. This piece of evidence is thus hearsay and ofno probative value.‖

ISSUE: Whether or not the complaint/report and deposition are hearsay.

HELD: No. The proceedings before the Labor Arbiter and the NLRC are non-litigious in nature asprovided for in Section 6, Rule V of the NLRC Rules of Procedure, as amended. The argument thatthe affidavit is hearsay because the affiants were not presented for cross-examination is notpersuasive because the rules of evidence are not strictly observed in proceedings before

administrative bodies like the NLRC, where decisions may be reached on the basis of positionpapers only. Article 221 of the Labor Code allows the NLRC and the Labor Arbiter to decide a caseon the basis of position papers and other documents submitted by the parties without resorting totechnical rules of evidence as observed in regular courts of justice.



ART. 221:TECHNICAL RULES NOT STRICTLY APPLIED IN LABOR CASES.

PRUDENCIO TANJUAN vs. PHILIPPINE POSTAL SAVINGS BANK, INC[G.R. No. 155278. September 16, 2003.]PANGANIBAN, J.:

FACTS: Petitioner Prudencio Tanjuan was employed by respondent Philippine Postal Savings Bank,Inc. (PPSBI), a government financing institution and a subsidiary of the Philippine Postal

Corporation (Philpost), as Property Appraisal Specialist and Officer-in-Charge of its CreditSupervision and Control Department. Respondent Pedrito Torres, PPSBI President and CEO, issuedMemorandum 145-98 addressed to petitioner and five other employees belonging to its AccountManagement Dept and Credit Supervision and Control Dept. charging them with negligence in theperformance of duties and misrepresentation in violation of the bank‘s rules for approving the applications for loan of Corinthian de Tagaytay and Clavecilla Marine Service. They were given fivedays to submit written explanations. Petitioner submitted his explanation alleging that he merelyvalidated the findings of the Property Appraiser.Respondent Torres informed petitioner of his preventive suspension for a period of 90 daysin view of the pending administrative investigation against him. Petitioner countered that thepreventive suspension should not exceed 30 days as stated in the Labor Code. Respondent Torres

issued OP Order No. 011-99 amending of the order of preventive suspension against the formerfrom 90 days to 30 days.The Board of Directors of PPSBI approved the bank‘s reorganization via retrenchment of employees and re-alignment of functions and positions for the purpose of preventing furtherbusiness losses. Torres wrote a letter addressed to all employees informing them of the impendingreorganization and enjoining them to apply for their desired positions. Petitioner did not apply forany position in the new organizational set-up. Petitioner then received a Notice of Terminationinforming him that his employment shall cease 30 calendar days from date of receipt of notice onthe ground of abolition of the position. Petitioner filed a case of illegal dismissal with moneyclaims.The Labor Arbiter rendered a decision declaring PPSBI guilty of illegal dismissal andordering it to reinstate petitioner to his former position, which may have a new title. Respondentappealed the decision to the NLRC stating that the arbiter hastily decided the case even if they didnot adduce evidence to support their claim of business losses. They presented audited consolidatedstatements of conditions, income and loss statements, statement of financial conditions, and COAannual audit report among other things.NLRC issued a resolution admitting the evidence presented by respondents on appeal andfinding the same adequate to prove the existence of serious business losses. Dissatisfied with theruling of the NLRC, petitioner elevated the case to CA. The CA affirmed the NLRC ruling.

ISSUES:(1) Whether or not the respondent PPSBI is barred from attaching as annexes to theMemorandum on Appeal evidence not submitted to the Labor Arbiter;

(2) Whether or not the petitioner was validly terminated.

HELD:(1) No. It is well settled that the NLRC is not precluded from receiving evidence even forthe first time on appeal, because technical rules of procedure are not binding in labor cases. Thisrule applies equally to both the employee and the employer. In the interest of due process, theLabor Code directs labor officials to use all reasonable means to ascertain the facts speedily andobjectively with little regard to technicalities and formalities. However, delay in the submission ofevidence should be clearly explained and should adequately provide the employer‘s allegation of the cause of termination. In the instant case, the respondents reserved the right to introduceevidence to the labor arbiter, if and when required to do so. Reasons of confidentiality and the



volatile nature of PPSBI‘s business as a banking institution prompted respondents to limit the presentation of evidence at the outset. Indeed it would be foolhardy for the NLRC and the CA toreject the evidence, just because it had not been presented before the labor arbiter. Suchevidence was absolutely necessary to resolve the issue of whether the petitioner‘s employment was validly terminated.(2) Yes. The petitioner was validly terminated on the reason of serious business losses.Both the NLRC and the CA found that the audited financial statements submitted by respondentsadequately supported their claim of actual, real, and substantial losses. The findings of the CA,

affirming those of the NLRC showed real and grave financial reverses, which made downsizing theonly recourse for the bank to follow. Indeed, retrenchment of the petitioner was the consequenceof the bank‘s reorganization and a cost saving device recognized by jurisprudence.

ART. 221: TECHNICALITIES ARE NOT STRICTLY APPLIED IN LABOR CASES

VAN MELLE PHILS. vs. VICTOR M. ENDAYA[G.R. No. 143132. September 23, 2003.]CALLEJO, SR., J.:

FACTS: Victor Endaya filed a Complaint with the National Labor Relations Commission (NLRC)

against Van Melle Phils., Inc. (VMPI) for Illegal Dismissal/Constructive Dismissal. Instead of filingan Answer to the complaint, petitioners filed a motion to dismiss the same on the ground that theSEC, and not the labor arbiter, had jurisdiction over the complaint pursuant to Section 5 of P.D. No902-A. They claimed that the controversy between the complainant and the respondents was anintracorporate controversy, involving as it was the election of a corporate officer of the respondentVMPI.The respondent opposed the motion to dismiss, insisting that the NLRC, not the SEC, had exclusive

jurisdiction over the complaint because his dismissal as president and general manager of therespondent VMPI was not effected through a resolution of the Board of Directors and, therefore, wasnot a corporate act. He averred that his dismissal could not be considered as an intra-corporatecontroversy because no such election or appointment of Niels Have or his representative took placeHe also averred that he was constructively dismissed by his immediate superior because of raciadiscrimination. He insisted that the dispute between him and the respondents was a labor disputewithin the context of Article 212, Paragraph 1 of the Labor Code of the Philippines; hence, the casewas within the exclusive jurisdiction of the NLRC.Labor Arbiter Manuel P. Asuncion issued an order stating that the ground invoked by therespondents therein in their motion to dismiss was treated as a matter of defense considering thatthe intricate issues involved in the said motion were legal and factual, necessitating the presentationof the respective contentions of the parties in evidence. The labor arbiter held the resolution of themotion in abeyance until after the parties submitted their respective position papers.The petitioners filed with the Court of Appeals (CA) a petition for certiorari with a prayer forinjunctive relief against the complainant and the labor arbiter. The CA issued a Resolution denyingdue course and dismissing the petition for failure of the petitioners to comply with Section 3, Rule

46 of the 1997 Rules of Civil Procedure. The petitioners filed a motion for reconsideration of the CAresolution. The CA denied the petitioners' motion for reconsideration. Hence the present petition.

ISSUE: Whether the labor arbiter had exclusive jurisdiction over a complaint involving the electionof a member of the board of directors and a corporate officer, patently an intra-corporatecontroversy between the private respondent and the petitioners, and a matter within the exclusive

jurisdiction of the SEC as provided for in a Sec. 5 of Presidential Decree No. 902-A.

HELD: The petition is meritorious. SC agree with the petitioners that even assuming that the Rulesrequire all attachments to a petition for certiorari to be certified true copies, the CA should havenevertheless taken cognizance of the petition. It has been the consistent holding of the Supreme



Court that cases should be determined on the merits, after full opportunity to all parties forventilation of their causes and defenses, rather than on technicality or some proceduralimperfections. In so doing, the ends of justice would be better served. Rules of procedure are meretools designed to expedite the decision or resolution of cases and other matters pending in court. Astrict and rigid application of the rules that would result in technicalities that tend to frustraterather than promote substantial justice must be avoided.Thus, in dismissing the petition before it, the appellate court clearly put a premium on technicalitiesand simply brushed aside the issue posed by the petitioners — whether the labor arbiter committed

a grave abuse of his discretion amounting to lack or excess of jurisdiction in denying therespondent's motion to dismiss on the ground that the SEC (now the RTC) had exclusive jurisdictionover the said complaint.

PERFECTION OF APPEAL

CORPORATE INN HOTEL, ET AL. vs. JENNEVIE H. LIZOG.R. No. 148279 May 27, 2004SANDOVAL-GUTIERREZ, J.:

FACTS: Corporate Inn Hotel, petitioner, engaged the services of Jennevie Lizo, respondent, as a

probationary account executive. Petitioner received complaints from its clients against her forundesirable conduct. Her performance was evaluated after which she was recommended toundergo an additional training under maximum supervision. Twenty-one (21) days after heremployment, petitioner terminated her services. She filed with the Labor Arbiter a complaint forillegal dismissal and other monetary claims against petitioner.The Labor Arbiter rendered Lizo wasillegally dismissed. On appeal, NLRC dismissed the same for being late. Petitioners filed a motionfor reconsideration but was denied by the NLRC in a Resolution.Petitioners filed with the Court ofAppeals a petition for certiorari. CA affirrmed in toto the NLRC Resolution.

ISSUE: Whether or not, the mandatory 10-day period of perfecting an appeal from the decision ofthe Labor Arbiter may be disregarded.

HELD: No. At the outset, it bears stressing that the right to appeal is a statutory right and one whoseeks to avail of the right must comply with the statute or rules. The NLRC Rules, akin to the Rulesof Court, promulgated by authority of law, have the force and effect of law. Thus, petitioners aremandated to perfect their appeal in the manner and within the period permitted by law and failureto do so renders the judgment of the Labor Arbiter final and executory. Under Article 223 of theLabor Code, a decision of a Labor Arbiter is final and executory unless appealed to the NationalLabor Relations Commission by any or both of the parties within ten (10) days from notice of thesaid Decision. Thus, the perfection of an appeal within the reglementary period for the same is

jurisdictional in character.

BINDING EFFECT OF THE DECISION OF THE NLRC; REDUNDANCY

BONIFACIO ASUFRIN, JR. vs. SAN MIGUEL CORPORATION[G.R. No. 156658. March 10, 2004]YNARES-SANTIAGO:

FACTS: Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC),hired petitioner as a utility/miscellaneous worker. He became a monthly paid employee promotedas Stock Clerk. Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City SalesOffice were reorganized. Several positions were abolished including petitioner‘s position as Stock Clerk. After reviewing petitioner‘s qualifications, he was designated warehouse checker at the Sum-ag Sales Office.



Respondent SMC thereafter wrote a letter to petitioner informing him that, owing to theimplementation of the ―pre-selling operations‖ scheme, all positions of route and warehouse personnel will be declared redundant and the Sum-ag Sales Office will be closed effective April 30,1996. Thereafter, the employees of Sum-ag sales force were informed that they can avail ofrespondent‘s early retirement package pursuant to the retrenchment program, while those who will not avail of early retirement would be redeployed or absorbed at the Brewery or other salesoffices. Petitioner opted to remain and manifested to Acting Personnel Manager Salvador Abadescohis willingness to be assigned to any job, considering that he had three children in college.

Petitioner was surprised when he was informed by the Acting Personnel Manager that hisname was included in the list of employees who availed of the early retirement package.Petitioner‘s request that he be given an assignment in the company was ignored by the Acting Personnel Manager.Petitioner thus filed a complaint for illegal dismissal with the NLRC. The Labor Arbiterdismissed the complaint for lack of merit. Petitioner appealed to the National Labor RelationsCommission (NLRC) which set aside the Labor Arbiter‘s decision and ordered respondent SMC to reinstate petitioner to his former or equivalent position with full backwages. Respondent filed apetition with the Court of Appeals which reversed the decision of the NLRC and reinstated the

judgment of the Labor Arbiter dismissing the complaint for illegal dismissal. Petitioner‘s motion for reconsideration was denied.

ISSUES: Whether or not the dismissal of petitioner is based on a just and authorized cause.

HELD: In the case at bar, petitioner was dismissed on the ground of redundancy, one of theauthorized causes for dismissal. In Dole Philippines, Inc. v. NLRC, citing the leading case ofWiltshire File Co., Inc. v. NLRC, we explained the nature of redundancy as an authorized cause fordismissal thus: ―Redundancy in an employer‘s personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondentheld prior to the termination of his services, does not show that his position had not becomeredundant. Indeed, in any well-organized business enterprise, it would be surprising to findduplication of work and two (2) or more people doing the work of one person. We believe that

redundancy, for purposes of the Labor Code, exists where the services of an employee are in excessof what is reasonably demanded by the actual requirements of the enterprise.The determination that employee‘s services are no longer necessary or sustainable and, therefore, properly terminable is an exercise of business judgment of the employer. The wisdom orsoundness of this judgment is not subject to discretionary review of the Labor Arbiter and theNLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary ormalicious act. In other words, it is not enough for a company to merely declare that it has becomeovermanned. It must produce adequate proof that such is the actual situation to justify thedismissal of the affected employees for redundancy. Respondent ―has not shown how the cessation of operations of the Sum-ag Sales Office contributed to the ways and means of improvingeffectiveness of the organization with the end in view of efficiency and cutting distributionoverhead and other related costs. Respondent, thus, clearly resorted to sweeping generalization[s]in dismissing complainant.‖ It bears stressing that whether it be by redundancy or retrenchment orany of the other authorized causes, no employee may be dismissed without observance of thefundamentals of good faith.To quote what has been aptly stated by former Governor General Leonard Wood in hisinaugural message before the 6th Philippine Legislature on October 27, 1922 ―labor is neither a chattel nor a commodity, but human and must be dealt with from the standpoint of humaninterest.‖ Accordingly, petitioner‘s dismissal is declared illegal, and respondent is ordered toreinstate him to his former or equivalent position, with full backwages computed from date ofdismissal up to his actual reinstatement. Respondent is likewise ordered to pay petitioner the sumequivalent to ten percent (10%) of his total monetary award as attorney‘s fees.



COMPUTATION OF BENEFITS; ASPECTS OF DUE PROCESS

BOLINAO SECURITY AND INVESTIGATION SERVICE, INC. vs. ARSENIO M. TOSTON[G.R. No. 139135. January 29, 2004]SANDOVAL-GUTIERREZ, J.:

FACTS: Arsenio M. Toston, respondent, was employed as a security guard by petitionerEventually, petitioner assigned respondent at the United States Agency for International

Development (USAID) situated Taguig, Metro Manila. While on duty, petitioner was shot byanother guard when informed the latter that he is being investigated in the alleged illegal lottobetting within the company premises.Respondent then filed with petitioner an application for a one month leave of absence aswell as sickness and/or medical benefits. While petitioner approved his one-month leave ofabsence, however, it rejected his claim for benefits. This prompted respondent to file with the SSSan application for sickness/medical benefits. At this instance, he came to know that petitionerfailed to remit to the SSS its monthly contributions for nine (9) consecutive months. Consequently,he reported the matter to the SSS.Lucy Caasi, in-charge of remitting petitioner‘s contributions to the SSS, scolded and rebukedrespondent and told him not to report for work and that his name would be ―dropped from the

rolls.‖ Respondent filed with the Labor Arbiter a complaint against petitioner and its presidentUrbano S. Caasi, Jr., for illegal dismissal and non-payment of wages and other benefits, with prayerfor reinstatement and payment of full backwages. Petitioner sent a letter to respondent declaringhim absent without leave (AWOL). He could not report then for work due to the pendency of hiscomplaint with the Labor Arbiter. After conducting an investigation, USAID submitted its report topetitioner recommending that respondent and Nicolas be relieved from their posts.The Labor Arbiter ordered that respondent was illegally dismissed from employment and orderingpetitioner to reinstate him to his former position and to pay his full backwages. Upon appeal, theNLRC affirmed with modification the Arbiter‘s assailed Decision in the sense that the award ofmoral and exemplary damages was deleted. Petitioner filed a motion for reconsideration but wasdenied. Thereafter, petitioner filed with this Court a petition for certiorari. The Court of Appealsrendered a Decision affirming in toto the NLRC Decision and Resolution. Petitioner filed a motionfor reconsideration but was denied by the Appellate Court. Hence, this petition for review oncertiorari.

ISSUE: Whether or not respondent was illegally dismissed from employment.

HELD: We agree with the Court of Appeals that respondent‘s dismissal from the service waswithout justifiable cause and without notice and hearing as required by the Labor Code and itsImplementing Rules. In the case at bar, there is no showing of a clear, valid and legal cause which

justifies respondent‘s removal from employment. Neither did petitioner serve two written notices to respondent prior to his termination from employment as required by the Labor Code. Clearly,this is a case of illegal dismissal.

It is a settled doctrine that ―the employer has the burden of proving the lawfulness of his employee‘sdismissal. The validity of the charge must be clearly established in a manner consistent with dueprocess. The Implementing Rules of the Labor Code provide that no worker shall be dismissedexcept for a just or authorized cause provided by law and after due process. This provision has twoaspects: (1) the legality of the act of dismissal, that is, dismissal based on the grounds provided byArticle 282 of the Labor Code, and (2) the legality in the manner of dismissal.The illegality of the act of dismissal constitutes discharge without just cause, while illegality in themanner of dismissal is dismissal without due process.‖ Clearly, petitioner failed to discharge itsburden.Respondent who was illegally dismissed from work is actually entitled to reinstatement without lossof seniority rights and other privileges as well as to his full backwages, inclusive of allowances, and



to other benefits or their monetary equivalent computed from the time his compensation waswithheld from him up to the time of his actual reinstatement. However, the circumstances obtainingin this case do not warrant the reinstatement of respondent. Apparently, antagonism caused asevere strain in the relationship between him and petitioner company. A more equitable dispositionwould be an award of separation pay equivalent to at least one month pay, or one month pay forevery year of service, whichever is higher (with a fraction of at least six (6) months being consideredas one (1) whole year), in addition to his full backwages, allowances and other benefits.

ILLEGAL DISMISSAL; ITS CONSEQUENCES

TOMAS CLAUDIO MEMORIAL COLLEGE, INC. vs. COURT OF APPEALS[G.R. No. 152568. February 16, 2004]CALLEJO, SR., J.:

FACTS: Private respondent Pedro Natividad started working with petitioner Tomas ClaudioMemorial College (TCMC) in Morong, Rizal. In time, he was promoted as ―Liason Officer‖ of theschool with the Department of Education, Culture and Sports (DECS) and with the Commission onHigher Education (CHED) with the rank of Assistant Registrar.The private respondent was arrested by the Morong police authorities, without any warrant

therefore, for violation of the Dangerous Drugs Act (Republic Act NO. 6425). A criminal complaintwas later filed against him. A preliminary investigation was conducted by the Municipal Court ofMorong, Rizal which found probable cause to hold him for trial. The court, on the said date, issueda warrant for the private respondent‘s arrest. The petitioner, through its president, Aladdin F.Trinidad, sent a Memorandum to the private respondent informing him that his employment wasalready terminated. The private respondent was thenceforth barred from entering the schoolwithout the petitioner‘s approval. The private respondent posted a bail bond and was released from his detention cell. He did not, however, file any complaint against the petitioner with theNLRC on account of his dismissal. The case was dismissed for lack of merit.The private respondent was arrested anew by police authorities for violation of Section 27,Article III of Rep. Act No. 6425, as amended. On said date, the private respondent posted a bailbond and was released from detention. The private respondent filed a complaint with the NLRCagainst the petitioner for illegal dismissal. The private respondent executed a sworn statementclaiming that (a) there was no factual basis for his dismissal; and (b) he was deprived of his rightsto due process.Acting Executive Labor Arbiter Pedro C. Ramos, rendered a decision dismissing the complaint forlack of legal basis. The private respondent appealed the decision to the NLRC which affirmed thesame. The NLRC also denied the private respondent‘s motion for the reconsideration of the saiddecision. However, on certiorari with the Court of Appeals, the appellate court affirmed, withmodification, the decision of the NLRC, holding that although there was a valid cause for the privaterespondent‘s dismissal, the petitioner did not follow the procedure for the termination of hisemployment. The petitioner‘s motion for reconsideration was denied by the Court of Appeals.

ISSUE: Whether or not private respondent was illegally dismissed thus entitling him to backwages.

HELD: 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 ofseniority rights and secondly, the payment of backwages corresponding to the period from hisillegal dismissal up to actual reinstatement. The statutory intent on this matter is clearlydiscernible. Reinstatement restores the employee who was unjustly dismissed to the position fromwhich he was removed, that is, to his status quo ante dismissal, while the grant of backwages allowsthe same employee to recover from the employer that which he had lost by way of wages as a resulof his dismissal. These twin remedies-reinstatement and payment of backwages – make thedismissed 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 tenureThe two forms of relief are distinct and separate, one from the other. Though the grant ofreinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other.The award of backwages is not conditioned on the employee‘s ability or inability to, in the interimearn any income. While it may be true that the private respondent was detained in Criminal CaseNo. 5137, the State Prosecutor found no probable cause for the detention of the private respondentand resolved to dismiss the case. The private respondent has not yet been convicted by final

judgment in Criminal Case No. 5251. Indeed, he is presumed innocent until his guilt is provedbeyond reasonable doubt.

FINDINGS OF FACT OF CA; WHEN BINDING TO THE SUPREME COURT

GALLERA DE GUISON HERMANOS, INC., ET AL. vs. MA. ASUNCION C. CRUZG.R. No. 159390 June 10, 2004TINGA, J.:

FACTS: Private respondent Ma. Asuncion G. Cruz was a cashier and stockholder of PetitionerGallera de Guison Hermanos, Inc. Gallera is engaged in the operation and maintenance of a cockpit

arena in Quezon City and petitioners Carlos H. Reyes, Sr. and Pacita G. Reyes are the chairman ofthe Board of Directors and President, respectively thereof. Private respondent wrote Gallerarequesting that she be assigned as Liaison Officer. Atty. Sumawang, Gallera‘s counsel, informed her through a letter that the Board is not in a legal position to consider the request because anemployee cannot be appointed to another position which would result in the reduction of hisexisting salary and that the duties and responsibilities of a Liaison Officer are already beingperformed by some of the management staff.Due to the alleged ill treatment and harassment by the management, the latter procured amedical certificate and went on sick leave. Atty. Sumawang, wrote private respondent to reportfor work on a no work no pay basis in the meantime that the management is studying to whichposition private respondent will be transferred. In 22 payrolls, she was designated as liason officer.Her designation as liason officer was removed. Thereafter, the private respondent did not reportfor work. Nevertheless, she was asked to return to work on a ―no work, no pay basis,‖ except the allowances and other cash entitlements to the position. Private respondent filed with theDepartment of Labor, NCR, a complaint for illegal dismissal. Meanwhile, Galera (sic) notifiedprivate respondent thru a letter that the latter should report for work and explain why privaterespondent has not been reporting for work. The labor arbiter issued a decision declaring privaterespondent to have been illegally dismissed.

ISSUE: Whether or not Cruz was dismissed for cause.

HELD: Indeed, the instant petition raises a fundamental factual issue which has already beenexhaustively discussed and passed upon by the Labor Arbiter and the Court of Appeals which ruled

that Cruz was illegally dismissed and the dismissal was attended by bad faith on the part of thepetitioners; hence, the petitioners are solidarily liable for Cruz‘ monetary claims consisting of separation pay, backwages and attorney‘s fees. We stated then, ―time and again the much-repeated but not so well-heeded rule thatfindings of fact of the Court of Appeals, particularly where it is in absolute agreement with that ofthe NLRC and the Labor Arbiter, as in this case, are accorded not only respect but even finality andare deemed binding upon this Court so long as they are supported by substantial evidence.‖ We reiterate the statement in this case. After a careful consideration of the records of this case, wefind no reason to disturb the unanimous findings and conclusions of the Court of Appeals, NLRCand the Labor Arbiter.



VALIDITY OF COMPROMISE AGREEMENTS

R & E TRANSPORT, INC. vs. AVELINA P. LATAG, rep.her deceased husband, PEDRO MLATAG[G.R. No. 155214. February 13, 2004]PANGANIBAN:

FACTS: Pedro Latag was a regular employee of La Mallorca Taxi. When La Mallorca ceased from

business operations, Latag transferred to R & E Transport, Inc. He was receiving an average dailysalary of five hundred pesos (P500.00) as a taxi driver. Latag got sick and was forced to apply forpartial disability with the SSS, which was granted. When he recovered, he reported for work butwas no longer allowed to continue working on account of his old age. He asked Felix Fabros, theadministrative officer of petitioners, for his retirement pay pursuant to Republic Act 7641 but hewas ignored. Thus, he filed a case for payment of his retirement pay before the NLRC. Lataghowever died and subsequently, his wife, Avelina Latag, substituted him. The Labor Arbiterrendered a decision in favor of Latag.Respondent Avelina Latag, with her then counsel, was invited to the office of petitioners‘ counseand was offered the amount of P38,500.00, which she accepted. Respondent was also askedto sign an already prepared quitclaim and release and a joint motion to dismiss the case.

Thereafter, the Labor Arbiter issued an order that decision stands and the Labor ArbitrationAssociate is directed to prepare the Writ of Execution in due course.Petitioners interposed an appeal before the NLRC which the latter dismissed for failure topost a cash or surety bond, as mandated by law. Petitioners filed a motion for reconsideration ofthe above resolution. The NLRC came out with the assailed decision, which gave due course to themotion for reconsideration. Respondent appealed to the CA, contending that under Article 223 ofthe Labor Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employer‘s appeal of a decision involving monetary awards may be perfected only upon the posting of anadequate cash or surety bond.According to the appellate court, because petitioners‘ appeal before the NLRC was not accompanied by an appropriate cash or surety bond, such appeal was not perfected. The CA thusruled that the labor arbiter‘s January 10, 2000 Decision and May 23, 2000 Order had already become final and executory. Hence, this Petition.

ISSUES:1. Whether the CA acted properly when it overturned the NLRC‘s factual findings. 2. Whether the labor arbiter‘s Order of May 23, 2000 involved a monetary award.

HELD: The Petition is partly meritorious.(1) The power of the CA to review NLRC decisions via a Rule 65 petition is now a settledissue. As early as St. Martin Funeral Homes v. NLRC, we have definitively ruled that the properremedy to ask for the review of a decision of the NLRC is a special civil action for certiorari underRule 65 of the Rules of Court, and that such petition should be filed with the CA in strict

observance of the doctrine on the hierarchy of courts. Moreover, it has already been explained thatunder Section 9 of Batas Pambansa 129, as amended by Republic Act 7902, the CA -- pursuant tothe exercise of its original jurisdiction over petitions for certiorari -- was specifically given thepower to pass upon the evidence, if and when necessary, to resolve factual issues.Likewise settled is the rule that when supported by substantial evidence, factual findingsmade by quasi-judicial and administrative bodies are accorded great respect and even finality bythe courts. These findings are not infallible, though; when there is a showing that they werearrived at arbitrarily or in disregard of the evidence on record, they may be examined by thecourts. Hence, when factual findings of the NLRC are contrary to those of the labor arbiter, theevidentiary facts may be reviewed by the appellate court. Such is the situation in the present case;thus, the doors to a review are open.



As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate courtcommitted no error when it ruled that the document was invalid and could not bar her fromdemanding the benefits legally due her husband. This is not say that all quitclaims are invalid perse. Courts, however, are wary of schemes that frustrate workers‘ rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Courts have stepped in to annulquestionable transactions, especially where there is clear proof that a waiver, for instance, waswangled 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. (2) We cannot concur, however, in petitioners‘ other contention that the May 23, 2000 Order did notinvolve a monetary award. The rules implementing the New Retirement Law similarly provide theformula for computing the one-half month salary. Since Pedro was paid according to the―boundary‖ system, he is not entitled to the 13th month and the service incentive pay; hence, hisretirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers donot receive fixed wages, but retain only those sums in excess of the ―boundary‖ or fee they pay tothe owners or operators of their vehicles. Thus, the basis for computing their benefits should be theaverage daily income. In this case, the CA found that Pedro was earning an average of five hundred

pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years ofservice equals P105,000. Compared with this amount, the P38,850 he received, which represented

just over one third of what was legally due him, was unconscionable.As amended, this provision explicitly provides that an appeal from the labor arbiter‘s decisionaward or order must be made within ten (10) calendar days from receipt of a copy thereof by theparty intending to appeal it; and, if the judgment involves a monetary award, an appeal by theemployer may be perfected only upon the posting of a cash or surety bond. Nonetheless, proceduralapses may be disregarded because of fundamental considerations of substantial justice or becauseof the special circumstances of the case combined with its legal merits or the amount and the issueinvolved.

PAYMENT OF APPEAL BOND

FILIPINAS SYSTEMS "FILSYSTEMS," INC. vs. NATIONAL LABOR RELATIONSCOMMISSION[G.R. No. 153859. December 11, 2003.]QUISUMBING J.:

FACTS: A complaint for illegal dismissal and monetary claims for service incentive leave, 13thmonth pay and night shift differential was filed by respondents against petitioners before theNational Labor Relations Commission. The complaint was assigned to Labor Arbiter Donato G.Quinto, Jr. who ordered the parties to file their position paper. Respondents complied, but not thepetitioners despite several warnings and time extensions. The inaction was construed as a waiver

by petitioners of their right to present evidence.The Labor Arbiter decided the complaint on the merit and ruled in favor of respondents. Hesustained their claim of illegal dismissal as petitioners failed to adduce contrary evidence.Petitioners were ordered to reinstate respondents. The monetary claims of the respondents werelikewise granted.Petitioners appealed to the National Labor Relations Commission. For the first time, theysubmitted evidence that respondents were project employees and that their dismissal was due tothe discontinuation of the Jaka Tower I project where they were assigned. Respondents, however,assailed the jurisdiction of the NLRC over the appeal for failure of the petitioners to file the appealbond within the ten (10)-day reglementary period. They further contended that it was too late forpetitioners to present evidence in the NLRC. The NLRC nevertheless assumed jurisdiction over the



appeal. Due to the evidence presented by petitioners on the issue of illegal dismissal, it remandedthe case to the Labor Arbiter for further proceedings. Respondents' motion for reconsideration wasdenied.Respondents then repaired to the Court of Appeals on a Petition for Certiorari. Theappellate court ruled that the NLRC did not have jurisdiction over the appeal since the appeal bondof the petitioners was filed out of time. It reinstated the decision of the Labor Arbiter. Petitioners'motion for reconsideration proved futile.

ISSUE: Whether or not the Court of Appeals erred and committed grave abuse of discretion infinding and ruling that the NLRC has not acquired jurisdiction on the appeal of the petitioners forsubmitting an appeal bond seven (7) days beyond the ten (10)-day reglamentary period inperfecting an appeal;

HELD: Payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal tothe NLRC. It is only in rare instances that the court relaxes the rule upon a showing of substantialcompliance with it and to prevent patent injustice.In the case at bar, petitioners alleged that they received a copy of the Arbiter's decision onOctober 31, 1998. Their memorandum of appeal was dated November 9, 1998, but their appealbond to stay execution of the decision was executed only on November 17, 1998. The records show

no partial payment of the bond was made during the reglementary period nor was there anyexplanation for its late filing. Given these facts, the late filing of the bond divested the NLRC of its jurisdiction to entertain petitioners' appeal.Likewise, we cannot countenance the late submission of petitioners' evidence with theNLRC. Petitioners should have adduced their evidence on the issue of illegal dismissal before theLabor Arbiter. They failed to do so despite the opportunities given to them by the Arbiter. It wasonly when an adverse decision was rendered against them by the Arbiter that they offered tosubmit their evidence before the NLRC refuting respondents' complaint of illegal dismissal. Such apractice cannot be tolerated for it will defeat the speedy administration of justice involving ourpoor workers. Moreover, it smacks of unfairness. Petitioners should have filed the present petitionwithin fifteen days under Rule 45 of the Rules of Court.

FINALITY OF DECISION

KING INTEGRATED SECURITY SERVICES, INC. vs. GALO S. GATAN[G.R. No. 143813. July 7, 2003.]CALLEJO, SR., J.:

FACTS: Galo S. Gatan, respondent, filed with the Labor Arbiter a complaint for illegal deductionand underpayment of wages against King Integrated Security Services, Inc. and/or MinaKing.Eventually, the Labor Arbiter rendered a decision in favor of Gatan. On appeal, the NationalLabor Relations Commission (NLRC) issued a Resolution modifying the Labor Arbiter's Decision bydeleting the amount representing respondent's wage differential for the period from November 2,

1990 to February 10, 1992, pursuant to Article 291 of the Labor Code which provides that all moneyclaims arising from employer-employee relations shall be filed within three (3) years from the timethe cause of action accrued, otherwise, they shall be forever barred.The NLRC Resolution, having become final and executory, the Labor Arbiter issued an orderdirecting the issuance of a writ of execution. From this order, petitioners interposed an appeal tothe NLRC, but it was dismissed. Their motion for reconsideration was denied. Forthwith,petitioners filed with the Court of Appeals a petition for certiorari assailing the NLRC Resolutiondismissing their appeal. The Court of Appeals dismissed the petition and affirmed withmodification the Resolutions of the NLRC. Petitioners filed a motion for partial reconsideration butit was denied for lack of merit.



ISSUE: Whether or not petitioner has the right to appeal.

HELD: The petition lacks merit. We have ruled that an order of execution of a final and executory judgment is not appealable, otherwise, there would be no end to a case.In Fabular vs. Court of Appeals, 6 we held: "The judgment in this case had long becomefinal and had in fact, been executed. It is now beyond the power of the lower court, or of thisCourt for that matter, to modify the same. Settled is the rule that after a judgment has becomefinal, no additions can be made thereto, and nothing can be done therewith except its execution;

otherwise, there would be no end to litigations, thus setting at naught the main role of courts of justice, which is to assist in the enforcement of the rule of law and the maintenance of peace andorder, by setting justiceable controversies with finality."

WHEN JUDGEMENT HAS BECOME FINAL AND EXECUTORY

SOLIDBANK CORPORATION vs. COURT OF APPEALS and GERARDO A. GARCIAPUNO, J.:

FACTS: Private respondent Garcia is petitioner‘s documentation clerk and signature control, thehighest rank position of a check verifier. Garcia cleared three different Solidbank checks which

turned out to be forgeries. Petitioner found Garcia responsible for clearing the forged checks andinformed him that his employment is being terminated for cause.Garcia filed a complaint for illegal dismissal before the NLRC Arbitration Branch. He allegedthat he was charged with syndicated forgery and falsification without investigation and hearing,and the charge was not even established. He added that he was terminated without just cause andin violation of his right to due process. He prayed for separation pay, backwages, moral damages,attorney's fees and the cost of suit. Labor Arbiter rendered a decision dismissing Garcia's complaintfor lack of merit. Garcia appealed to the NLRC, which partially granted the appeal, ruling thatGarcia was illegally dismissed but limited the award of backwages to only one year as it found thathe "is not entirely faultless, as there was some sort of neglect on his part on the performance of hisduties."Petitioner appealed with the Court of Appeals by filing a special civil action for certioraribut the appellate court decided instead to grant Garcia full backwages.ISSUE: Whether or not the CA erred when it increased the original award of the NLRC consideringsuch award was never elevated on appeal or by certiorari by private respondent.HELD: Yes. The well-settled rule with respect to civil cases is that a party who has not appealedfrom a decision cannot seek any relief other than what is provided in the judgment appealed from.An appellee who has himself not appealed may not obtain from the appellate court any affirmativerelief other than the ones granted in the decision of the lower court. There are, however,exceptions to the rule.The NLRC granted backwages but limited it to a period of one year after it found that"there was some sort of neglect on his part in the performance of his duties." Given this finding, hisfailure to contest the limited award is fatal. It had the effect of an admission that he was not

entirely fault-free in carrying out his duties and that he was accepting the one-year award, andrelinquishing his claim for full backwages, due to such neglect. The ruling therefore of the NLRCthat he was entitled to only a year of backwages due to some neglect became binding and final tohim and can no longer be modified.



EXHAUSTION OF REMEDIES

UNIVERSITY OF IMMACULATE CONCEPCION, ET AL. vs.YOLIBELLE S. AVINANTE, ET ALG.R. No. 143557 June 25, 2004SANDOVAL-GUTIERREZ J.:

FACTS: Avinante, Labor and Employment Officer III sent to the University of ImmaculateConcepcion, a notice requesting the inspection of its payroll, proof of payment to its employees

and a record of its capital and total assets. Upon receipt, petitioner's directress, Sister Maria Jacinta De Belen, RVM filed a motion seeking to enjoin respondent Avinante from inspecting itsrecords. Despite petitioners' motion, respondent Avinante proceeded with her inspection. But shewas refused access to petitioners' records, so she issued a "Notice of Inspection Results," specifyingthe violations against labor law as well as occupational safety and health standard laws committedby petitioners. They then filed an opposition to this Notice.The Regional Director of Regional Office No. XI issued an Order finding petitioners liable forviolation of the above laws and directing them to pay by way of restitution to their 193 employees.Petitioners filed a motion for reconsideration but was denied by the Regional Director. On appeal,the Office of the DOLE Secretary with modification the assailed Orders. Petitioners filed a motionfor reconsideration but was denied.

This prompted petitioners to file a petition for certiorari with this Court which we referredto the Court of Appeals which the Court of Appeals dismissed the petition for being late. Petitionersfiled a motion for reconsideration, however, the same was denied by the Appellate Court.

ISSUE: Whether or not the Court of Appeals erred in dismissing the petition for certiorari for beinglate.

HELD: The filing of a petition for certiorari before the Supreme Court (now before the Court ofAppeals pursuant to the ruling in St. Martin's Funeral Home vs. NLRC) shall not stay the executionof the order or decision unless the aggrieved party secures a temporary restraining order from theCourt within fifteen (15) calendar days from the date of finality of the order or decision or posts asupersedeas bond in an amount which is adequate to protect the interests of the prevailing partysubject to the approval of the Secretary."In National Federation of Labor vs. Laguesma, we ruled that "the remedy of an aggrievedparty in a Decision or Resolution of the Secretary of the DOLE is to timely file a motion forreconsideration as a precondition for any further or subsequent remedy, and then seasonably file aspecial civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure." Under thisRule, petitioners should have filed their petition for certiorari within 60 days from receipt of theDOLE Secretary's Order denying their first motion for reconsideration.Suffice it to say that even if petitioners' second motion is in order, however, it is a proforma motion. As aptly stated by the Court of Appeals, "the second motion for reconsideration filedby petitioners was a mere reiteration of the arguments raised in their first motion forreconsideration and passed upon." In Vda de Espina vs. Abaya, we held that a second motion for

reconsideration, being pro-forma, does not suspend the period to file a petition for certiorari.Furthermore, the second motion for reconsideration has not stated new grounds.



DUTY TO BARGAIN

GENERAL MILLING CORPORATION vs. COURT OF APPEALS[G.R. No. 146728. February 11, 2004]QUISUMBING J.:

FACTS: In its two plants located at Cebu City and Lapu-Lapu City, petitioner General MillingCorporation (GMC) employed 190 workers. They were all members of private respondent General

Milling Corporation Independent Labor Union (union, for brevity), a duly certified bargainingagent. GMC and the union concluded a collective bargaining agreement (CBA) which included theissue of representation effective for a term of three years. The CBA was effective for three yearsretroactive to December 1, 1988. Hence, it would expire on November 30, 1991. On November 29,1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with a requestthat a counter-proposal be submitted within ten (10) days. As early as October 1991, however, GMChad received collective and individual letters from workers who stated that they had withdrawnfrom their union membership, on grounds of religious affiliation and personal differences. OnDecember 16, 1991, GMC wrote a letter to the union‘s officers stating that it felt there was no basis tonegotiate with a union which no longer existed. On January 13, 1992, GMC dismissed MarciaTumbiga, a union member, on the ground of incompetence. The union protested and requested

GMC to submit the matter to the grievance procedure provided in the CBA. GMC, however, advisedthe union to ―refer to our letter dated December 16, 1991.‖ Thus, the union filed a complaint againstGMC with the NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor practiceon the part of GMC. The labor arbiter dismissed the case with the recommendation that a petitionfor certification election be held to determine if the union still enjoyed the support of the workersThe union appealed to the NLRC. The NLRC held that respondent union remained as the exclusivebargaining agent with the right to renegotiate the economic provisions of the CBA. Consequently, itwas unfair labor practice for GMC not to enter into negotiation with the union. On GMC‘s motionfor reconsideration, the NLRC set aside its decision. Hence, the union filed a petition for certioraribefore the Court of Appeals. The appellate court rendered a decision which granted the petition ofthe union. A motion for reconsideration was seasonably filed by GMC but the CA denied it for lackof merit.

ISSUES: Whether or not the Court of Appeals acted with grave abuse of discretion amounting tolack or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating the dutyto bargain collectively and/or interfering with the right of its employees to self-organization, and (2)imposing upon GMC the draft CBA proposed by the union for two years to begin from theexpiration of the original CBA.

HELD: The law mandates that the representation provision of a CBA should last for five years. Therelation between labor and management should be undisturbed until the last 60 days of the fifthyear. Hence, it is indisputable that when the union requested for a renegotiation of the economicterms of the CBA on November 29, 1991, it was still the certified collective bargaining agent of the

workers, because it was seeking said renegotiation within five (5) years from the date of effectivityof the CBA on December 1, 1988. The union‘s proposal was also submitted within the prescribed 3-year period from the date of effectivity of the CBA, albeit just before the last day of said period. Itwas obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. Forrefusing to send a counter-proposal to the union and to bargain anew on the economic terms of theCBA, the company committed an unfair labor practice under Article 248 of the Labor Code. Theduty to bargain collectively means the performance of a mutual obligation to meet and convenepromptly and expeditiously in good faith for the purpose of negotiating an agreement. Good faith orbad faith is an inference to be drawn from the facts. Both parties are required to perform theirmutual obligation to meet and convene promptly and expeditiously in good faith for the purpose ofnegotiating an agreement. The union lived up to this obligation when it presented proposals for a



new CBA to GMC within three (3) years from the effectivity of the original CBA. But GMC failed inits duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence ofthe union and the status of its membership to prevent any negotiation. Failing to comply with themandatory obligation to submit a reply to the union‘s proposals, GMC violated its duty to bargaincollectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commigrave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is, underthe circumstances, guilty of unfair labor practice. Finally, did the CA gravely abuse its discretionwhen it imposed on GMC the draft CBA proposed by the union for two years commencing from the

expiration of the original CBA? The provision mandates the parties to keep the status quo while theyare still in the process of working out their respective proposal and counter proposal. The generalrule is that when a CBA already exists, its provision shall continue to govern the relationshipbetween the parties, until a new one is agreed upon. The rule necessarily presupposes that all otherthings are equal. That is, that neither party is guilty of bad faith. However, when one of the partiesabuses this grace period by purposely delaying the bargaining process, a departure from the generarule is warranted. Since it was GMC which violated the duty to bargain collectively, it had lost itsstatutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by theunion.

SURFACE BARGAINING; BLUE-SKY BARGAINING

STANDARD CHARTERED BANK EMPLOYEES UNION vs.MA. NIEVES R. CONFESOR, ETAL.G.R. No. 114974 June 16, 2004CALLEJO, SR., J.:

FACTS: Standard Chartered Bank is a foreign banking corporation doing business in thePhilippines. The exclusive bargaining agent of the rank and file employees of the Bank is theStandard Chartered Bank Employees Union. The Bank and the Union signed a five-year collectivebargaining agreement (CBA) with a provision to renegotiate the terms thereof on the third yearPrior to the expiration of the three year period but within the sixty-day freedom period, the Unioninitiated the negotiations. The Bank took note of the Union‘s proposals. The Bank attached itscounter-proposal to the non-economic provisions proposed by the Union. Before thecommencement of the negotiation, the Union suggested that the bank lawyers should be excludedfrom the negotiating team. The Bank acceded. Meanwhile, the Bank suggested that Umali, thePresident of the National Union of Bank Employees (NUBE), be excluded from the Union‘snegotiating panel. However, Umali was retained as a member thereof.The parties met and set the ground rules for the negotiation. Both parties agreed to place thenotation ―DEFERRED/DEADLOCKED on items that remained unresolved.‖ Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to beincluded in the total economic package. Umali replied that it was impossible to do so because theBank‘s counter-proposal was unacceptable. The Union declared a deadlock and filed a Notice ofStrike before the National Conciliation and Mediation Board (NCMB).

On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages beforethe Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila. The Bankalleged that the Union violated its duty to bargain, as it did not bargain in good faith. It contendedthat the Union demanded ―sky high economic demands,‖ indicative of blue-sky bargaining.The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint overwhich the SOLE assumed jurisdiction. After the parties submitted their respective position papersthe SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both partiesfailed to substantiate their claims. Dissatisfied, the Union filed a motion for reconsideration withclarification, while the Bank filed a motion for reconsideration. The SOLE issued a Resolutiondenying the motions. The Union filed a second motion for reconsideration, which was, likewisedenied.



The Bank and the Union signed the CBA. Immediately thereafter, the wage increase was effectedand the signing bonuses based on the increased wage were distributed to the employees covered bythe CBA. The Office of the Solicitor General, in representation of the public respondent, prayed thathe petition be dismissed. It asserted that the Union failed to prove its ULP charges and that thepublic respondent did not commit any grave abuse of discretion in issuing the assailed order andresolutions.

ISSUES:

1. Whether or not the Bank is guilty of ―interference‖ with its choice of negotiator; surfacebargaining; making bad faith non-economic proposals; and refusal to furnish the Union with copiesof the relevant data;2. Whether or not the public respondent acted with grave abuse of discretion amounting to lack orexcess of jurisdiction when she issued the assailed order and resolutions; and,3. Whether or not the petitioner is estopped from filing the instant action.

HELD:The petition is bereft of merit.(1) Article 248(a) of the Labor Code, considers it an unfair labor practice when an employerinterferes, restrains or coerces employees in the exercise of their right to self-organization or the

right to form association. The right to self-organization necessarily includes the right to collectivebargaining.Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union toexclude from its panel of negotiators a representative of the Union, and if it can be inferred that theemployer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees, ULP under Article 248(a) inconnection with Article 243 of the Labor Code is committed. In order to show that the employercommitted ULP under the Labor Code, substantial evidence is required to support the claimSubstantial evidence has been defined as such relevant evidence as a reasonable mind might acceptas adequate to support a conclusion. In the case at bar, the Union bases its claim of interference onthe alleged suggestions of Diokno to exclude Umali from the Union‘s negotiating panel. The

complaint was made only after a deadlock was declared by the Union. It is clear that such ULPcharge was merely an afterthought. The Duty to Bargain Collectively Surface bargaining is defined as―going through the motions of negotiating‖ without any legal intent to reach an agreement. Theminutes of meetings do not show that the Bank had any intention of violating its duty to bargainwith the Union. The Union has not been able to show that the Bank had done acts, both at and awayfrom the bargaining table, which tend to show that it did not want to reach an agreement with theUnion or to settle the differences between it and the Union. Admittedly, the parties were not able toagree and reached a deadlock. However, it is herein emphasized that the duty to bargain ―does notcompel either party to agree to a proposal or require the making of a concession.‖ Hence, theparties‘ failure to agree did not amount to ULP under Article 248(g) for violation of the duty tobargain. The records show that the Bank‘s counterproposals on the non-economic provisions orpolitical provisions did not put ―up for grabs‖ the entire work of the Union and its predecessorsWe, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish theinformation it needed. The Union, did not, as the Labor Code requires, send a written request for theissuance of a copy of the data about the Bank‘s rank and file employees. Moreover, as alleged by theUnion, the fact that the Bank made use of the aforesaid guestimates, amounts to a validation of thedata it had used in its presentation.

(3) No Grave Abuse of Discretion On the Part of the Public Respondent While it is true that ashowing of prejudice to public interest is not a requisite for ULP charges to prosper, it cannobe said that the public respondent acted in capricious and whimsical exercise of judgment,equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the publicrespondent exercised its power in an arbitrary and despotic manner by reason of passion orpersonal hostility.



(3) Estoppel not ApplicableThe respondent Bank argues that the petitioner is estopped from raising the issue of ULPwhen it signed the new CBA.In the case, however, the approval of the CBA and the release of signing bonus do notnecessarily mean that the Union waived its ULP claim against the Bank during the past negotiations.After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonuswas included in the CBA itself. Moreover, the Union twice filed a motion for reconsiderationrespecting its ULP charges against the Bank before the SOLE.

The Union Did Not Engage In Blue-Sky BargainingWe, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining ormaking exaggerated or unreasonable proposals. The Bank failed to show that the economicdemands made by the Union were exaggerated or unreasonable. The minutes of the meeting showthat the Union based its economic proposals on data of rank and file employees and the prevailingeconomic benefits received by bank employees from other foreign banks doing business in thePhilippines and other branches of the Bank in the Asian region.In sum, we find that the public respondent did not act with grave abuse of discretion amounting tolack or excess of jurisdiction when it issued the questioned order and resolutions. While theapproval of the CBA and the release of the signing bonus did not estop the Union from pursuing itsclaims of ULP against the Bank, we find the latter did not engage in ULP. We, likewise, hold that the

Union is not guilty of ULP.

CBA; SIGNING BONUS

PHILACOR vs. COURT OF APPEALS, ET AL.[G.R. No. 149434. June 3, 2004.]YNARES-SANTIAGO, J.:

FACTS: Petitioner is a domestic corporation where respondent United Philacor Workers Union-NAFLU is the duly elected collective bargaining representative of the rank-and-file employees ofpetitioner. During the collective bargaining negotiations between petitioner and respondent union,petitioner offered P4,000.00 to each employee as an "early conclusion bonus." Upon conclusion ofthe CBA negotiations, petitioner accordingly gave this early signing bonus. Respondent union sentnotice to petitioner of its desire to negotiate a new CBA. Petitioner and respondent union begantheir negotiations. But a deadlock was declared.On a conciliation and mediation conference before Conciliator Velasco, there were eighteenunresolved items between petitioner and respondent union. The parties agreed on fourteen items,leaving wages, rice subsidy, signing, and retroactive bonus unresolved. A strike was staged andlasted for eleven days and resulted in the stoppage of manufacturing operations as well as losses forpetitioner. Labor Secretary Bienvenido Laguesma assumed jurisdiction over the dispute and issueda return to work order. Secretary Laguesma further issued that the signing bonus should be given aspart of the incentive and benefits. Petitioner filed a Partial Motion for Reconsideration stating thatwhile it accepted the decision of Secretary Laguesma, it took exception to the award of the signing

bonus. Sec. Laguesma denied petitioner's motion. A Petition for Certiorari with the Court ofAppeals was dismissed. The award of the signing bonus was affirmed. Petitioner filed a Motion forReconsideration but the same was denied.

ISSUE: Whether or not, the signing bonus should be included as a part of the incentives although noCBA was renewed by the parties.

HELD: The petition is meritorious. Petitioner invokes the doctrine laid down in the case of Caltex v.Brillantes, where it was held that the award of the signing bonus by the Secretary of Labor waserroneous. The said case involved similar facts and circumstances. However, as clearly explained byCaltex, a signing bonus may not be demanded as a matter of right. If it is not agreed upon by the



parties or unilaterally offered as an additional incentive by Caltex, the condition for awarding itmust be duly satisfied. In the present case, the condition sine qua non for its grant — a non-strike — was not complied with. In the case at bar, two things militate against the grant of the signing bonusfirst, the non-fulfillment of the condition for which it was offered, i.e., the speedy and amicableconclusion of the CBA negotiations; and second, the failure of respondent union to prove that thegrant of the said bonus is a long established tradition or a "regular practice" on the part of petitionerPetitioner admits, and respondent union does not dispute, that it offered an "early conclusionbonus" or an incentive for a swift finish to the CBA negotiations. Verily, a signing bonus is justified

by and is the consideration paid for the goodwill that existed in the negotiations that culminated inthe signing of a CBA.Furthermore, we have consistently ruled that a bonus is not a demandable and enforceableobligation. True, it may nevertheless be granted on equitable considerations as when the giving ofsuch bonus has been the company's long and regular practice. To be considered a "regular practice,"however, the giving of the bonus should have been done over a long period of time, and must beshown to have been consistent and deliberate. The test or rationale of this rule on long practicerequires an indubitable showing that the employer agreed to continue giving the benefits knowingfully well that said employees are not covered by the law requiring payment thereof.

INTERPRETATION OF THE CBA

MINDANAO STEEL CORPORATION vs. MINSTEEL FREE WORKERS ORGANIZATION(MINFREWO-NFL)[G.R. No. 130693. March 4, 2004]SANDOVAL-GUTIERREZ, J.:

FACTS: Mindanao Steel Corporation and Minsteel Free Workers Organization MINFREWO-NFLCagayan de Oro City executed a collective bargaining agreement (CBA) providing for an increase ofP20.00 in the workers‘ daily wage. Petitioner refused to implement the Interim Wage Order No. RX-02, prompting respondent to file with the National Mediation and Conciliation Board (NCMB) acomplaint for payment of ECOLA against the former. Then the parties, in a Submission Agreementagreed to submit the case for voluntary arbitration. After the parties had submitted their positionpapers and other pleadings, the Voluntary Arbitrator rendered a decision ordering petitioner to payrespondent‘s members and other workers their ECOLA. Petitioner then filed a motion forreconsideration but was denied.Thereafter, petitioner filed with the Court of Appeals a petition for certiorari with prayer forissuance of a temporary restraining order and/or writ of preliminary injunction. The AppellateCourt promulgated its Decision affirming the Voluntary Arbitrator‘s Decision The Court of Appeals issued a Resolution denying petitioner‘s motion for reconsideration. Hence, this petition for review on certiorari.

ISSUE: Whether or not petitioner is exempt from paying the ECOLA in light of the CBA enteredinto by the parties.

HELD: Petitioner‘s contentions lack merit. To begin with, any doubt or ambiguity in the contract between management and the unionmembers should be resolved in the light of Article 1702 of the Civil Code which provides: ―(I)n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety anddecent living for the laborer.‖ Pertinent is Section 3, Article VII of the CBA which provides: ―It is hereby agreed that these salaryincreases shall be exclusive of any wage increase that may be provided by law as a result of anyeconomic change.‖ The provision is clear that the salary increases, such as the P20.00 providedunder the CBA, shall not include any wage increase that may be provided by law as a result of anyeconomic change. Hence, aside from the P20.00 CBA wage increase, respondent‘s members are also



entitled to the ECOLA under the Interim Wage Order. The CBA provision under Section 3, ArticleVII needs no interpretation. Contracts which are not ambiguous are to be interpreted according totheir literal meaning and not beyond their obvious intendment.Finally, the P20.00 daily wage increase granted by petitioner to its employees under the CBA can notbe considered as creditable benefit or compliance with the Interim Wage Order because such wasintended as a CBA or negotiated wage increase and not ―because of, or in anticipation of the fueprice hikes.‖ Note:

Category for Establishment Amount of ECOLA1. With not more than 20 employees P200 / month2. With 21 but not more than 150 employees P300 / month3. With 151 but not more than 300 employees P400 / month4. With more than 300 employees P500 / month

ART. 218 JURISDICTION OF THE SECRETARY OF LABOR

SMC QUARRY 2 WORKERS UNION — FEBRUARY SIX MOVEMENT vs.TITAN MEGABAGS INDUSTRIAL CORP.G.R. No. 150761 May 19, 2004SANDOVAL-GUTIERREZ, J.:

FACTS: The controversy at bar arose from a petition for certification election filed with the Med-Arbitration Section, Regional Office No. IV, Department of Labor and Employment (DOLE) atCalamba, Laguna by petitioner SMC Quarry 2 Workers Union-February Six Movement (FSM) LocalChapter. In its petition for certification election, petitioner alleged that it is a legitimate labororganization that seeks to represent the regular rank-and-file workers at Titan Megabags IndustrialCorporation, respondent.Respondent opposed the petition, contending that members of petitioner union are not itsemployees but of Stitchers Multi-Purpose Cooperative (SMC), an independent contractor. The Med-Arbiter held that respondent is the employer of the members of petitioner union and directed thata certification election be conducted by its regular rank and file workers. On appeal, the Office ofthe DOLE Secretary, affirmed in toto the Med-Arbiter‘s Order authorizing a certification election. A motion for reconsideration was denied by the Office of the DOLE Secretary in a Resolution as itwas late by seven (7) days. Respondent filed a petition for certiorari with the Court of Appeals,alleging that the Office of the DOLE Secretary committed grave abuse of discretion in its decisionand in ordering a certification election. The Court of Appeals set aside the resolutions of the Officeof the DOLE Secretary and disallowed the conduct of a certification election. The Court of Appealsdenied petitioner‘s motion for reconsideration.

ISSUES:1. Whether or not, the CA erred in setting aside the final and executory Resolutions of the DoleSecretary;

2. Whether or not, the employer has the locus standi to question the certification election of itsemployees.

HELD:(1) Under Article 259 of the Labor Code, as amended, any party to a certification election mayappeal the order of the Med-Arbiter directly to the Secretary of Labor who shall decide the samewithin fifteen (15) calendar days. Along this line, Section 15, Rule XI, Book V of the Omnibus RulesImplementing the Labor Code provides that the Decision or Resolution of the Secretary of the DOLEon appeal shall be final and executory. Upon finality of the Decision of the Secretary, the entirerecords of the case shall be remanded to the office of origin for implementation of the Decisionunless restrained by the appropriate court.



In National Federation of Labor vs. Laguesma, we ruled that the remedy of an aggrieved party in aDecision or Resolution of the Secretary of the DOLE is to timely file a motion for reconsideration asa precondition for any further or subsequent remedy, and then seasonably file a special civil actionfor certiorari under Rule 65 of the 1997 Rules of Civil Procedure. And without a motion forreconsideration seasonably filed within the ten-day reglementary period, the questioned Decision orResolution of the Secretary becomes final and executory. Consequently, the merits of the case can nolonger be reviewed to determine if the Secretary could be faulted for grave abuse of discretionRespondent‘s failure to file its motion for reconsideration seasonably is jurisdictional and fatal to its

cause and has, in effect, rendered final and executory the resolutions of the Secretary of the DOLE.(2) Even if there was no procedural flaw on the part of respondent, still the Appellate Court

should have denied respondent‘s petition for certiorari. We have held that "in certificationelections, the employer is a bystander, it has no right or material interest to assail thecertification election." Thus, when a petition for certification election is filed by a legitimatelabor organization, it is good policy of the employer not to have any participation or partisaninterest in the choice of the bargaining representative. While employers may rightfully benotified or informed of petitions of such nature, they should not, however, be consideredparties thereto with an inalienable right to oppose it.

JURISDICTION OF THE MED-ARBITER AND THE SECRETARY OF LABOR

TOYOTA MOTOR PHILS. CORPORATION WORKERS' ASSOCIATION vs. COURT OFAPPEALS[G.R. No. 148924. September 24, 2003.]CALLEJO, SR., J.:

FACTS: This Court ruled that the employees of the respondent Toyota Motor PhilippinesCorporation (TMPC) belonging to the Level 5 positions under its Single Salary Structure set up weresupervisory employees. The decision became final and executory. Thereafter, the respondent putup and implemented its Three-Function Salary Structure for its personnel/employees.Petitioner Toyota Motor Philippines Corporation Workers' Association (TMPCWA) filed a petitionfor certification election in an unorganized establishment, particularly for the rank-andfileemployees before the Med-Arbitration Unit of DOLE-NCR. The respondent TMPC opposed thepetition on the ground that a case was pending before the Supreme Court between it and anotherunion, the Toyota Motor Philippines Corporation Labor Union (TMPCLU), whose registrationcertificate has been cancelled. It asserted that the petitioner's membership is the same as that of theTMPCLU, which sought to represent the same bargaining unit. Med-Arbiter Lameyra resolved todismiss the petition. On appeal, the DOLE rendered a Decision reversing the Med-Arbiter's decisionand ordering the conduct of a certification election. The DOLE denied the respondent's motion forreconsideration of the said decision.The respondent submitted a list of 1,110 employees however the petitioner, questioned the eligibilityof the 120 employees in the list. Nonetheless, the certification election proceeded as scheduledDuring the certification election, 105 out of the 120 employees whose eligibilities had been

questioned by the petitioner were able to cast their votes, but these votes were not opened andconsidered. With 503 affirmative votes and the exclusion of the 105 challenged votes, the, petitionerasserted that it garnered the majority votes of the 943 votes cast (less the challenged votes); hence, itsought to be declared as the certified bargaining agent of the respondent at its Sta. Rosa and BicutanPlants. Respondent filed its position paper, alleging that the 105 challenged votes should have beenopened and considered in the tabulation of the results of the election. The respondent furtheralleged that under the Three-Function Salary Structure of its personnel the following were rank-andfile employees:Med-Arbiter Zosima Lameyra issued an Order certifying the petitioner as the exclusive bargainingagent of the rank-and-file employees of Toyota in the said plants. She held that the challenged voters



were supervisory employees under the Three-Function Salary Structure. TMPCWA is herebycertified as the bargaining agent of the rank-and-file employees of the company.The respondent interposed an appeal from the said order before the DOLE. The respondent assertedthat the challenged voters were rank-and-file employees. Labor Arbiter ruled that the Constitutionmandates that the State shall accord protection to labor. And that petitioners may exercise all theirrights and claim all legal benefits as rank-and-file workers, as found in the Constitution and theLabor Code. The DOLE affirmed the order of Med-Arbiter. The petitioner voted to stage a strike atthe Sta. Rosa and Bicutan Plants of the respondent and filed a manifestation with the NCR-Nationa

Conciliation and Mediation Board (NCR-NCMB) informing the latter of its intention to stage astrike.The petitioner filed a manifestation with the NCR-NCMB that the respondent had dismissed threehundred union members and officers. Nevertheless, the petitioner gave several days for therespondent to "mend" its mind and to cease and desist from committing unfair labor practice. Thepetitioner further stated that the union members would stage a protest in front of the companypremises. DOLE, thru Secretary Patricia Sto. Tomas, issued a resolution denying with modificationthe motion for reconsideration of the respondent.

ISSUES:1. Whether or not Med-Arbiter and the Office of the Secretary has jurisdiction in certification

election proceedings;2. Whether or not public respondent Secretary gravely abused her discretion, amounting to lack orexcess of jurisdiction, in declaring that the challenged voters, except for the 18, are supervisoryemployees, and thus ineligible to vote in the certification election among the company‘s rank-and-file employees; 3. Whether or not the respondent is entitled to injunctive relief.

HELD:(1) Indeed, it is within the exclusive jurisdiction of the Med-Arbiter and the Office of the Secretary incertification election proceedings to resolve this issue. When this case was filed, the Med-Arbiterand later on the Office of the Secretary acquired jurisdiction over the subject matter of the case andthe parties to it, to the exclusion of all other adjudicating agencies. In so acquiring jurisdiction, the

Med-Arbiter and later on this Office had jurisdiction to resolve the principal issue on the status ofthe workers whose rights, so the Labor Arbiter surmised, "may be rendered inutile if their status isunresolved."(2) Specifically, the respondent asserted that the petitioner bears the burden of proving that the 105challenged voters are supervisory employees. Assuming arguendo that the respondent had theburden, nevertheless, it adduced overwhelming evidence that the challenged voters are, indeedrank-and-file employees. Proceedings before labor agencies merely require the parties to submittheir respective position papers and supporting affidavits. Hence, the challenged voters isadmissible in evidence. The public respondent SOLE cannot consider the affidavits of the challengedvoters as defective by concluding that the same were not properly notarized, inasmuch as thepetitioners never challenged the matter before the Med-Arbiter below. All the affidavits of thechallenged employees are admissible in evidence and entitled to credence.(3) There was no longer any emergency, urgency or a pressing necessity for the CA to still issue awrit of preliminary injunction. There is no showing in the record that despite the assumption by theSOLE of the dispute between the petitioner and the respondent, the petitioner is bent on staging astrike against the respondent in defiance by the petitioner of the order of the SOLE. This issue isinterwoven with the principal issue on the merits of the petition, whether or not the respondent isthe real party-in-interest to assail the resolution of the SOLE and the resolution of the Med-ArbiterIf not elected by the majority of the rank-and-file employees of the respondent, the petitioner has nolegal right to negotiate and bargain with the respondent for a collective bargaining agreement. Bygranting the respondent's plea for a writ of preliminary injunction, the CA, in effect, ruled that therespondent is the real party-in-interest, and not merely a bystander in the certification election;hence, has a material and substantial right sought to be protected. Thus, through the issuance of the



263 and 264 of the Labor Code respecting the September 27, 1990 notice of strike filed by the unioncannot be carried over to the November 16, 1990 notice of strike.Resultantly, for failure of the union to comply with the aforementioned requirements for itsNovember 16, 1990 notice of strike, the strike staged on November 16 up to November 29, 1990was illegal. Thereafter, the respondents appealed NLRC‘s decision to the CA and the latter ruled that the strike was legal, hence, the dismissal of respondents were unjustified and without legalbasis. Hence, this petition.

ISSUE: Whether or not the strike staged by the respondent union on November 16 was legal.

HELD: NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the DOLEthirty days before the intended date thereof or fifteen days in case of ULP; (b) strike vote approvedby a majority of the total union membership in the bargaining unit concerned obtained by secretballot in a meeting called for that purpose; and (c) notice given to the DOLE of the results of thevoting at least seven days before the intended strike. The requisite seven-day period is intended togive the DOLE an opportunity to verify whether the projected strike really carries the approval ofthe majority of the union members. The notice of strike and the cooling-off period were intendedto provide an opportunity for mediation and conciliation. The requirements are mandatory andfailure of a union to comply therewith renders the strike illegal. A strike simultaneously with or

immediately after a notice of strike will render the requisite periods nugatory. Moreover, a strikethat is undertaken, despite the issuance by the SOLE of an assumption or certification order,becomes a prohibited activity and, thus, illegal pursuant to Art. 264 of the Labor Code, as amendedConsequently, the union officers and members are deemed to have lost their employment status forhaving knowingly participated in an illegal act.In this case, the respondent union filed its notice of strike with the DOLE on November 16, 1990 andon the same day, staged a picket on the premises of the hotel, in violation of the law. Therespondents cannot argue that since the notice of strike on November 16, 1990 were for the samegrounds as those contained in their notice of strike on September 27, 1990 which complied with therequirements of the law on the cooling-off period, strike ban, strike vote and strike vote report, thestrike staged by them on November 16, 1990 was lawful. The matters contained in the notice of

strike of September 27, 1990 had already been taken cognizance of by the SOLE when he issued onOctober 31, 1990 a status quo ante bellum order enjoining the respondent union from intending orstaging a strike. Despite the SOLE order, the respondent union nevertheless staged a strike onNovember 16, 1990 simultaneously with its notice of strike, thus violating Art. 264(a) of the LaborCode, as amended, which provides that ― x x x No strike or lockout shall be declared afterassumption of jurisdiction by the President or the Secretary or after certification or submission of thedispute to compulsory or voluntary arbitration or during the pendency of cases involving the samegrounds for the strike or lockout.‖ While it may be true that the petitioner itself barred the officers of the respondent union fromworking and sent out circulars of its decision to retrench its employees effective December 16, 1990the same were not valid justifications for the respondents to do away with the statutory proceduralrequirements for a lawful strike. There was no immediate and imperative need for the respondentsto stage a strike on the very day that the notice of strike on November 16, 1990 was filed because theretrenchment envisaged by the petitioner had yet to take effect on December 14, 1990. Thegrievances of the respondent union could still very well be ordered and acted upon by the SOLEbefore December 14, 1990. The respondents' claim of good faith is not a valid excuse to dispensewith the procedural steps for a lawful strike. Thus, even if the union acted in good faith in the beliefthat the company was committing an unfair labor practice, if no notice of strike and a strike votewere conducted, the said strike is illegal. Hence, the need for a union to adhere to and complystrictly with the procedural conditions sine qua non provided for by the law in staging a strike.



CONSEQUENCES OF AN ILLEGAL STRIKE

ELIZABETH C. BASCON vs. COURT OF APPEALS[G.R. No. 144899. February 5, 2004]QUISUMBING, J.:

FACTS: The petitioners were employees of private respondent Metro Cebu Community Hospital,Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital

(NAMA-MCCH), a labor union of MCCH employees. Petitioner Bascon had been employed as anurse.The other petitioner, Cole, had been working as a nursing aide. Both petitioners were dismissed bythe respondent hospital for allegedly participating in an illegal strike.An intra-union conflict arose between the NAMA-MCCH and the National Labor Federation(NFL), the mother federation of NAMA-MCCH. NAMA-MCCH asked MCCH to renew their CBAwhich was to expire on December 31, 1995. NFL opposed this move by its local affiliate. MCCHdeferred the CBA negotiations until there was a determination as to which of said unions had theright to negotiate a new CBA. The members and officers of NAMA-MCCH staged a series of massactions inside MCCH‘s premises starting February 27, 1996. They marched around the hospitalputting up streamers, placards and posters. MCCH ordered petitioners to desist from participating

in the mass actions conducted in the hospital premises with a warning that non-compliancetherewith would result in the imposition of disciplinary measures. Petitioners again claimed theydid not receive said order. Petitioners Bascon and Cole were then served notices terminating theiremployment.Bascon and Cole filed a complaint for illegal dismissal. They denied having participated in saidmass actions or having received the notices. They admit, however, to wearing armbands for unionidentity while nursing patients as per instruction of their union leaders. The Labor Arbiter found thetermination to be valid and legal, and dismissed the complaint. On appeal, NLRC reversed theruling of the Labor Arbiter and ordered the reinstatement of petitioners with full backwages. Amotion for reconsideration was filed, where the NLRC reverse itself. Hence, the instant case.

ISSUES:1. Whether or not, the CA can supplant its finding of facts with that of the commission?2. Whether or not, an employee should be terminated for participating in an illegal strike?

HELD:(1) Yes, as a general rule, the findings of facts of the NLRC are deemed binding and conclusive uponthe Court. The CA is not a trier of facts. Thus, resort to judicial review of the decisions of the NLRCin a special civil action for certiorari under Rule 65 of the Rules of Court is generally limited to thequestion of grave abuse of discretion amounting to lack or excess of jurisdiction. However, where, asin the instant case, the findings of facts of the NLRC contradict those of the Labor Arbiter, adeparture from the general rule is warranted. Thus, the Court may look into the records of the caseand reexamine the questioned findings. Where the NLRC and the Labor Arbiter disagree on their

finding of facts, the Court can review the records to determine which findings should be preferredas more conformable to the evidentiary facts.In St. Martin Funeral Home v. NLRC, we held that the special civil action of certiorari is the mode of

judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but thelatter court is the more appropriate forum in strict observance of the doctrine on the hierarchy ofcourts and that, in the exercise of this power, the Court of Appeals can review the factual findings orthe legal conclusions of the NLRC.(2) In Article 264 (a) of the Labor Code it could be gleaned that while a union officer can beterminated for mere participation in an illegal strike, an ordinary striking employee, like petitionersherein, must have participated in the commission of illegal acts during the strike. There must be



proof that they committed illegal acts during the strike. Substantial evidence, which may justify theimposition of the penalty of dismissal, may suffice.In this case, the Court of Appeals found that petitioners‘ actual participation in the illegal strike waslimited to wearing armbands and putting up placards. There was no finding that the armbands orthe placards contained offensive words or symbols. Thus, neither such wearing of armbands norsaid putting up of placards can be construed as an illegal act. In fact, per se, they are within themantle of constitutional protection under freedom of speech.We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful occupation,

especially at this late point in their lives when it would be a near impossibility for them to findanother employment. The employer‘s power to dismiss must be tempered with the employee‘s rightto security of tenure.

ILLEGAL STRIKE

MA. COUNSELO MAQUILING, SAN JUAN DE DIOS EDUCATIONAL FOUNDATIONEMPLOYEES UNIONALLIANCEOF FILIPINO WORKERS et.al. vs. SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC.(HOSPITAL) and NATIONAL LABOR RELATIONS COMMISSION[G.R. No. 143341. May 28, 2004.]

CALLEJO, SR., J.:

FACTS:San Juan de Dios Educational Foundation, Inc. is a domestic foundation operating as a college andhospital with a 200 bed capacity, complemented by 400 hospital personnel, more or less. San Juan deDios Educational Foundation Employees Union-Alliance of Filipino Workers, is the sole andexclusive bargaining representative of the rank-and-file employees in the Foundation. RodolfoCalucin, Jr., then Executive Secretary of the Union, had been employed at the Foundation as amedical clerk for almost twelve years. The Foundation, through its Personnel Officer Doringo,informed him that, per its records, he had incurred tardiness and that such tardiness had affectedhis efficiency. He was required to explain, in writing, why his services should not be terminated forgross and habitual neglect of his duties. Calucin, Jr. claimed that he had already served themaximum suspension of one week for his past tardiness. He furthered that he had not incurredtardiness for the past four months. Moreover, his superior had given him a performance rating ofFAIR. The Foundation wrote Calucin, Jr. informing the latter that his employment had beenterminated for gross and habitual neglect of duties under Article 282 (b) of the Labor Code.Calucin, Jr. filed a Complaint for Illegal Dismissal before the National Arbitration Branch. On thesame date, the Union filed a Notice of Strike before the National Conciliation and Mediation BoardThen DOLE Secretary certifying the case to the NLRC, directing the striking employees to go towork, and directing the Foundation to accept all employees under the same terms and conditionsprevailing before the strike. Nevertheless, the officers and striking members of the Union defied theorder of the DOLE and continued with their strike. In the meantime, the Foundation filed a petitionbefore the NCMB to declare the strike illegal. The Foundation and the Union entered into an

agreement submitting to a voluntary arbitrator their differences.The Union informed the Foundation that the night-shift duty would be reporting back to work andthe other shift will report on a later date. The Foundation denied the Union's request.

The SOLE issued an Order directing the Foundation to comply with her directives. The Foundationfiled a petition with this Court assailing the order of the SOLE. In the meantime, the Foundationallowed the payroll reinstatement of the twenty-seven (27) employees subject to the outcome of itspetition filed with this Court. The Union agreed with this arrangement. The Court ruling that theSOLE did not act with grave abuse of discretion and affirmed her order. The Court denied the saidmotion. Nevertheless, the Foundation refused to give the twenty-seven employees the equivalent oftheir salaries for the period they were refused reinstatement. This prompted the employees, through



the Union, to file a complaint against the Foundation before the NLRC. The Commission held thatthe strike staged by the Union at its inception, legal and peaceful. However, the striking employeesdefiance of the RTWO of the SOLE rendered the strike illegal. The NLRC dismissed the claim ofunfair labor practice arising from the illegal dismissal of Rogelio Calucin, Jr. The Union filed amotion for reconsideration from the said decision. The NLRC denied the motion.Dissatisfied with the decision and resolution of the NLRC, the Union and its officers filed a petitionfor certiorari before the Court of Appeals. The Court of Appeals issued a Resolution directing therespondents to file their Comment on the Petition. In the meantime, the Foundation and the Union

executed a new CBA. Among the conditions for its approval was that the termination of the Unionofficers as adjudged by the NLRC would not be enforced. However, the Foundation reneged on thisagreement and terminated the services of the Union officers immediately after the new CBA wassigned and approved. The CA rendered a decision partially granting the petition, in that the moneyclaims of the twenty-seven employees were granted.

ISSUE:1.Whether or not the strike staged by the officers and members of the Union was illegal; 2.Whetherthe petitioner Union's officers were legally dismissed; andHELD: The petition is bereft of merit.The petitioners assert that the respondent Foundation failed to prove that the petitioners

and their counsel were served with copies of the Return-to-Work Order issued by the Secretary ofLabor and Employment and that, consequently, they could not have defied the same. Hence, theyinsist they were illegally dismissed by the respondent Foundation. We do not agree. It bearsstressing that the sheriff's report is an official statement by him of his acts under the writs andprocesses issued by the court in obedience to its directive and in conformity with law. In the absenceof contrary evidence, a presumption exists that a sheriff has regularly performed his official duty. Tocontrovert the presumption arising therefrom, there must be clear and convincing evidence. In thiscase, the petitioners failed to adduce clear and convincing evidence to overcome the presumptionThe bare denial by the petitioners of receiving copies of the order will not suffice.Despite the receipt of an order from then SOLE to return to their respective jobs, the Union officersand members refused to do so and defied the same. Consequently, then, the strike staged by the

Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of itsofficers is in order. The respondent Foundation was, thus, justified in terminating the employmentof the petitioner Union's officers.On the last issue, the petitioners failed to prove their claim that the respondent Foundationcommitted unfair labor practices and discrimination of its employees. We agree with the followingdiscerning findings and encompassing disquisitions of the Court of Appeals on this issue. Therecords of this case do not show any hint that Calucin's [Jr.'s] dismissal is due to his trade unionactivities. On the other hand, per findings of the public respondent, the Foundation was able tosupport with documents how Calucin [Jr.] declared himself irrelevant in the Foundation through histardiness and shallow excuses. For the foregoing reasons, Calucin, Jr.'s dismissal is valid.

CONSEQUENCE OF AN ILLEGAL STRIKE

STAMFORD MARKETING CORPORATION vs. JOSEPHINE JULIAN[G.R. No. 145496. February 24, 2004]QUISUMBING, J.:

FACTS: The instant controversy stemmed from a letter sent by De La Cruz, Jr., president of thePhilippine Agricultural, Commercial and Industrial Workers‘ Union (PACIWU-TUCP), to RosarioA. Apacible, the treasurer and general manager of herein petitioners. Said letter advised Apaciblethat the rank-and-file employees of the aforementioned companies had formed the ApacibleEnterprise Employees‘ Union-PACIWU-TUCP. The union demanded that management recognize itsexistence. Shortly thereafter, discord reared its ugly head, and rancor came hard on its wake.



Josephine Julian, et al. vs. Stamford Marketing Corp.NLRC NCR Case No. 00-11-08124-94A day after Apacible received the letter of PACIWU-TUCP, herein private respondents Josephine

Julian, president of the newly organized labor union; Jacinta Tejada, and Jecina Burabod, boardmember and member of the said union, respectively, were effectively dismissed from employment.The three dismissed employees filed suit with the Labor Arbiter. In their Complaint, the threedismissed employees alleged that petitioners had not paid them their overtime pay, holidaypay/premiums, rest day premium, 13th month pay for the year 1994, salaries for services actually

rendered, and that illegal deduction had been made without their consent from their salaries for acash bond. For its part, herein petitioner Stamford alleged that private respondents abandoned theirwork without any a notice or an explanation.

Philippine Agricultural, Commercial andIndustrial Workers’ Union, et al. vs. GSP Manufacturing Corp. NLRC NCR Case No. 00-03-02114-95PACIWU-TUCP, filed on behalf of 50 employees allegedly illegally dismissed for union membershipby the petitioners, a Complaint before the Arbitration Branch of NLRC, Metro Manila. PACIWU-TUCP charged petitioners herein with unfair labor practice. The Complaint alleged that whenApacible received the letter of PACIWU-TUCP, management began to harass the members of the

local chapter, a move which culminated in their outright dismissal from employment, without any just or lawful cause. It was a clear case of union-busting, averred PACIWU-TUCP. GSPManufacturing Corporation (GSP) denied the union‘s averments. It claimed that it had verified withthe Bureau of Labor Relations (BLR) whether a labor organization with the name ApacibleEnterprises Employees‘ Union was duly registered. It was informed that no such labor organization was registered either as a local chapter of PACIWU or of the Trade Union Congress of thePhilippines (TUCP).

Lucita Casero, et al. vs. GSP Manufacturing Corp., et al.NLRC NCR Case No. 00-01-10437-95This separate case was also filed by the dismissed union members (complainants in NLRC NCRCase No. 00-03-02114-95), against the petitioners herein for payment of their monetary claims. Thedismissed employees demanded the payment of (1) salary differentials due to underpayment ofwages; (2) unpaid salaries/wages for work actually rendered; (3) 13th month pay for 1994; (4) cashequivalent of the service incentive leave; and (5) illegal deductions from their salaries for cashbonds. Petitioner corporations, however, maintained that they have been paying complainants thewages/salaries mandated by law and that the complaint should be dismissed in view of theexecution of quitclaims and waivers by the private respondents.The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and therespondent corporations were under one management.Labor Arbiter Reyes ruled the reassignment and transfer of complainants in NLRC NCR Case No00-11-08124-94 as unfair labor practice, it being management interference in the complainants‘formation and membership of union. In NLRC NCR Case No. 00-03-02114-95, it was duly

established that the employees‘ union was not registered with the Bureau of Labor Relations. Hence, private respondents had engaged in an illegal strike since the right to strike maybe availedof only by a legitimate labor organization. In NLRC NCR Case No. 00-01-10437-95, the Labor Arbiterfound petitioners liable for salary differentials and other monetary claims for petitioners‘ failure to sufficiently prove that it had paid the same to complainants as required by law.Petitioners herein seasonably appealed the decision of Labor Arbiter Reyes. Subsequently, theNLRC affirmed the decision in NLRC NCR Case Nos. 00-11-08124-94 and 00-01-10437-95.However, the NLRC set aside the judgment with respect to NLRC NCR Case No. 00-03-02114-95and ordered the remand of the case for further proceedings. Petitioners then moved forreconsideration of the NLRC ruling, citing the ruling in NLRC NCR Case No. 05-03064-96 to supporttheir position that respondents herein had conducted an illegal strike and were liable for unlawful



acts. The NLRC resolved to partly grant the Motion for Reconsideration.Unwilling to let the matter rest there, petitioners then filed a special civil action forcertiorari with the Court of Appeals which brushed aside petitioners‘ theory that the illegality of strike makes the respondents‘ dismissal legal. The Court of Appeals affirmed the finding of the NLRC that petitioners had failed to support their claim of having paid herein respondents theirmoney claims, because belated evidence presented by petitioners is bereft of any probative value.Petitioners timely moved for reconsideration, but the appellate court denied said motion.

ISSUES:1. Whether the respondents union officers and members were validly and legally dismissed fromemployment considering the illegality of the strike;2. Whether the respondents union officers and members are entitled to backwages, separation payand reinstatement, respectively.HELD:(1) In the instant case, we find no reason to disagree with the findings of the NLRC that thestrike conducted by the respondent union is illegal. First, it has not been shown to the satisfactionof this Court that said union is a legitimate labor organization, entitled under Article 263 (c) to filea notice of strike on behalf of its members. Second, the other requirements under Article 263 (c)and (f) were not complied with by the striking union. On this matter, the record is bare of any

showing to the contrary.Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makesa distinction between union officers and members who participated thereon. Thus, knowinglyparticipating in an illegal strike is a valid ground for termination from employment of a unionofficer. The law, however, treats differently mere union members. Mere participation in an illegalstrike is not a sufficient ground for termination of the services of the union members. The LaborCode protects an ordinary, rank-and-file union member who participated in such a strike fromlosing his job, provided that he did not commit an illegal act during the strike. Thus, absent anyclear, substantial and convincing proof of illegal acts committed during an illegal strike, anordinary striking worker or employee may not be terminated from work.On this point, we affirm the findings of the appellate court that Julian and Tejada did not

abandon their employment. Petitioners utterly failed to show proof that Julian and Tejada had theintent to abandon their work and sever their employment relationship with petitioners. It isestablished that an employee who forthwith takes steps to protest his layoff cannot be said to haveabandoned his work. However, we cannot sustain the appellate court‘s ruling that the dismissal of

Julian and Tejada was tantamount to unfair labor practice. There is simply nothing on record toshow that Julian and Tejada were discouraged or prohibited from joining any union. Hence, thepetitioners cannot be held liable for unfair labor practice.With respect to union officers, however, there is no dispute they could be dismissed forparticipating in an illegal strike. Union officers are duty- bound to guide their members to respectthe law. Nonetheless, as in other termination cases, union officers must be given the requirednotices for terminating an employment, i.e., notice of hearing to enable them to present theirside, and notice of termination, should their explanation prove unsatisfactory. Nothing in Article264 of the Labor Code authorizes an immediate dismissal of a union officer for participating in anillegal strike. In this case, petitioners did not give the required notices to the union officers.We affirm the appellate court‘s ruling that the union members who are parties herein wereillegally dismissed and thus, entitled to reinstatement and payment of backwages for lack ofsufficient evidence that they engaged in illegal acts during the strike. They were in good faith inbelieving that their actions were within the bounds of the law, since such were meant only tosecure economic benefits for themselves so as to improve their standard of living. Besides, it is notthe business of this Court to determine whether the acts committed by them are illegal, for reviewof factual issues is not proper in this petition. Review of labor cases elevated to this Court on apetition for review on certiorari is confined merely to questions of law, and not of fact, as factualfindings generally are conclusive on this Court.



(2) For the same reasons, we likewise affirm the Court of Appeals in upholding the findingsof both the NLRC and the Labor Arbiter regarding the validity or invalidity of quitclaims and theaward of other monetary claims. Questions on whether the quitclaims were voluntarily executed ornot are factual in nature. Thus, petitioners‘ appeal for us to re-examine certain pieces ofdocumentary evidence concerning monetary claims cannot now be entertained. It is not ourfunction to assess and evaluate the evidence all over again, particularly where the findings of boththe Arbiter and the Court of Appeals coincide.Dismissal of the union officers is declared NOT INVALID, and the award of separation pay to

said union officers is hereby DELETED. However, as a sanction for non-compliance with noticerequirements for lawful termination by the petitioners, backwages are AWARDED to the unionofficers computed from the time they were dismissed until the final entry of judgment of this case.

BOOK VIPROBATIONARY PERIOD UNDER SECTION 2, RULE VII, OF THE RULES IMPLEMENTINGTHE CIVIL

SERVICE LAW GALLARDO U. LUCERO vs. COURT OF APPEALS, ET AL.[G.R. No. 152032 July 3, 2003]VITUG, J.:

FACTS: Petitioner was hired by Excellent Manpower Services, a manning agency, which used tosupply the manpower requirements of the PNB, to work as an administrative assistant at the bank'scash division. petitioner was given by the PNB an original appointment as Liaison Officer I, with apermanent status, thereby foregoing his previous relationship with the bank, as aforesaid, andaccepting thereby the terms appurtenant to his new appointment.Ledesma, Vice-President of the Human Resources Department (HRD) of the PNB, issued amemorandum to Gaerlan, then Vice-President of the Cash Division, informing the latter that themanagement approved the termination of services of Lucero due to the "unsatisfactory"performance rating obtained by him during the probationary period of his employment. Acting onthe memorandum, Gaerlan wrote to the HRD requesting that Lucero's name be dropped from theofficial roll of PNB employees effective at the close of business hours. Meanwhile, Lucero wasserved his termination papers.Lucero wrote to the Civil Service Commission protesting his dismissal by the PNB and askingfor his reinstatement. The CSC referred Lucero's letter to the PNB for comment and appropriateaction. In compliance with the directive of the CSC, the PNB wrote to Lucero and furnished himwith copies of the evaluation reports of his superiors at the bank. The CSC acknowledged theresponse of the PNB to the former's letter regarding Lucero's complaint and informed the PNB thatit considered the complaint "closed." Lucero filed a complaint for illegal dismissal against the PNBbefore the Labor Arbiter. The Labor Arbiter dismissed the complaint for lack of jurisdiction. Lucerowent on appeal to the NLRC. The NLRC issued its judgment, which reversed the assailed decisionof the Labor Arbiter and held that Lucero had been illegally dismissed by the PNB.

The PNB, nevertheless, filed with the Court of Appeals a petition for certiorari under Rule65 of the 1997 Rules of Procedure, contending that the NLRC committed grave abuse of discretionin assuming jurisdiction over the case and in ruling that Lucero's dismissal was illegal. the Court ofAppeals rendered a decision to the effect that the NLRC properly assumed jurisdiction over thecase; nevertheless, it found Lucero not to have been illegally dismissed. Lucero filed a motion forreconsideration; the Court of Appeals denied the motion.ISSUES:1. Whether or not Lucero is covered under the Civil Service Law or Labor Law;2. Whether or not Lucero‘s appointment is on regular basis at the time of his dismissal; and3. Whether or not the Court of Appeals erred in not taking in consideration the subsequent



high performance rating of Lucero.HELD:(1) At the time of the appointment, PNB was still a government agency subject to civilservice rules and regulations that, among other things, subjected appointments "into the careerservice under a permanent status" to a probationary period.Section 2, Rule VII, of the Rules Implementing the Civil Service Law reads: "Section 2.Original appointment refers to initial entry into the career service under a permanentstatus of a person who meets all the requirements of the position including the civil service

eligibility."(a) All such persons must serve a probationary period of six (6) months following their original appointment and shall undergo a thorough character investigation. A probationer may bedropped from the service for unsatisfactory conduct or want of capacity anytime before theexpiration of the probationary period: Provided, that such action is appealable to theCommission."(2) The Court of Appeals, reiterating the findings of the NLRC, held that at the time of theservices of petitioner were dispensed with the PNB when he was still under probationary status,i.e., that he was still on trial during which time his qualification for his career employment wouldbe determined. The performance by Gallardo was found inadequate by the PNB that entitled it todrop him from the service. Whether, indeed, that performance was satisfactory or unsatisfactory,was a factual question best addressed for final determination by the Court of Appeals, the findings

on which, when supported by substantial evidence, would be binding on this Court.(3) In the instant case, Lucero proved himself unworthy of permanent employment.Consequently, PNB cannot be faulted for terminating his services. It would be difficult to sustainthe stand taken by petitioner that the Court of Appeals erred in ignoring his subsequent highperformance rating. The high rating of "very satisfactory" obtained by petitioner after hisreinstatement, in compliance with the order of the NLRC, was not controlling, the point in questionbeing his performance during the probationary period of the employment.

PROBATIONARY EMPLOYEE

FLORENCIO M. DE LA CRUZ, JR. vs. NATIONAL LABOR RELATIONS COMMISSION[G.R. No. 145417. December 11, 2003.]

CORONA, J.:

FACTS: petitioner Florencio M. de la Cruz, Jr. was hired by private respondent ShembergMarketing Corporation (Shemberg) as senior sales manager with a monthly salary of P40,500. Theposition of senior sales manager was then newly created in line with Shemberg's objective ofproduct positioning in the consumer market.However, Shemberg's human resource department manager, Llanto, summoned petitionerand informed him of the management's decision to terminate his services. Petitioner asked Llantofor something to do with the drop in the company's sales. Petitioner then requested a meeting withShemberg's vice president, Dacay, Jr., but was told that the decision of the management was final.His request to be furnished a 30-day written notice was also denied by the management. Hence,

petitioner filed a complaint for illegal dismissal, non-payment of salary, backwages, 13th monthpay and damages against Shemberg, Ernesto Dacay, Jr. and Lilybeth Llanto.Respondents answered that petitioner's dismissal was due to his failure to meet therequired company standards and for loss of trust and confidence. In a decision labor arbiterCarreon ruled that petitioner Florencio de la Cruz was illegally dismissed and granted his claim forseparation pay, backwages and unpaid wages. On appeal by respondents, the NLRC dismissed theappeal. The NLRC partially granted the motion for reconsideration and modified its previousresolution. Petitioner elevated the case to the Court of Appeals on a petition for certiorari but itwas dismissed for lack of merit. His subsequent motion for reconsideration was likewise denied.Hence, this petition.



ISSUES: Whether or not the Court of Appeals committed reversible error when it refused to awardbackwages notwithstanding the fact that respondent failed to comply with the two-noticerequirement.HELD: The petition is without merit.Petitioner was holding a managerial position in which he was tasked to perform keyfunctions in accordance with an exacting work ethic. His position required the full trust andconfidence of his employer. While petitioner could exercise some discretion, this obviously did notcover acts for his own personal benefit. As found by the court a quo, he committed a transgression

that betrayed the trust and confidence of expenses out of company funds. Petitioner failed topresent any persuasive evidence or argument to prove otherwise. His act amounted to fraud ordeceit which led to the loss of trust and confidence of his employer.We reiterate the well-established rule that findings of fact of the Court of Appeals areconclusive on the parties and are not generally reviewable by this Court when supported bysubstantial evidence. The rationale is that this Court, not being a trier of facts, relies in good parton the assessment and evaluation of evidence by the lower courts. We thus subscribe to thefollowing findings of the Court of Appeals in affirming the NLRC decision, that petitioner'sdismissal was for a just cause.With respect to the unauthorized use of company funds, there appears to be substantialevidence to show that petitioner indeed is guilty of the same — but only with respect to the

reimbursement of plane ticket fares. Technicalities should not be permitted to stand in the way ofequitably and completely resolving the rights and obligations of the parties. Petitioner vigorouslycontends that he was not a probationary employee since Shemberg failed to disclose to him thereasonable standards for qualifying as a regular employee. This Court notes, however, theevidence on record clearly showing that petitioner was well informed of the standards to be metbefore he could qualify as a regular employee.A probationary employee is one who, for a given period of time, is under observation andevaluation to determine whether or not he is qualified for permanent employment. During theprobationary period, the employer is given the opportunity to observe the skill, competence andattitude of the employee while the latter seeks to prove to the employer that he has thequalifications to meet the reasonable standards for permanent employment. The length of time is

immaterial in determining the correlative rights of both the employer and the employee in dealingwith each other during said period.There is no dispute that petitioner, as a probationary employee, enjoyed only temporaryemployment status. In general terms, this meant that he was terminable anytime, permanentemployment not having been attained in the meantime. The employer could well decide he nolonger needed the probationary employee's services or his performance fell short of expectations,etc. As long as the termination was made before the expiration of the six-month probationaryperiod, the employer was well within his rights to sever the employer-employee relationship. Acontrary interpretation would defect the clear meaning of the term "probationary." In this case,respondent Shemberg had good reason to terminate petitioner's employment and that was hisdishonesty.

PROBATIONARY PERIOD

RADIN C. ALCIRA vs. NLRC, ET AL.G.R. No. 149859 June 9, 2004CORONA, J.:

FACTS: Respondent Middleby Philippines Corporation (Middleby) hired petitioner as engineeringsupport services supervisor on a probationary basis for six months. Apparently unhappy withpetitioner's performance, respondent Middleby terminated petitioner's services. The bone ofcontention centered on whether the termination occurred before or after the six-monthprobationary period of employment.



The parties, presenting their respective copies of Alcira's appointment paper, claimedconflicting starting dates of employment: May 20, 1996 according to petitioner and May 27, 1996according to respondent. Both documents indicated petitioner's employment status as "probationary(6 mos.)" and a remark that "after five months (petitioner's) performance shall be evaluated andany adjustment in salary shall depend on (his) work performance." Petitioner asserts thatrespondent Middleby withheld his time card and did not allow him to work. Contending he hasbecome a regular employee as of the said date of Nov. 20 he claimed he was illegally dismissed.Respondents claim he showed poor performance in his assigned tasks. The labor arbiter dismissed

the complaint on the ground that petitioner's dismissal was before his "regularization," consideringthat, counting from May 20, 1996, the six-month probationary period ended on November 20, 1996.NLRC affirmed the decision of the labor arbiter. The Court of Appeals affirmed the judgment of theNLRC. Hence, this petition for review.ISSUE:1. Whether or not, the petitioner was allowed to work beyond his probationary period andwas therefore already a regular employee at the time of his alleged dismissal;2. Whether or not, petitioner was illegally dismissed when respondent Middleby opted notto renew his contract on the last day of his probationary employment.HELD:(1) NO. In CALS Poultry Supply Corporation, et al. vs. Roco, et al., this Court dealt with the

same issue of whether an employment contract from May 16, 1995 to November 15, 1995 waswithin or outside the six-month probationary period. We ruled that November 15, 1995 was stillwithin the six-month probationary period. Our computation of the 6-month probationary period isreckoned from the date of appointment up to the same calendar date of the 6th month following.In short, since the number of days in each particular month was irrelevant, petitioner was still aprobationary employee when respondent Middleby opted not to "regularize" him on November 20,1996.(2) It is settled that even if probationary employees do not enjoy permanent status, theyare accorded the constitutional protection of security of tenure. This means they may only beterminated for just cause or when they otherwise fail to qualify as regular employees in accordancewith reasonable standards made known to them by the employer at the time of their engagement.

But we have also ruled in Manlimos, et al. vs. National Labor Relations Commission that thisconstitutional protection ends on the expiration of the probationary period. On that date, theparties are free to either renew or terminate their contract of employment. Manlimos concludedthat "(t)his development has rendered moot the question of whether there was a just cause for thedismissal of the petitioners." In the case at bar, respondent Middleby exercised its option not torenew the contract when it informed petitioner on the last day of his probationary employmentthat it did not intend to grant him a regular status. Although we can regard petitioner's severancefrom work as dismissal, the same cannot be deemed illegal.

DISMISSAL; JUST AND VALID CAUSES

PHIL. EMPLOY SERVICES and RESOURCES, INC. vs. JOSEPH PARAMIO, ET AL.

[G.R. No. 144786 April 15, 2004]CALLEJO, SR., J.:

FACTS: Respondents applied for employment in Taiwan with petitioner, Phil. Employ Services andResources, Inc. (PSRI for brevity). They paid P19,000 each as placement fee. The respondents weredeployed in Taiwan. When they encountered problems, they brought their attention to the managerwho told them to forget about it and refrain to air their complaints.Respondent Navarra and another employee, Pio Gabito, were summoned by themanagement and told that they were to be repatriated, without specifying the ground or causetherefor. They pleaded that they be informed of the cause or causes for their repatriation, buttheir requests were rejected. The manager of their employer summoned the police, who arrived



and escorted them to the airport. Upon respondent Navarra's arrival in Manila, the petitionersought to settle his complaints. After the negotiations, the petitioner agreed to pay P49,000 to thesaid respondent but, in consideration thereof, the latter executed a quitclaim releasing thepetitioner from any or all liabilities for his repatriation.Respondent Paramio got ill as a result of the employer's failure to give breakfast on the saiddate and dinner the night before. His manager still ordered him to work. When he pleaded that hebe allowed to take some rest, the manager refused. Respondent Paramio was, instead, made tocarry a container weighing around 30 kilograms. Due to his condition, the container slipped from

his hands and he injured his thumb. He was brought to the hospital where he was operated on andtreated for his wound. Instead of giving him financial assistance for his hospital bills, his employertold him a week after his release from the hospital that it would be better for him to go home tothe Philippines to recuperate. An official from the Taiwanese Labor Department intervened forrespondent Paramio and his employer was told that it had no right to repatriate the respondentbecause the accident which caused the injury happened while the latter was at work.When he could no longer bear the pain in his thumb, he took a break. When the managersaw him resting, he was ordered to return to work. Respondent Paramio refused and contendedthat he could not resume work because of his thumb injury. Incensed, the manager told him that hehad to stop working and would just have to wait for his plane ticket for his repatriation. Therespondent did as he was told. For failure to report to work, he was asked to explain the reason

thereof. He was given his paycheck and later in the evening of the same day, respondent Paramiowas repatriated to the Philippines.The Labor Arbiter declared that the dismissal of the respondents were illegal. The NLRC setaside the decision of the NLRC. The respondents filed a motion for reconsideration of theresolution, but the NLRC denied the motion in a Resolution. Hence this petition for certiorari.ISSUES:1. Whether or not, the petitioners were illegally dismissed when they repatriated by theirTaiwan employees.2. Whether or not, Navarra‘s repatriation and execution of quitclaim and receipt of P 49,000 sufficient to conclude his waiver of right against illegal dismissal.HELD:

(1) Yes. Respondents‘ dismissal was not based on just, valid and legal grounds. As such, the rule lex loci contractus (the law of the place where the contract is made) governs. Therefore, theLabor Code, its implementing rules and regulations, and other laws affecting labor, apply in thiscase. In order to effect a valid dismissal of an employee, the law requires that there be just andvalid cause as provided in Article 282 and that the employee was afforded an opportunity to beheard and to defend himself. Dismissal may also be based on any of the authorized causes providedfor in Articles 283 and 284 of the Labor Code.The petitioner failed to substantiate its claim that respondent Navarra's repatriation wasbased on a valid, legal and just cause. The petitioner merely alleged that it was made clear torespondent Navarra that his repatriation was due to the fight he had with his supervisor. It is notnecessary that there be an express termination of one's services before a case of illegal dismissalcan exist. In the landmark case of Philippine Japan Active Carbon Corporation vs. National LaborRelations Commission, et al (171 SCRA 164) the Supreme Court ruled that "a constructive dischargeis defined as: "A quitting because continued employment is rendered impossible, unreasonable orunlikely:" In the case at bar, the petitioners were made to suffer unbearable conditions in theworkplace and the inhuman treatment of their employer until they were left with no choice but toquit. Thus, it cannot be said that the resignation and repatriation of complainants Curameng,Bautista, Sarmienta and Guillermo was voluntary.It cannot be gainsaid that the instant complaint for illegal dismissal indicates that theresignations and repatriations of the petitioners were not done freely on their part. It is highlyunlikely that these workers, after having invested so much time, effort and money to secure theiremployment abroad would just quit even before the expiration of their contract. We have morereason to rule that the repatriations of petitioners Paramio and Navarra were not voluntary.



We thus rule that the respondents were constructively dismissed from their employment.There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by anemployer becomes so unbearable on the part of the employee that it would foreclose any choice byhim except to forego his continued employment. It exists where there is cessation of work because"continued employment is rendered impossible, unreasonable or unlikely, as an offer involving ademotion in rank and a diminution in pay."(2) We rule that the deed of release executed by respondent Navarra did not completelyrelease the petitioner from its liability on the latter's claim. As a rule, quitclaims, waivers or

releases are looked upon with disfavor and are commonly frowned upon as contrary to publicpolicy and ineffective to bar claims for the measure of a worker's legal rights. If (a) there is clearproof that the waiver was wangled from an unsuspecting or gullible person; or (b) the terms of thesettlement are unconscionable, and on their face invalid, such quitclaims must be struck down asinvalid or illegal.The records reveal that respondent Navarra executed a deed of release and waiver for andin consideration of only P49,000. There is no evidence that he was informed that he was entitledto much more than the said amount, including a refund for the placement fee he paid to thepetitioner. With regard to the deed of quitclaim and acceptance, it is a well-settled principle thatthe law does not consider as valid any agreement to receive less compensation than what a workeris entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims

executed are ineffective to bar recovery for the full measure of the worker's rights. The reason whyquitclaims are commonly frowned upon as contrary to public policy and they are ineffective to barclaims for the full measure of the worker's legal rights is because the employer and employee donot stand on the same footing, such that quitclaims usually take the form of contracts ofadherence, not of choice. Assuming arguendo that the quitclaim was executed voluntarily, still, itcannot diminish petitioner's entitlement to the full compensation provided in their contract. At themost, such amount can be considered an advance on his claim.

ART. 282; TERMINATION OF EMPLOYMENT; BREACH OF TRUST; WHEN WILLFUL

DIAMOND MOTORS CORP. vs. COURT OF APPEALS, ET AL.[G.R. No. 151981. December 1, 2003]YNARES-SANTIAGO, J.:

FACTS: Petitioner Diamond Motors Corporation hired respondent Cadao and subsequentlyappointedhim Special Accounts Manager with a fixed monthly salary excluding commission for every carsold. His tasks included the promotion and sale of Mitsubishi vehicles to precisely listed corporateclients on fleet basis. The transactions are usually done through letters of intent or purchase orderssubmitted by the client. TAPE, Inc. is one of petitioner's clients on a fleet sale basis. Its purchasingofficer, Esper Reate, sent three letters of intent to respondent confirming an order for three units ofMitsubishi Lancer. TAPE, Inc. subsequently sent purchase orders to petitioner for the three units.However, petitioner investigated the said transaction and it was found out that two customers were

not employees of TAPE, Inc. or its sister corporation, M-Zet. Therefore, the production companiesmanifested that they will not pay for the purchase orders. The report further noted that Reate wasnot the authorized signatory for the purchases considering that only Mr. Tuviera as the President ofTAPE, Inc., or, in his absence, Ms. Dionisio, AVP for Administration, can sign for them. Respondentwas accused by petitioner of dishonesty and deceit in the conduct of said sale. Thereafter,petitioner terminated the services of respondent.Private respondent filed a complaint for illegal dismissal with prayer for the payment ofearned salary, commission and other accrued benefits against the petitioner before the NLRC. TheLabor Arbiter dismissed the complaint for lack of merit. Aggrieved, private respondent appealed tothe NLRC which reversed the decision of the Labor Arbiter and declared his dismissal illegal.Respondent was awarded separation pay plus backwages. Thereafter, petitioner filed a petition for



review with the CA. Petitioner maintained that respondent's dismissal was for a valid causepursuant to Article 282 of the Labor Code and jurisprudence. The CA however dismissed thepetition and affirmed the decision of the NLRC. Hence, this petition.

ISSUE: Whether or not respondent‘s dismissal from service was illegal.

HELD: NO. Article 282(c) of the Labor Code, as amended, provides that an employer can terminatethe employment of the employee concerned for "fraud or willful breach by an employee of the trust

reposed in him by his employer or duly authorized representative." The loss of trust and confidencemust be based on the willful breach of the trust reposed in the employee by his employer. Ordinarybreach will not suffice. A breach of trust is willful if it is done intentionally, knowingly andpurposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,heedlessly or inadvertently.The guidelines for the application of the doctrine of loss of confidence was laid down in thecase of Concorde Hotel v. CA, i.e., (a) the loss of confidence should not be simulated; (b) it shouldnot be used as a subterfuge for causes which are improper, illegal or unjustified; (c) it should notbe arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) it must begenuine, not a mere afterthought to justify earlier action taken in bad faith.In the case at bar, the Labor Arbiter ruled that based on the evidence adduced by the

parties, respondent knowingly violated company rules and regulations. There was also a clear taintof deceit on his part when he passed off what was otherwise a retail sale as a fleet sale. Indeed,respondent cannot deny that at the time he was negotiating what he claimed to be a fleet sale toTAPE, Inc., he already knew that the would-be end users are not employees of TAPE, Inc. The factthat respondent attempted to deprive petitioner of its lawful revenue is tantamount to fraudagainst the company, which warrants dismissal from the service.

ART. 282, LABOR CODE; TERMINATION BY EMPLOYER, GROUNDS THEREFOR.

PT & T CORP. vs. COURT OF APPEALS, ET AL.G.R. No. 152057. September 29, 2003CALLEJO, SR., J.:

FACTS: The petitioner is a domestic corporation engaged in the business of providing telegraph andcommunication services thru its branches all over the country. It employed various employees,among whom were private respondents. The petitioner came up with a Relocation andRestructuring Program. Private respondents received separate letters from the petitioner, givingthem the option to choose the branch to which they could be transferred. Thereafter, the privaterespondents and other petitioner's employees were directed to "relocate" to their new PT&TBranches.The petitioner offered benefits/allowances to those employees who would agree to betransferred under its new program. Moreover, the employees who would agree to the transferswould be considered promoted. The private respondents rejected the petitioner's offer. Hence, the

petitioner sent letters to the private respondents requiring them to explain in writing why nodisciplinary action should be taken against them for their refusal to be transferred/relocated. Intheir respective replies to the petitioner's letters, the private respondents explained that thetransfers imposed by the management would cause enormous difficulties on the individualcomplainants. Dissatisfied with this explanation, the petitioner considered the private respondents'refusal as insubordination and willful disobedience to a lawful order; hence, the privaterespondents were dismissed from work. Subsequently, the private respondents' bargaining agent,PT&T Workers Union-NAFLU-KMU, filed a complaint against the petitioner for illegal dismissaland unfair labor practice for and in behalf of the private respondents.For its part, the petitioner alleged that the private respondents' transfers were made in thelawful exercise of its management prerogative and were done in good faith. In their reply to the



petitioner's position paper, the private respondents opined that since their respective transfersresulted in their promotion, they had the right to refuse or decline the positions being offered tothem. Resultantly, the refusal to accept the transfers could not have amounted to insubordinationor willful disobedience to the "lawful orders of the employer."

ISSUE:1. Whether or not the respective transfers of the private respondents are consideredpromotions;

2. Whether or not the denial of a promotion is a just and authorized cause for dismissal?HELD:(1) Yes. With or without a corresponding increase in salary, the respective transfers of theprivate respondents were in fact promotions, following the ruling enunciated in HomeownersSavings and Loan Association, Inc. v. NLRC: ―Promotion, as we defined in Millares v. Subido, is ‗theadvancement from one position to another with an increase in duties and responsibilities asauthorized by law, and usually accompanied by an increase in salary.‘ Apparently, the indispensable element for there to be a promotion is that there must be an ‗advancement from one position to another‘ or an upward vertical movement of the employee's rank or position. Any increase in salary should only be considered incidental but never determinative of whether or not apromotion is bestowed upon an employee.

(2) No. An employee cannot be promoted, even if merely as a result of a transfer, withouthis consent. A transfer that results in promotion or demotion, advancement or reduction or atransfer that aims to 'lure the employee away from his permanent position cannot be done withoutthe employees' consent. There is no law that compels an employee to accept a promotion for thereason that a promotion is in the nature of a gift or reward, which a person has a right to refuse.Hence, the exercise by the private respondents of their right cannot be considered in law asinsubordination, or willful disobedience of a lawful order of the employer. As such, there was novalid cause for the private respondents' dismissal.

ART. 282; TERMINATION BY EMPLOYER

SAMUEL SAMARCA vs. ARC-MEN INDUSTRIES, INC.[G.R. No. 146118. October 8, 2003]SANDOVAL-GUTIERREZ, J.:

FACTS: Samuel Samarca was employed as a laborer by Arc-Men Industries, Inc. Petitioner filed anapplication for an emergency leave of absence on account of his son's hospitalization. Upon hisreturn for work, petitioner was immediately served with a notice of respondent's order suspendinghim for thirty (30) days effective for alleged violation of company Rules and Regulations. Petitionerfiled with the Regional Arbitration Branch a complaint for illegal suspension against respondent.During the pendency of this complaint, petitioner's 30-day suspension ended. Consequently,respondent directed petitioner to report for work immediately. However, he refused explainingthat because of the pendency of his complaint for illegal suspension with the Labor Arbiter, he

could not report for work. Respondent, finding that the petitioner failed to submit a sufficientwritten explanation, decided to terminate his services via a notice of termination. Petitioner filedan amended complaint for illegal dismissal.The Labor Arbiter dismissed the case for lack of merit and declaring the dismissal ofcomplainant as valid and for cause but the complainant is entitled to his proportionate 13th monthpay. On appeal, the NLRC reversed and set aside the Labor Arbiter's Decision, ordering respondentto reinstate petitioner to his former position without loss of seniority rights and to pay hisbackwages from the date of dismissal up to his actual reinstatement but limited to a maximumperiod of three (3) years. Respondent filed a motion for reconsideration but was denied withfinality by the NLRC. Respondent filed with the Supreme Court a petition for certiorari. The SCreferred the petition for disposition to the Court of Appeals. The Court of Appeals rendered a



Decision reversing the Resolutions of the NLRC and reinstating the Decision of the Labor Arbiter.Petitioner filed a motion for reconsideration but was denied in a Resolution. Hence, this petitionfor review on certiorari.

ISSUE: Whether or not petitioner was validly dismissed on ground of abandonment of work.

HELD: Jurisprudence holds that for abandonment of work to exist, it is essential (1) that theemployee must have failed to report for work or must have been absent without valid or justifiable

reason; and (2) that there must have been a clear intention to sever the employer-employeerelationship manifested by some overt acts. Deliberate and unjustified refusal on the part of theemployee to go back to his work post and resume his employment must be established. Absencemust be accompanied by overt acts unerringly pointing to the fact that the employee simply doesnot want to work anymore. And the burden of proof to show that there was unjustified refusal to goback to work rests on the employer.We hold that the above twin essential requirements for abandonment to exist are notpresent in the case at bar. Petitioner's absence is not without a justifiable reason. The filing of acomplaint for illegal dismissal is inconsistent with the charge of abandonment, for an employeewho takes steps to protest his dismissal cannot by logic be said to have abandoned his work.Moreover, we find no indication that petitioner has shown by some overt acts his intention to sever

the employer-employee relationship. Finally, it was unlikely that petitioner had abandoned his jobfor no reason at all considering the hardship of the times.Petitioner did not abandon his job but was illegally dismissed by respondent. An employeewho is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights andother privileges as well as to his full backwages, inclusive of allowances, and to other benefits ortheir monetary equivalent computed from the time his compensation was withheld from him up tothe time of his actual reinstatement. However, the circumstances obtaining in this case do notwarrant the reinstatement of petitioner. Antagonism caused a severe strain in the relationshipbetween him and respondent. Respondent is hereby ordered to pay petitioner (1) his separation pay(in lieu of his reinstatement) equivalent to one month pay for every year of service; and (2) his fullbackwages inclusive of allowances and other benefits or their monetary equivalent from his

dismissal up to the time of his supposed actual reinstatement.

ABANDONMENT OF WORK

R TRANSPORT CORP. vs. ROGELIO EJANDRA[G.R. No. 148508 May 20, 2004]CORONA, J.:

FACTS: Private respondent Ejandra alleged that, for almost six years, he worked as a bus driver ofpetitioner R Transport Corporation. An officer of LTO of Guadalupe, Makati City, apprehended himfor obstruction of traffic for which his license was confiscated. He was able to retrieve his licenseonly after a week. Private respondent informed Mr. Pasquin that he was ready to report for work.

However, he was told that the company was still studying whether to allow him to drive again.Private respondent was likewise accused of causing damage to the bus he used to drive. He wasasked to take a vacation which the manager did not specify for how long. Petitioner claimed thatprivate respondent abandoned his job. He also claimed that there was no employer and employeerelationship between him and the respondent. Labor arbiter Rogelio Yulo decided in favor ofprivate respondent. NLRC rendered a decision affirming the decision of the labor arbiter.In disputing petitioner's claim that private respondent was not its employee and was nottherefore entitled to notice and hearing before termination, the NLRC held that complainant wasnot afforded his right to due process prior to the severance of his employment with respondents.Appellants' defense of denying the existence of employer-employee relationship with thecomplainant based on the manner by which complainant was being paid his salary, cannot hold



water.

ISSUE: Whether or not, the respondent abandoned his work.

HELD: No, to constitute abandonment, two elements must concur: (1) the failure to report for workor absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more determinative factor andshould be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has

the burden of proof to show a deliberate and unjustified refusal of the employee to resume hisemployment without any intention of returning.In the instant case, petitioner fell short of proving the requisites. Petitioner's absence was

justified because the LTO, Guadalupe Branch, did not release his license until after a week. Theprocess of redeeming a confiscated license, based on common experience, depended on when theapprehending officer turned over the same. Second, private respondent never intended to sever hisemployment as he in fact reported for work as soon as he got his license back. Third, labor arbiterYulo correctly observed that, if private respondent really abandoned his work, petitioner shouldhave reported such fact to the nearest Regional Office of the Department of Labor andEmployment. Petitioner made no such report.In addition to the fact that petitioner had no valid cause to terminate private respondent

from work, it violated the latter's right to procedural due process by not giving him the requirednotice and hearing.

HEARSAY; AFFIDAVITS

ANICETO W. NAGUIT, JR. vs. NLRC, ET AL.[G.R. No. 120474. August 12, 2003.]CARPIO-MORALES, J.:

FACTS: Petitioner Aniceto W. Naguit, Jr., an employee of respondent Manila Electric Company(MERALCO) was dismissed after 32 years of service. Petitioner informed his Supervisor-Branchhead Ortega, Jr. that he would render overtime work on June 6, and that after concluding his fieldwork on that day, he would proceed to Pagbilao, Quezon to accompany his wife to a wedding. On

June 6, petitioner arrived at the office at 7:50 a.m. At 12:00 noon, he, along with his co-employeeCabuhat who drove his jeep, proceeded to Pagbilao, Quezon. On June 8, the timekeeper of theMERALCO office prepared an Overtime Notice and the corresponding timesheet wherein it wasreflected that petitioner worked from 8:00 a.m. to 5:00 p.m. on June 6 and 7. Petitioner corrected thedocuments by erasing the entries made for June 7, and were approved by Ortega. Petitioner wasthereafter paid for overtime work on June 6. Documents including petty cash voucher coveringCabuhat's alleged overtime work were also prepared on account of which petitioner, as custodianof petty cash, released to Cabuhat the meal allowance and rental for a jeep.MERALCO wrote a letter to the petitioner regarding the incident. After hearings wereconducted, it informed petitioner that he was, for falsification of time card and encouraging and

inducing another employee to perform an act constituting a violation of the Company Code onEmployee Discipline, dismissed from the service with forfeiture of all rights and privileges.Petitioner filed a complaint with the NLRC against MERALCO for illegal dismissal and prayed forreinstatement, backwages, damages, attorney's fees among others. The Labor Arbiter rendered adecision in favor of the petitioner. MERALCO appealed the Labor Arbiter's decision to the NLRCwhich reversed the decision and dismissed the complaint. Hence, this petition.

ISSUE: Whether or not the petitioner's dismissal is valid

HELD: In labor cases, this Court has consistently held that where the adverse party is deprived ofopportunity to cross-examine the affiants, affidavits are generally rejected for being hearsay,



unless the affiant themselves are placed on the witness stand to testify thereon. Thus, suchaffidavits of Cabuhat are inadmissible as evidence against petitioner.Despite the inadmissibility of the affidavits, the Court finds that MERALCO had reasonablegrounds to fault petitioner based on the sworn statements given during its investigation. Ascustodian of the petty cash fund, the petitioner had the duty to ascertain that the circumstanceswhich brought about any claim therefrom were in order. He cannot now shirk from thisresponsibility by indirectly pinning the blame on the approving officer and asserting that thetransgression was the result of mere inadvertence, given his admission that he very well knew that

Cabuhat did not conduct any field work, he having merely driven for him to Pagbilao.Petitioner thus committed dishonesty and breached MERALCO's trust, which dishonesty callsfor reprimand to dismissal under MERALCO's rules. Dismissal is, however, too severe as a penaltyin petitioner's case, given his 32 years of service during which he had no derogatory record.At the time petitioner was dismissed, he was still below the retirement age of employees ofMERALCO at 60. To date, however, he is now about 65. Imposing a penalty less harsh thandismissal and ordering his reinstatement are thus functus oficio, the Labor Arbiter's order for hisreinstatement not having been executed. To this Court, a denial of the award of backwages topetitioner from the time of his dismissal up to his age of retirement suffices as punishment for hisdishonesty. He should not, however, be deprived of his retirement benefits.

SUMMARY HEARING OF LABOR CASES; TWO-NOTICE REQUIREMENT

SHOPPES MANILA, INC vs. NATIONAL LABOR RELATIONS COMMISSION[G.R. No. 147125. January 14, 2004]CALLEJO, SR., J.:.

FACTS: The petitioner is a domestic corporation engaged in garments manufacturing using thebrand name ―KAMISETA.‖ The petitioner employed private respondent Torno as trimmer. The private respondent and a co-employee, Maricar Buan, were tasked to handle the inventory offinished products. Sometime thereafter, the petitioner started to receive information from thehead of its production department that, according to other employees, Buan and the privaterespondent had been stealing ―KAMISETA‖ items from the factory. The petitioner had the witnessesinterviewed. Respondent agreed to have her house inspected and searched for the alleged stolenitems. The private respondent‘s supervisor, conducted the inspection and submitted a report to the effect that she found the KAMISETA items in the private respondent‘s house. On the basis of the said report, the petitioner issued a disciplinary action form suspendingthe private respondent indefinitely without pay. A notice of dismissal was addressed to the privaterespondent specifying the charge against her, the factual basis thereof and the imposable penaltiesfor the said charge if proven.The private respondent failed to appear during the scheduled hearing. Consequently, thepetitioner decided to dismiss the private respondent from her employment. When notified of thepetitioner‘s decision, the private respondent filed a complaint for illegal dismissal with prayer for reinstatement and payment of backwages, non-payment of service incentive leave pay and 13th-

month pay against the petitioner before the National Capital Regional Arbitration Branch. Despitemandatory conferences, the parties did not reach an amicable settlement. In due course, theysubmitted their respective position papers and replies. Acting on the motion, LA Tumanong set thecase for full blown hearing during which the witnesses can be cross-examined by the opposingcounsel. However, the hearing failed to materialize because of the absences of either the privaterespondent or her counsel. In the meantime, LA Tumanong was replaced by Labor Arbiter ErmitaAbrasaldo-Cuyuca who issued an order declaring that the case was submitted for decision.LA Cuyuca rendered a decision holding that the respondent was illegally dismissed anddirected the petitioner to pay backwages and separation pay to the private respondent. However,according to the labor arbiter, reinstatement could no longer be effected, as the relationshipbetween the private respondent and the petitioner had been strained and ruptured. Aggrieved, the



petitioner appealed the decision to the NLRC, alleging that it was deprived of its right to a formalhearing before the labor arbiter rendered her decision. LA Cuyuca‘s failure to conduct a hearing deprived the petitioner of its vested right; consequently, her decision was null and void.The NLRC issued a resolution dismissing the appeal and affirming the decision of the laborarbiter. The petitioner filed a motion for reconsideration which was denied by the NLRC.Dissatisfied, the petitioner filed a petition for certiorari under Rule 65 of the Rules of Court beforethe Court of Appeals. The CA rendered judgment affirming the decision of the NLRC and thefinding of both the NLRC and LA Cuyuca. The petitioner‘s motion for reconsideration was denied

in a CA Resolution.

ISSUES:1. Whether or not the absence of a formal hearing amounts to denial of petitioner‘s right to dueprocess;2. Whether or not termination of the private respondent‘s employment was based on a just and validcause.HELD: The petition is barren of merit.(1) We agree with the CA that the petitioner did not have a vested right to a formal hearingsimply and merely because LA Tumanong granted its motion and set the case for hearing. Pursuantto Section 5, Rule V of the New Rules of Procedure of the NLRC, the labor arbiter has the authority

to determine whether or not there is a necessity to conduct formal hearings in cases brought beforehim for adjudication. The holding of a formal hearing or trial is discretionary with the labor arbiterand is something that the parties cannot demand as a matter of right. It is entirely within hisauthority to decide a labor case before him, based on the position papers and supportingdocuments of the parties, without a trial or formal hearing. The requirements of due process aresatisfied when the parties are given the opportunity to submit position papers wherein they aresupposed to attach all the documents that would prove their claim in case it be decided that nohearing should be conducted or was necessary.(2) Similarly, we affirm the finding of the CA that the private respondent was illegallydismissed. In order to effect a valid dismissal, the law requires that (a) there be just and validcause as provided under Article 282 of the Labor Code; and (b) the employee be afforded an

opportunity to be heard and to defend himself. As stated by the CA, the petitioner had failed toshow that it had complied with the two-notice requirement: (a) a written notice containing astatement of the cause for the termination to afford the employee ample opportunity to be heardand defend himself with the assistance of his representative, if he so desires; (b) if the employerdecides to terminate the services of the employee, the employer must notify him in writing of thedecision to dismiss him, stating clearly the reason therefor.

ABANDONMENT OF WORK

ACD INVESTIGATION SECURITY AGENCY, INC. vs. PABLO D. DAQUERA,[G.R. No. 147473. March 30, 2004]SANDOVAL-GUTIERREZ, J.:

FACTS: Pablo Daquera in his complaint against petitioner Alfonso Dilla, Sr. and Public EstatesAuthority , alleged that he was employed as a security guard by petitioner. He was reassigned toPublic Estates Authority as a security officer . However, he was illegally suspended and thereafterillegally dismissed for dishonesty, without prior written notice and investigation. Petitioner Dillaclaims that HE received several complaints against respondent for abandonment of post, drinkingliquor while on duty, and extortion from subordinate security guards. In an administrativeinvestigation, petitioner found respondent guilty of dishonesty and neglect of duty. Petitionerreassigned him to another post. However, he refused and took a leave of absence to seekemployment elsewhere. After one week, respondent still failed to report for work and instead filedwith the Labor Arbiter a complaint against petitioner.



The Labor Arbiter declared the dismissal of the complainant as illegal and ordered for hisreinstatement, without loss of seniority rights and pay him backwages. On appeal, the NLRC,affirmed the Arbiter‘s Decision, but discharging Dilla the employer from liability. A motion for reconsideration was denied by the NLRC. Petitioner filed with the Court of Appeals a petition forcertiorari seeking to set aside the NLRC Decision and Resolution. CA affirmed in toto the assaileddecision.

ISSUES:

1. Whether or not, dishonesty, serious misconduct and willful breach of trust are valid causes fordismissing respondent from the service;2. Whether or not, private respondent is entitled to reinstatement with backwages since heabandoned his work; and3. Whether or not, the Appellate Court erred in awarding respondent his monetary benefitsconsidering his quitclaim.

HELD:(1) We have been very careful in cases of dismissal based on dishonesty, serious misconduct, andloss of trust and confidence because the same can easily be concocted by an abusive employerSecond, we are also not convinced that respondent abandoned his work and that terminating his

services is a lawful sanction. Deliberate and unjustified refusal on the part of the employee to goback to his work post and resume his employment must be established. Absence must beaccompanied by overt acts unerringly pointing to the fact that the employee simply does not want towork anymore. And the burden of proof to show that there was unjustified refusal to go back towork rests on the employer.‖ However, the above twin essential requirements for abandonment toexist are not present in the case at bar.(2) Respondent who was illegally dismissed from work is actually entitled to reinstatementwithout loss of seniority rights and other privileges as well as to his full backwages, inclusive ofallowances, and to other benefits or their monetary equivalent computed from the time hiscompensation was withheld from him up to the time of his actual reinstatement. However, thecircumstances obtaining in this case do not warrant the reinstatement of respondent. Antagonism

caused a severe strain in the relationship between him and petitioner. A more equitable dispositionwould be an award of separation pay equivalent to at least one month pay for every year of servicein addition to his full backwages, allowances and other benefits.(3) Quitclaims by laborers are frowned upon as contrary to public policy and are held to beineffective to bar recovery for the full measure of the workers‘ rights

ILLEGAL DISMISSAL; TWO-NOTICE RULE

GUTIERREZ vs. SINGER SEWING MACHINE

FACTS: This is a complaint for illegal dismissal. Petitioner Gutierrez was hired by Singer as AuditAssistant on contractual basis. He became an Accounts Checker on probationary status. Thereafter,

he acquired regular status as Asset Auditor when he was dismissed from employment.It appears that Gutierrez and three other were caught watching a video tape inside theoffice. Despite reminder, the group continued to watch the video. On another occasion, Gutierrezposted at the door Department Office a notice, which read "MAIPARIT TI UMISBO DITOY," (NoUrinating Here). When asked if he had seen anyone urinate at the door where the sign was postedand the latter replied in the negative and answered, "Gusto ko, eh" (It is my pleasure). Gutierrezrefused to remove the sign when requested to do so.Asset Manager Consunji, in a Memo informing Gutierrez of the latter's violation of company rulesand regulations. Another Memo was issued by Mr. Consunji, worded as follows: After a thoroughinvestigation of the incident and after having found your explanations to be unsatisfactory and dueto your refusal to comply with my memo to you which constitutes willful defiance or disregard of



Company authority, the management deems it fitting and proper to impose upon you the penalty ofdismissal effective immediately upon receipt hereof.

ISSUES:1. Whether or not the was a violation of due process; and2. Whether or not the grounds relied upon were sufficient to warrant dismissal

HELD:

(1) The record shows that Singer's evidence against petitioner was based on three affidavitsmade by three of its employees. On this score, we agree with the Court of Appeals in finding that inthis case procedural due process was not violated by management. Singer has shown compliancewith the two-notice requirement — first, of the intention to dismiss, indicating therein the acts oromissions complained against; and second, of the decision to dismiss an employee — and inbetween such notices, an opportunity for him to answer and rebut the charges against him.(2) We agree with the NLRC that petitioner's dismissal from employment was unjustifiedand illegal. We agree with the complainant that the questioned poster cannot be interpreted as anact of vandalism. The affidavit is not sufficient to establish complainant's guilt of vandalism. Thecomplainant likewise justified his action in relation to his act of watching video films. We mustalso stress that, even on the assumption that Gutierrez in fact committed the cited infractions, in

our view they are only minor ones which do not merit the supreme penalty of dismissal fromemployment. The penalty imposed on the erring employee ought to be proportionate to theoffense, taking into account its nature and surrounding circumstances. In the application of laborlaws, the courts and other agencies of the government are guided by the social justice mandate inour fundamental law. To be lawful, the cause for termination must be a serious and gravemalfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with thespirit of our Constitution and laws which lean over backwards in favor of the working class, andmandate that every doubt must be resolved in their favor.

CONSTRUCTIVE DISMISSAL:

FERNANDO GO vs. COURT OF APPEALS and MOLDEX PRODUCTS, INC.[G.R. No. 158922. May 28, 2004.]YNARES-SANTIAGO, J.:

FACTS: Petitioner Moldex Products, Inc. hired private respondent, Fernando Go as a salesman.Over the years, private respondent worked himself within petitioner's corporate structure until heeventually attained the rank of Senior Sales Manager. It appears that the accounts handled by thepetitioner and his staff experienced collection problems. This difficulty in collection necessitatedthe conduct of an investigation by the respondent, which led to the discovery of anomalies. Amongthe sales personnel investigated was a member of petitioner's division. Consequently, respondentcorporation dismissed a number of its personnel.Respondent claimed that it also questioned petitioner and that "obviously feeling guilty for

not exercising effective supervision over his subordinates, he submitted a letter of resignation.While on leave, petitioner worked for the release of his clearance and the payment of 13th monthpay and leave pay benefits. On the other hand, petitioner averred that he was not investigated.Petitioner further alleged that after the investigation, he was surprised to receive an advice fromthe respondent that his services were being terminated by the latter on account of commandresponsibility. But since the petitioner was not involved in the anomalies, he was promisedpayment of separation pay, commission and other benefits due him on account of his long anddedicated employment with the respondent. In addition, the respondent also granted to petitionera distributorship agreement for the right to be a distributor of its products. In exchange, petitionerwas asked to submit a courtesy resignation to the respondent. Thereafter, petitioner'sresponsibility as the senior sales manager of the respondent was eventually stripped from him.



Petitioner filed with the NLRC a complaint for constructive dismissal, separation pay,service incentive leave including damages and attorney's fees against the respondent. LaborArbiter Abrasaldo-Cuyuca rendered in favor of the complainant and against the respondent. TheNLRC affirmed with modification the Labor Arbiter's decision. As modified, the NLRC deleted theaward of attorney's fees for lack of factual basis but it affirmed the rest of the Labor Arbiter'saward in favor of herein petitioner. Respondent sought a reconsideration of the NLRC decisionwhich was denied. Respondent filed a petition for certiorari with the Court of Appeals whichannulled and set aside the twin resolutions of the NLRC.

ISSUE: Whether or not petitioner was constructively dismissed rather he voluntarily resigned fromthe respondent.HELD: After a careful review of the records of this case, we find sufficient reasons to upholdrespondent's contention. Constructive dismissal exists where there is a cessation of work becausecontinued employment is rendered impossible, unreasonable or unlikely. It is present when anemployee's functions, which were originally supervisory in nature, were reduced, and suchreduction is not grounded on valid grounds such as genuine business necessity.It should be remembered that the petitioner has submitted a letter of resignation. It is thusincumbent upon him to substantiate his claim that his resignation was not voluntary but in truthwas actually a constructive dismissal. The failure of the petitioner to fully substantiate his claimthat the respondent stripped him of his duties and functions is fatal to his present petition. Except

for the sworn statements previously discussed, which we have found to be lacking in probativevalue, petitioner did not present any other proof of the alleged stripping of his functions by therespondent. Petitioner's bare allegations of constructive dismissal, when uncorroborated by theevidence on record, cannot be given credence. The totality of the evidence indubitably shows thatpetitioner resigned from employment without any coercion or compulsion from respondent. Hisresignation was voluntary. As such, he shall only be entitled to his 13th month pay and leave paybenefits. These, however, have already been paid to him by respondent.

CLOSURE OF ESTABLISHMENT

JOSEFINA A. CAMA, et. Al. vs. JONI’S FOOD SERVICES, INC. [G.R. No. 153021. March 10, 2004]QUISUMBING, J.:

FACTS: Respondent Joni‘s Food Services, Inc. is engaged in the coffee shop and restaurant business, with several branches or outlets. Co-respondent Jose Antonio Feliciano is its presidentand general manager. Petitioners were employees of JFSI having been hired on various dates. JFSIhad eight (8) outlets however, it shut down three of these shops to avert serious business losses.

JFSI operations in the red. As a result, JFSI shut down more outlets, leaving it with just threeoperating outlets. The remaining branches were also closed. One month before the target closuredate of its remaining outlets, JFSI sent notices of closure to the Department of Labor andEmployment (DOLE) and to the complainants who were then employed in the remaining branchesor

outlets.The petitioners, except Prima P. Santiano, filed a complaint for illegal dismissal, separationpay, service incentive leave pay, 13th month pay, attorney‘s fees, remittance of SSS and Pag-Ibigcontributions, and refund of excess withholding taxes against JFSI. Petitioner Santiano filed herseparate complaint charging JFSI with violations similar to those aired by her co-petitioners.Santiano‘s separate complaint and was consolidated with NLRC-NCR. Following failed attempts toreach an amicable settlement between complainants and respondents, formal hearings ensuedbefore the Labor Arbiter.The NLRC declared respondent Joni‘s Food Services, Inc. (JFSI) not guilty of illegal dismissal as above-discussed. However, the NLRC held the petitioners entitled to separation pay, the LaborArbiter opined that petitioners were retrenched as a result of the closure of the respondent‘s



coffee shop operations and/or to prevent losses, and hence, fell squarely within the coverage ofArticle 283 of the Labor Code. Aggrieved, respondents appealed to the NLRC raising the issue ofwhether the complainants below were entitled to the monetary award decreed by the LaborArbiter. The decision appealed from was affirmed with the modification deleting the award forattorney‘s fees. Respondent company, JFSI, then moved for reconsideration, but this was denied by the NLRC in its resolution. Hence, it filed a special civil action for certiorari with the Court ofAppeals, on the ground that the NLRC committed grave abuse of discretion amounting to lack orexcess of jurisdiction by incorrectly applying Article 283 of the Labor Code.

The Court of Appeals granted the writ of certiorari prayed for by JFSI. The petitionersseasonably moved for reconsideration, but the appellate court denied the motion in its resolution.Hence, the instant case.ISSUE: Whether or not the termination of petitioners‘ employment due to serious business losses suffered by JFSI precluded payment of separation pay.HELD: Respondents assert that the company was taking losses of such magnitude which left itssurvival or future existence in the dark. To stem these serious losses, the company found norecourse but to shut down its outlets. Thus, as found by the Court of Appeals, respondents had nooption but to lay off employees and eventually close shop.The Constitution, while affording full protection to labor, nonetheless, recognizes ―the right of enterprises to reasonable returns on investments, and to expansion and growth.‖ In line

with this protection afforded to business by the fundamental law, Article 283 of the Labor Codeclearly makes a policy distinction. It is only in instances of ―retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to seriousbusiness losses or financial reverses‖ that employees whose employment has been terminated as aresult are entitled to separation pay. In other words, Article 283 of the Labor Code does notobligate an employer to pay separation benefits when the closure is due to serious losses. Torequire an employer to be generous when it is no longer in a position to do so, in our view, wouldbe unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law inprotecting the rights of the working man, authorizes neither the oppression nor the self-destructionof the employer.

CLOSURE OF ESTABLISHMENT AND REDUCTION OF PESONNEL.

MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENTvs. MAC ADAMS METAL ENGINEERING[G.R. No. 141615. October 24, 2003.]CORONA, J.:

FACTS: The present controversy stemmed from two separate complaints: the first complaint, filedby petitioner MAMEWU and its president, petitioner Mario A. Garcia, for and in behalf of 29 otherpetitioners, charged private respondents MAME and GBS with unfair labor practices (ULP)committed through union busting and illegal closure, and illegal dismissal. The second complaint,filed by the last eight petitioners led by Halim Roldan, alleged that aside from ULP and illegal

dismissal, private respondents were likewise liable for non-payment of premium pay for holidaysand rest days, night differential pay and 13th month pay.Insisting that the closure of MAME and GBS was illegal as it was calculated to bust theirunion, petitioners claimed that MAME and GBS continued doing business under new businessnames, i.e., MBS Machine and Industrial Supply (MBS) and MVS Heavy Equipment Rental andBuilders (MVS).Thus, MBS and MVS were impleaded as respondents in the complaint for allegedly being run-awayshops of MAME and GBS. In both complaints, petitioners prayed for alternative reliefs forreinstatement with backwages and/or separation pay.In their answer, private respondent spouses Geronimo and Lydia V. Sison, proprietors ofGBS and MAME respectively, denied petitioners' allegations. Respondent Lydia V. Sison decided to



retire from business when she became sickly in 1988. Her health did not improve despite propermedical attention. In the general meeting of the workers she announced her plan to close shop.The announcement in advance was intended to give the workers ample time to look for alternativeemployment. Accordingly, she declined to accept new projects and proceeded with the winding upof her business.After the workers' general meeting, some employees formed a union ostensibly for thepurpose of making representations with the management to reconsider its decision to ceasebusiness operations or, at least, see to it that all benefits due the affected employees would be

paid. In the course of negotiations with the management, the union leadership demandedseparation pay computed at 45 days for every year of service, a proposal private respondentsrejected. As it turned out, even before respondent Lydia V. Sison could formally notify theemployees and the concerned government agencies of the intended closure and cessation of herbusiness, MAMEWU and its members started resorting to concerted activities such as workslowdown, picketing, refusal to report for work and ultimately, strikes. Meanwhile, the workers ofGBS joined in the concerted activities in sympathy with the striking employees of MAME. As aconsequence, GBS was also forced to close and cease its business operations. For their part, MBSand MVS denied being run-away shops of MAME and GBS.The labor arbiter rendered a decision declaring that the closure of business of MAME andGBS was legitimate, having been done in good faith and in accordance with law. Hence, no unfair

labor practice or illegal dismissal was committed. On appeal to the NLRC, the assailed decision ofthe labor arbiter was affirmed. Aggrieved, petitioners filed a petition for review before the Courtof Appeals questioning the decision of the NLRC. The Court of Appeals rendered a decisionaffirming the findings of both the labor arbiter and the NLRC that there was a legitimate and bonafide closure and cessation of business by MAME and GBS. The appellate court, however, modifiedthe assailed decision and declared the second group of petitioners, led by Halim Roldan, as regularemployees also entitled to separation pay. Hence the petition.ISSUE: Whether the closure of private respondents' business was done in good faith and forlegitimate business reasons.HELD: Yes. Explicit from Article 283 of the Labor Code is that closure or cessation of businessoperations is allowed even if the business is not undergoing economic losses. The owner, for any

bona fide reason, can lawfully close shop at anytime. Just as no law forces anyone to go intobusiness, no law can compel anybody to continue in it. It would indeed be stretching the intent andspirit of the law if SC were to unjustly interfere with the management's prerogative to close orcease its business operations, just because said business operation or undertaking is not sufferingfrom any loss or simply to provide the workers continued employment.The employer need only comply with the following requirements for a valid cessation ofbusiness operations: (a) service of a written notice to the employees and to the DOLE at least onemonth before the intended date thereof; (b) the cessation of or withdrawal from businessoperations must be bona fide in character and (c) payment of termination pay equivalent to atleast one-half month pay for each year of service, or one month pay, whichever is higher. Therecords reveal that private respondents complied with the requirements.Finally, since private respondents' cessation and closure of business was lawful, there wasno illegal dismissal to speak of. This fact negated the obligation to pay backwages. Instead privaterespondents were required to give separation pay, which they already did, to all their regularemployees except petitioners Rolando Cortes, Herminigildo Justo, Guillermo Macaraeg, FelixbertoMirana, Arsenio Ortiz, Manuel Pranada, Ruben Saringan and Ramon Seraspi who refused to accepttheir separation pay.



JUDICIAL REVIEW OF LABOR CASES

CBL TRANSIT, INC. vs. NATIONAL LABOR RELATIONS COMMISSION[G.R. No. 128425. March 11, 2004]CORONA, J.:

FACTS: Private respondents were regular employees hired as drivers andconductors/conductresses by petitioner CBL Transit, Inc./California Bus Line, Inc. However,

despite their regular employment status, they were not given work assignments beginningDecember 1990. They also averred that CBL Transit, Inc. and California Bus Lines, Inc. were, inreality, a single enterprise owned and operated by one and the same family. A complaint for illegaldismissal was filed by herein respondents at the Department of Labor and Employment (DOLE),NLRC, National Capital Region.On the other hand, petitioner CBL Transit, Inc. categorically denied the allegations of theprivate respondents. It claimed that the termination of private respondents was a consequence ofits closure of operations due to bankruptcy.Labor arbiter Cresencio R. Iniego found petitioner guilty of illegal dismissal. Consequently,petitioner and its directors/stockholders were ordered to pay private respondents separation payequivalent to one-month salary for every year of service. On appeal, the NLRC upheld the decision

of the labor arbiter. It rejected petitioner‘s claim that it was forced to close shop due to bankruptcy. Petitioner filed a petition for certiorari before the Supreme Court. However, in aresolution the Supreme Court dismissed the petition and ordered the reinstatement of privaterespondents with backwages up to the time of their actual reinstatement, or separation pay in theamount of one month for every year of service in case reinstatement was not feasible.To enforce the Court‘s resolution, labor arbiter Iniego directed Atienza of the Research and Information Unit to call for a conference with the parties in order to determine the individualmoney claims of private respondents. Subsequently, Mr. Atienza submitted a report consisting ofthe computation of private respondents‘ respective monetary awards. Since the actual payrolls were not available, the computation, per agreement of both parties, was based on the monthlyaverage earnings of the individual private respondents appearing on their Social Security System(SSS) forms.Unconvinced, petitioner again filed its comment, this time submitting its own formula andpertinent figures. As the matter remained unsettled, both parties agreed to meet again. This time,however, petitioner‘s accountant failed to appear and instead filed a manifestation and motion assailing the computation and authority of Ricardo Atienza. In a pleading filed by respondent, italleged that the computation made by the Acting Chief, Research and Information Unit of thisOffice, was not based on what was agreed upon by the parties, and is favorable to thecomplainants. Petitioner appealed to the NLRC but the appeal was dismissed for lack of merit. Themotion for reconsideration was likewise denied. Hence, this petition.ISSUES:1. Whether or not private respondents are entitled to separation pay;2. Whether or not petitioner ceased operations because of bankruptcy.

HELD:(1) Petitioner‘s contention that the NLRC acted with grave abuse of discretion when it sustained the labor arbiter‘s order awarding backwages and separation pay to private respondents is devoid of merit. It should be pointed out that, due to the unavailability of the actual payrolls,the parties themselves agreed on the basis for the computation of the respective award of backwages and separation pay ¾ the monthly average earnings of the individual privaterespondents appearing on their SSS forms for the years 1988, 1989, and 1990. The only differencewas in the manner of computation thereof. This issue is definitely a question of fact, thedetermination of which is the statutory function of the NLRC. Judicial review of labor cases doesnot go beyond the evaluation of the sufficiency of the evidence upon which its labor officials‘ findings rest. As such, the findings of facts and conclusion of the NLRC are generally accorded not



ISSUE: Whether or not, the award of backwages in favor of respondent is proper.HELD: Yes. Under Art. 279 of the Labor Code, an employee who is unjustly dismissed is entitled toreinstatement, without loss of seniority rights and other privileges, and to the payment of his fullbackwages, inclusive of allowances, and other benefits or their monetary equivalent, computedfrom the time his compensation was withheld from him (which, as a rule, is from the time of hisillegal dismissal) up to the time of his actual reinstatement.Similarly, under R.A. 6715, employees who are illegally dismissed are entitled to fullbackwages, 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 actualreinstatement. If reinstatement is no longer possible, the backwages shall be computed from thetime of their illegal termination up to the finality of the decision.

RECKONING POINT FOR PAYMENT OF BACKWAGES.

ROBERTO FULGENCIO vs. NATIONAL LABOR RELATIONS COMMISSION[G.R. No. 141600. September 12, 2003.]CALLEJO, SR., J.:

FACTS: This is a petition for review on certiorari filed under Rule 45 of the 1997 Rules of Civil

Procedure, assailing the Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 54641 whichdismissed outright the petitioners' petition for certiorari for alleged failure to comply with theformal requirements of the rules, and its January 18, 2000 Resolution denying the petitioners'motion for reconsideration.The private respondent Raycor Aircontrol Systems, Inc. was engaged in the installation ofairconditioning systems in the buildings of its clients. In connection with such installation work,petitioners were among those hired by the private respondent to work in various capacities, such astinsmith, leadsman, aircon mechanic, installer, welder and painter. The private respondent servedthe petitioners with uniformly worded notices of termination of employment. As a result, thepetitioners joined other employees in filing three separate cases of illegal dismissal against theprivate respondent, docketed as NLRC-NCR Nos. 00-03-01930-92, 00-05-02789-92 and 00-07-03699-92. The proceedings in all the cases were subsequently consolidated.The Labor Arbiter rendered judgment dismissing the complaints for lack of merit. Onappeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's findings. Theprivate respondent's motion for reconsideration having been denied by the NLRC, the privaterespondent filed a petition for certiorari assailing the above-quoted decision with the SupremeCourt which rendered judgment holding that petitioner has failed to discharge its burden of proofin the instant case and therefore ordering the reinstatement of private respondents as regularemployees of petitioner, without loss of seniority rights and privileges and with payment ofbackwages from the day they were dismissed up to the time they are actually reinstated.The judgment of the court became final and executory. The private respondent filed amotion for clarification claiming that it had offered reinstatement to the petitioners but that thelatter spurned its offer. The Court denied the said motion. The case was remanded to the NLRC for

implementation. In due course, the Research and Information Unit of the NLRC computed thebenefits due the petitioners and submitted an updated computation. The Labor Arbiter approvedthe computation. Meanwhile, on motion of the petitioners, a writ of execution was issued by theLabor Arbiter directing the sheriff of the NLRC to accompany complainants to the premises ofrespondent for the purpose of reinstating them to their former position and collect from saidrespondent the amount of P3,960,668.45 corresponding to complainants' backwages and attorney'slien.The private respondent appealed the Order of the Labor Arbiter to the NLRC whichawarded backwages of the complainant and such will not be reduced by their salaries obtainedelsewhere during the period of their dismissal until the offer of reinstatement was made. Thepetitioners filed a motion for the reconsideration of the above-quoted decision, contending that by



computing the backwages of the petitioners the NLRC modified the already final and executorydecision of the Supreme Court. The NLRC issued an order denying the said motion. The petitionersfiled a petition for certiorari with a prayer for the issuance of a writ of preliminary injunction withthe CA which outrightly dismissed the petition in a Resolution.ISSUE: Whether or not petitioners are entitled to payment of backwages from the time they wereillegally dismissed up to the time of their actual reinstatement.HELD: The Supreme Court gave due course to the petition to avert a miscarriage of justice onaccount of technicalities. The court has the discretion to dismiss or not to dismiss an appellant's

appeal. In this case, the Court finds compelling reasons to disregard the petitioners' procedurallapses in order to obviate a patent injustice and to avert further delay.The Supreme Court was convinced beyond cavil that the NLRC committed a grave abuse ofits discretion amounting to lack or excess of jurisdiction in reversing the order of the Labor Arbiter,for in so doing, the NLRC modified the decision of this Court in Raycor Aircontrol Systems, Inc. v.NLRC. It bears stressing that in our decision in G.R. No. 114290, we specifically enjoined thepetitioners' reinstatement coupled with the payment of backwages, from the time of their dismissalup to the time of their actual reinstatement. However, the NLRC, in its assailed June 16, 1998Decision, directed the payment of the petitioners' backwages from the time of dismissal up to July13, 1992, thus sustaining the claim of the private respondent that when the petitioners weredirected to return to work on the said date, they refused. In so doing, the NLRC sought to enforce

the final judgment in G.R. No. 114290 in a manner contrary to the explicit terms thereof. We notethat in its Decision dated June 16, 1998, the NLRC reversed the Labor Arbiter's dismissal of the caseand directed the payment of backwages, to be reckoned from the time of the petitioners' dismissalup to the time of their actual reinstatement. If the private respondent believed the aforesaidcomputation to be erroneous in the light of the factual circumstances obtaining between theparties, it should have assigned the same as an error when it filed its petition for certiorari in G.R.No. 114290 assailing the said NLRC judgment.It is, therefore, crystal-clear that the manner of the computation of the petitioners'backwages is an issue which was already resolved by this Court in its decision in G.R. No. 114290which had long acquired finality. Hence, the Court's decision in G.R. No. 114290, which directedthe payment of the petitioners' backwages from the time they were dismissed up to the time they

are actually reinstated, has become the "law of the case" which now binds the NLRC and the privaterespondent.

RECKONING POINT FOR PAYMENT OF BACKWAGES

JOSE B. CRUZ vs. PHILIPPINE GLOBAL COMMUNICATIONS, INC. AND/OR ALFREDOPARUNGAO,[G.R. No. 141868. May 28, 2004.]SANDOVAL-GUTIERREZ, J p:

FACTS: Philippine Global Communications, Inc., respondent, is a corporation engaged in theprincipal business of communications through telex and telegram, with various branches

nationwide. As a result of a decline in the volume of recorded messages sent via telex andtelegram, respondent suffered substantial financial losses. With this development, respondentadopted an organizational streamlining program that resulted in the closure of its branches andtermination from the service of forty-two (42) workers. Among them were Jose B. Cruz, Rodolfo C.Delos Santos, Vicente A. Rigos, Gregorio A. Lingal and Olivia P. Francisco, petitioners, whooccupied managerial, supervisory and confidential positions.Eventually, respondent paid petitioners their separation pay at the rate of 1 ½ monthssalary per year of service. Then after having been paid their separation pay, they executed andsigned a ―Release, Waiver and Quitclaim.‖ However, on October 17, 1995, petitioners filed with the Labor Arbiter a complaint for payment of retirement benefits, damages and attorney‘s fees against respondent and its president, Alfredo Parungao. On July 31, 1997, the Labor Arbiter



rendered a Decision sustaining petitioners‘ claim for retirement benefits under respondent‘s Retirement Plan. Upon appeal by the parties, the National Labor Relations Commission (NLRC), ina Decision dated March 2, 1998, reversed the Labor Arbiter‘s Decision and dismissed petitioners‘ complaint for payment of retirement benefits.On March 23, 1998, petitioners filed a motion for reconsideration but was denied. Hence,petitioners filed with this Court a petition for certiorari which we referred to the Court of Appealspursuant to our ruling in St. Martin‘s Funeral Home vs. NLRC. On July 30, 1999, the AppellateCourt promulgated its Decision affirming the assailed Decision of the NLRC. In denying petitioners

claim for retirement benefits. On February 4, 2000, the Court of Appeals issued a Resolution denyingpetitioners‘ motion for reconsideration.ISSUE: Whether or not employee separated from the service is entitled to either the amountprescribed in the retirement plan or the separation pay provided by law, whichever is higher.HELD: In Cipriano case, this Court, through Mr. Chief Justice Concepcion, ruled that regularemployees who were separated from the service are entitled either to the amount prescribed inthe retirement plan or the separation pay provided by law, whichever is higher. This is pursuant tothe agreement between the company and the labor union, of which plaintiff is a member, thus:―Plaintiff's contention is manifestly devoid of merit. His right to the benefits of the aforementioned plan came into existence by virtue of the agreement between the defendant and the labor union,of which plaintiff is a member. Admittedly, said right is subject to the limitations prescribed in the

agreement, Article X of which reads: ‗Regular employees who are separated from the service of the company for any reason other than misconduct or voluntary resignation shall be entitled to either100% of the benefits provided in Section 2, Article VIII hereof, regardless of their length of servicein the company or to the severance pay provided by law, which ever is the greater amount.‘ Pursuant thereto, plaintiff was entitled to ‗either‘ the amount prescribed in the plan or the severance pay provided by law, whichever is the greater amount.‘ In other words, he had a right to one of the two benefits, not to both, at the same time. The exclusion of one by the other is clearlydeducible, not only from the terms ‗either‘ and ‗or‘ used in the agreement, but, also, by the qualifying phrase ‗whichever is the greater amount.‘ . . ..‖ Clearly, under the above case, the right of the concerned employees to receive bothretirement benefits and separation pay depends upon the provisions in the Retirement Plan. Thus,

petitioners are entitled only to either the separation pay provided under Article 283 of the LaborCode, as amended, or retirement benefits prescribed by the Retirement Plan, whichever is higher.Under Article 283 of the Labor Code, as amended, affected employees, in case ofretrenchment or cessation of operations, are always given termination or separation pay equivalentto one month pay or at least ½ month pay for every year of service, whichever is higher. UnderSection 4, Article VI 12 of respondent‘s Retirement Plan, the employees are entitled to a retirement pay equivalent to one and a half (1 ½) months pay for every year of service computedon the basis of their basic monthly salary at the time of retirement. Here, respondent opted to paypetitioners separation benefits computed under the Retirement Plan, the same being higher thanwhat Article 283 of the Labor Code, as amended, provides.

ILLEGAL DISMISSAL; BACK WAGES

JACINTO RETUYA vs. DUMARPA[G.R. No. 148848 August 5, 2003]PANGANIBAN, J.:

FACTS: Petitioners were workers who have rendered services in various corporations of privaterespondents, namely Mindanao Integrated Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders,Inc. and Queen City Builders, Inc. Private respondent, Insular Builders, Inc. engaged in theconstruction business, on the other hand, is a family-owned corporation managed and operatedprincipally by Antonio Murillo, father, and his son, Rodolfo Murillo. At the height of the feudbetween private respondents Antonio Murillo and Rodolfo Murillo, the former discharged the latter



SPECIAL LAWSPD 626; DEATH BENEFITSGSIS vs. TEODOSIO CUANANGG.R. No. 158846. June 3, 2004YNARES-SANTIAGO, J.:

FACTS: Carmen T. Cuanang, deceased wife of respondent Marc Dennis Cuanang, was formerlyemployed as an Elementary Grade Teacher. She was promoted to Teacher I and later to Teacher II.

She applied for early optional retirement after completing almost twenty six years of governmentservice. Cuanang was confined at the University of the East Ramon Magsaysay Memorial MedicalCenter, for Bronchial Asthma and Pneumonia, Rheumatic Heart Disease (RHD) and Mitral Stenosis.Cuanang died at the age of 65. The immediate cause of her death was determined to be CardioPulmonary Arrest with Acute Myocardial Infarction as the antecedent cause, and Bronchial Asthmaand Hypertension as underlying causes. Respondent filed with petitioner GSIS a claim for deathbenefits under PD 626, as amended. Petitioner denied the claim as the death occurred out ofservice. On appeal to the ECC, the commission affirmed GSIS. They later filed with the Court ofAppeals a petition for review under Rule 43 of the Rules of Court. CA reversed the decision of ECCand GSIS.ISSUE: Whether or not, death benefits should be paid although it occurred after separation from

government service.HELD: Yes. We hold in the affirmative. In the instant case, the wife of the respondent died a yearafter her retirement. Clearly, the period between her retirement and demise was less than oneyear. A claim for benefit for such death cannot be defeated by the mere fact of separation fromservice. Hence, the degree of proof required under PD 626 was satisfied, i.e., "such relevantevidence as a reasonable mind might accept as adequate to support a conclusion." Probability andnot ultimate degree of certainty is the test of proof in compensation proceedings.In the case at bar, the requisite substantial evidence came from the expert opinion of Dr.Arsenio A. Estreras Jr., a Diplomate in Internal Medicine who issued the Death Certificate. AcuteMyocardial Infarction generally occurs with the abrupt decrease in coronary blood flow that followsa thrombotic occlusion of a coronary artery previously narrowed by astherosclerosis. It is commonknowledge among medical practitioners that hypertension is one major risk factor among multiplecoronary risk factors that can precipitate an acute coronary acclusion. Cuanang was hypertensiveand also had bronchial asthma. Therefore Acute Myocardial Infarction which she suffered can be aconsequence also of her chronic hypertension vis-à-vis her rheumatic heart disease.This expert opinion is fully supported by the facts leading to Carmen Cuanang'sdeteriorating health condition, and ultimately, her death. When the deceased joined thegovernment service on October 1, 1972, she was in perfect health. It was only in 1997, while shewas still in the service, that her condition started to worsen. Myocardial Infarction, also known ascoronary occlusion or just a "coronary", is a life threatening condition. Predisposing factors formyocardial infarction are the same for all forms of Coronary Artery Disease, and these factorsinclude stress. Stress appears to be associated with elevated blood pressure. It is of commonknowledge that the job of a teacher can be very stressful. It goes without saying that all these

conditions contributed much to the deterioration of her already precarious health.Therefore, claims falling under the Employees' Compensation Act should be liberallyresolved to fulfill its essence as a social legislation designed to afford relief to the working man andwoman in our society. It is only this kind of interpretation that can give meaning and substance tothe compassionate spirit of the law as embodied in Article 4 of the New Labor Code, which statesthat all doubts in the implementation and interpretation of the provisions of the Labor Codeincluding its implementing rules and regulations should be resolved in favor of labor.



PERMANENT TOTAL DISABILITY

GOVERNMENT SERVICE INSURANCE SYSTEM vs. LEO L. CADIZ[G.R. No. 154093. July 8, 2003.]YNARES-SANTIAGO, J.:

FACTS: Respondent Leo L. Cadiz was appointed as a Provincial Guard of Negros Oriental. He wasabsorbed by the Philippine National Police (PNP), with a rank of Police Chief Inspector.

Respondent's rank was adjusted to Police Chief Superintendent, the position he held until hisretirement at the age of 55.The medical records of respondent revealed that he suffered a heart attack and washospitalized at the San Carlos Planters Hospital, San Carlos City. He was transferred to the SilimanUniversity Medical Center where he was diagnosed to be suffering from a heart ailment.Consequently, he applied for early retirement due to "an ailment causing paralysis of the left handand slurred speech rendering him unfit to discharge further his duties and responsibilities as apolice officer." After its own examination of respondent, the Medical and Dental Service, PNP,declared him "UNFIT FOR POLICE SERVICE". Hence, he was retired from service and grantedpermanent total disability benefits. Subsequently, respondent filed a disability claim with the GSIS,attaching to his application his service record and PNP General Order No. 641, stating that

respondent retired from the PNP due to a permanent total disability.Dr. Estrada, Medical Officer of GSIS, Dumaguete City, approved the claim and grantedrespondent permanent total disability benefits and temporary total disability benefits. The MedicalService Group of GSIS, Pasay City, however, directed Dr. Estrada to revise her recommendation.Dr. Estrada modified her recommendation by retaining respondent's temporary total disabilitybenefits but downgrading the permanent total disability benefits to compensation equivalent to 8months permanent partial disability benefits. Respondent moved for reconsideration of theevaluation but the same was denied.On appeal by respondent, the Employees' Compensation Commission (ECC) affirmed thefindings of the GSIS. Hence, respondent filed a petition with the Court of Appeals which, which setaside the decision of the ECC and granting respondent's claim for permanent total disability. GSIS,as the agency charged with the management and administration of the trust fund of the ECC, filedthe instant petition.ISSUE: Whether or not respondent is entitled to permanent total disability benefits.HELD: We rule in the affirmative. The test of whether or not an employee suffers from permanenttotal disability is the capacity of the employee to continue performing his work notwithstanding thedisability he incurred. If by reason of the injury or sickness he sustained, the employee is unable toperform his customary job for more than 120 days and he does not come within the coverage ofRule X of the Amended Rules on Employees Compensability (which, in a more detailed manner,describes what constitutes temporary total disability), then the said employee undoubtedly suffersfrom a permanent total disability regardless of whether or not he loses the use of any part of hisbody. Permanent total disability does not mean a state of absolute helplessness, but meansdisablement of an employee to earn wages in the same kind of work, or work of similar nature, that

he was trained for, or any work which a person of similar mentality and attainment could do.In the case at bar, respondent's entitlement to permanent total disability was establishedby his medical records and by the investigation of the very agency he worked for, the PNP, whichfound him "UNFIT FOR POLICE SERVICE". Even the initial findings of Dr. Estrada, Medical Officerof the GSIS, Dumaguete City evinced that respondent is really qualified for permanent totaldisability benefits. Most of all, the decision of the PNP to retire him at the age of 55 for being unfitfor police service is a clear indication that his heart ailment rendered him incapable of effectivelyand competently performing his job as a Police Chief Superintendent without serious discomfort orpain and without material injury or danger to his life. In a number of cases, it was ruled that theearly retirement of an employee due to a work-related ailment, as in the case at bar, proves that hewas really disabled totally to further perform his assigned task, and to deny permanent total



disability benefits when he was forced to retire would render inutile and meaningless the social justice precept guaranteed by the Constitution.The case at bar neither concerns a recurring illness previously compensated, nor a claim foradditional/conversion of disability benefits, but involves a review of the ECC decision whichclassified respondent's early-retirement-causing disability as permanent partial instead ofpermanent total.

REQUISITES OF AGRARIAN TENANCY RELATIONSHIP; PARAB’S JURISDICTION

SPS. NUMERIANO and CARMELITA ROMERO vs. MERCEDES L. TAN[G.R. No. 147570. February 27, 2004]QUISUMBING, J.:

FACTS: Petitioners allege that they have been in peaceful possession of the fishpond as tenant lesseesince 1985. They present cash vouchers and hand-written receipts covering the period 1987to 1997. In September 1999, respondents gave verbal notice to terminate petitioners‘ lease. According to petitioners, respondents wanted to terminate the contract because a third partyoffered to pay higher rent. However, despite petitioners‘ counter-offer to match the increase inthe rent, respondents appeared bent on removing petitioners from the premises. For their part,

respondents aver that there is no relationship of lease-tenancy by petitioners to speak of. They addthat the existing contract between them and petitioners is an ordinary lease, governed by the CivilCode. Respondents further claim that petitioners failed to pay the agreed rental covering theperiod January 1997 to December 1997. Accordingly, respondents were constrained to file anejectment case against petitioners before the Metropolitan Trial Court (MTC) of Malabon, Branch55, conformably with the provision on venue in the lease contract. MTC issued a judgment based ona compromise agreement wherein the parties agreed, that petitioners would vacate the leasedpremises not later than December 1999. Petitioners filed a complaint for maintenance of peacefulpossession and issuance of mandatory preliminary injunction with the Provincial Agrarian ReformAdjudication Board, Region III (PARAB). Respondents filed a motion to dismiss it, alleging lack of

jurisdiction, improper venue and litis pendentia, and/or res judicata. The PARAB denied the motionto dismiss. Bautista filed a motion for intervention. He alleged that he had entered into a one year

joint venture agreement dated November 1998, to expire on December 1999, with the petitionersto augment their harvest and enhance their fishpond technology. Intervenor claims that he has theright of possession over the subject fishpond as respondents. Petitioners amended their complaintto include intervenor Kenneth Bautista as one of the defendants. PARAB rendered judgment infavor of herein petitioners.In the meantime, while the complaint before the PARAB was pending, herein petitioners 21days before the expiration of the lease contract and the date to relinquish possession of thefishpond pursuant to the compromise agreement, filed with the RTC of Malabon, a petition forannulment of the MTC judgment, order, and compromise agreement. Petitioners raised issuesconcerning the tenancy relationship, lack of assistance by counsel in arriving at the compromiseagreement, as well as lack of jurisdiction by the MTC. Respondents filed a motion to dismiss

premised on culpability of petitioners for forum shopping, including lack of cause of action to filethe petition. RTC dismissed the petition for lack of cause of action and failure to prosecute. As itturned out, even before the RTC‘s Order of dismissal came out in their favor, respondents had already elevated the controversy to the appellate court. Respondents filed with the Court ofAppeals a petition for certiorari assailing decision of the PARAB. Court of Appeals set aside thePARAB decision. Petitioners filed before this Court an appeal via a petition praying for reversal ofthe above stated CA decision, which ruled that the PARAB had no jurisdiction to hear and decidethe complaint filed by petitioners, and thus ordered the immediate execution of MTC judgment.ISSUE: Whether or not the PARAB had jurisdiction to hear and decide the complaint formaintenance of peaceful possession and issuance of mandatory preliminary injunction.HELD: These issues depend on whether the fishpond, which is the subject of the controversy, is



governed by the Comprehensive Agrarian Reform Law (CARL).The Court of Appeals in ruling thatthe PARAB has no jurisdiction relies on our ruling in the case of Atlas Fertilizer Corp. v. Secretary,Dept. of Agrarian Reform where we held that Rep. Act No. 7881 expressly provides that fishpondsand prawn farms are excluded from the coverage of CARL. In reversing the PARAB‘s findings, the appellate court stated that the provincial adjudicator‘s jurisdiction is only to hear, determine and adjudicate all agrarian cases, AND disputes and incidents in connection therewith (DARAB NewRules of Procedure, Rule 2, Section 2), and considering further that lands devoted to fishing are notagricultural lands because the use of the land is only incidental to and not the principal factor in

productivity, as implied by this Court in the Atlas case, it follows that the PARAB has no jurisdiction over the instant case. The jurisdiction of the PARAB in this case is limited to agrariandisputes or controversies and other matters or incidents involving the implementation of theComprehensive Agrarian Reform Program (CARP) under Rep. Act No. 6657, Rep. Act No. 3844 andother agrarian laws. An agrarian dispute is defined as any controversy relating to tenurialarrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted toagriculture, including disputes concerning farm workers associations or representation of persons innegotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurialarrangements. Although Section 166 (1) of Rep. Act No. 3844 had included fishponds in itsdefinition of agricultural land within its coverage, this definition must be considered modified in thelight of Sec. 2 of Rep. Act No. 7881, which amended Section 10 of Rep. Act No. 6657, otherwise

known as the Comprehensive Agrarian Reform Law (CARL). Expressly, the amendment hasexcluded private lands actually, directly and exclusively used for prawn farms and fishponds fromthe coverage of the CARL. Clearly, by virtue of the amendments to the CARL, the operation of afishpond is no longer considered an agricultural activity, and a parcel of land devoted to fishpondoperation is not agricultural land as therein defined.Consequently, we rule that there is no agrarian tenancy relationship to speak of in this caseat this time, since certain requirements set by present law on the matter have not been met.Among these are: (1) the subject matter should be agricultural land; (2) the purpose should beagricultural production; and (3) there should be personal cultivation done by the tenantsthemselves. Here, we also find that petitioners failed to prove their personal ―cultivation‖ of the area in question. There is personal cultivation if the tenant (lessee) cultivates the land himself or

with the aid of the immediate farm household, which refers to the members of the family of thetenant (lessee) and other persons who are dependent upon him for support and who usually helphim in the activities. Particularly fatal to petitioners‘ cause is the joint venture agreement with Bautista. This agreement provides, among others, that Bautista will share in the operation andmanagement of the fishpond; pay the agreed rentals to the registered owner of the land; and thatafter deducting all operational expenses, Bautista and petitioners shall have equal share in the netprofits. Not only does it reflect lack of personal cultivation by petitioners, but it also shows thenature of their fishpond operation is that of a large scale commercial venture.

COMPREHENSIVE AGRARIAN REFORM PROGRAM

SAMAHAN NG MAGSASAKA SA SAN JOSEP vs. MARIETTA VALISNO, ET AL.[G.R. No. 158314. June 3, 2004.]YNARES-SANTIAGO, J.:

FACTS: The original 57-hectare property, situated in La Fuente, Sta. Rosa, Nueva Ecija, wasformerly registered in the name of Dr. Nicolas Valisno, Sr. Before Presidential Decree No. 27, theland was the subject of a judicial ejectment suit, whereby in 1971, the Valisnos' tenants wereejected from the property. Among these tenants was Dominador Maglalang, who represents theSMSJ in the instant proceedings.Dr. Valisno mortgaged 12 hectares of his property to Renato and Angelito Banting. Theproperty was subdivided into ten lots on individual titles were issued in the name of the eightchildren of Nicolas, Angelito Banting, and Renato Banting. The mortgage on the 12 hectare portion



then transferred to the Redemptioner-Grandchildren in 1973. Regardless of the source of theirfunds, and regardless of their minority, they became the legal owners of the property in 1973.Moreover, although Maria Cristina, Leonora and Gregorio were all minors in 1973, they wereundoubtedly of legal age in 1994, when SMSJ initiated the petition for coverage of the subjectlandholding under the CARL, and of course were likewise of legal age in 1997, when all the Valisnoheirs filed their Consolidated Application for Retention and Award under RA 6657.As owners in their own right of the questioned properties, Redemptioner-Grandchildrenenjoyed the right of retention granted to all landowners. This right of retention is a constitutionally

guaranteed right, which is subject to qualification by the legislature. It serves to mitigate theeffects of compulsory land acquisition by balancing the rights of the landowner and the tenant andby implementing the doctrine that social justice was not meant to perpetrate an injustice againstthe landowner. A retained area, as its name denotes, is land which is not supposed to leave thelandowner's dominion, thus sparing the government from the inconvenience of taking land only toreturn it to the landowner afterwards, which would be a pointless process.

PD 626

AZUCENA O. SALALIMA vs. EMPLOYEES COMPENSATION COMMISSION, ET AL.[G.R. No. 146360 May 20, 2004]

YNARES-SANTIAGO, J.:

FACTS: Petitioner's husband, Juancho S. Salalima, was employed for twenty-nine years as a routehelper and subsequently as route salesman for the Meycauayan Plant of Coca-Cola Bottlers Phils.,Incorporated. In 1989, Juancho was diagnosed with minimal pulmonary tuberculosis. His biopsyrevealed that he had "Adenocarcinoma, poorly differentiated, metastatic". He underwentchemotherapy.Later, he was found to be suffering from pneumonia. He was confined at the MakatiMedical Center and died two days due to "Adenocarcinoma of the Lungs with widespreadmetastasis.‖ A claim for compensation benefits under P.D. 626 was filed by his surviving wife,Azucena, petitioner herein, with the SSS. The claim for benefit was denied on the ground thatAdenocarcinoma of the Lungs (Cancer of the Lungs) had no causal relationship with Juancho's jobas a route salesman. Petitioner brought the case to the ECC, which affirmed SSS. ECC stated that

Juancho's exposure to smog and dust is not associated with the development of lung cancer. In theCourt of Appeals affirmed ECC.ISSUE: Whether or not, the denial of the claim of the death benefits under P.D. 626, deceased isproper.HELD: Yes. It is worth noting that tuberculosis is most commonly confused with carcinoma of thelung because the highest incidence of both diseases is in the upper lobe of the lungs and in oldermen. Tuberculosis is a disease characterized by lesions in the lungs as well as tuberculous scars.Thus, in light of Juancho's continued exposure to detrimental work environment and constantfatigue, the possibility that Juancho's Adenocarcinoma of the lungs developed from the worseningof his pulmonary tuberculosis is not remote.The degree of proof required under P.D. No. 626 is merely substantial evidence, What the

law requires is a reasonable work-connection and not a direct causal relation. It is enough that thehypothesis on which the workmen's claim is based is probable. Medical opinion to the contrary canbe disregarded especially where there is some basis in the facts for inferring a work-connection.

Juancho's job required long hours on the streets as well as his carrying of cases of soft drinks duringsales calls. The combination of fatigue and the pollutants that abound in his work environmentverily contributed to the worsening of his already weak respiratory system. His continuousexposure to these factors may have led to the development of his cancer of the lungs.It escapes reason as well as one's sense of equity that Juancho's heirs should now be deniedcompensation (death) benefits for the sole reason that his illness immediately before he died wasnot compensable in his line of work. P.D. 626, as amended, is said to have abandoned thepresumption of compensability and the theory of aggravation prevalent under the Workmen's



Compensation Act. Despite such abandonment, however, the present law has not ceased to be anemployees' compensation law or a social legislation; hence, the liberality of the law in favor of theworking man and woman still prevails, and the official agency charged by law to implement theconstitutional guarantee of social justice should adopt a liberal attitude in favor of the employee indeciding claims for compensability, especially in light of the compassionate policy towards laborwhich the 1987 Constitution vivifies and enhances.

Labor Standards Law

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