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LABOR LAW AND SOCIAL LEGISLATION

3102 BAR EXAMINATIONS


LABOR STANDARDS

STATE POLICY ON LABOR

It is incumbent upon this Court to afford full protection to labor. Thus, while we take
cognizance of the employers right to protect its interest, the same should be exercised in a manner which
does not infringe on the workers right to security of tenure. "Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane justification that
those with less privilege in life should have more in law. (St. MARY'S ACADEMY of Dipolog City v.
TERESITA PALACIO, MARIGEN CALIBOD, LEVIE LAQUIO, ELAINE MARIE
SANTANDER, ELIZA SAILE, AND MA. DOLORES MONTEDERAMOS, G.R. No. 164913,
September 8, 2010)

RECRUITMENT OF LOCAL AND MIGRANT WORKERS

In fine, for failure to adduce any shred of evidence of payment made to petitioner, or that
petitioner referred or endorsed respondent for employment abroad to another agency, the charges of
non-issuance of receipt and misrepresentation against petitioner could not possibly prosper. By the
voluntary withdrawal of respondents application from petitioner, the latter could not have been involved
in the recruitment and placement of respondent and consequently could not be held liable for any
violation. (LNS INTERNATIONAL MANPOWER SERVICES v. ARMANDO C. PADUA, JR.,
G.R. No. 179792, 5 March 2010)

The imposition of joint and solidary liability is in line with the policy of the state to protect and
alleviate the plight of the working class. Verily, to allow petitioners to simply invoke the immunity from
suit of its foreign principal or to wait for the judicial determination of the foreign principals liability
before petitioner can be held liable renders the law on joint and solidary liability inutile. (ATCI
OVERSEAS CORPORATION, ET AL. v. MA. JOSEFA ECHIN, G.R. No. 178551, 11 October 2010)

ILLEGAL RECRUITMENT (SEC. 5, R.A. NO. 10022)

This is in accordance with the penultimate paragraph of Section 6 Republic Act No. 8042 which
provides, thus: Illegal recruitment is deemed committed by a syndicate if carried out by a group of three
(3) or more persons conspiring or confederating with one another. It is deemed committed in large scale
if committed against three (3) or more persons individually or as a group. xxx The respective testimonies
of private complainants clearly established that appellant promised them employment in Italy and that she
asked money from them for the processing of their papers. Relying upon appellants representations,
complainants parted with their money. That appellant recruited them without the requisite license from
the POEA makes her liable for illegal recruitment. (PEOPLE OF THE PHILIPPINES v. ANITA
"KENNETH" TRINIDAD, G.R. No. 181244, 9 August 2010)

It is the lack of the necessary license or authority to recruit and deploy workers, either locally or
overseas, that renders the recruitment activity unlawful or criminal. The Statute of Frauds and the rules of
evidence do not require the presentation of receipts in order to prove the existence of recruitment
agreement and the procurement of fees in illegal recruitment cases. The amounts may consequently be
proved by the testimony of witnesses.( PEOPLE OF THE PHILIPPINES v. EDITH RAMOS ABAT,
G.R. No. 168651, 16 March 2011)

To prove illegal recruitment, it must be shown that the accused, without being duly authorized by
law, gave complainants the distinct impression that he had the power or ability to send them abroad for
work, such that the latter were convinced to part with their money in order to be employed. It is
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important that there must at least be a promise or offer of an employment from the person posing as a
recruiter, whether locally or abroad. (PEOPLE OF THE PHILIPPINES v. TERESITA TESSIE
LAOGO, G.R. No. 176264, 10 January 2011)

LIABILITY OF LOCAL AGENT IN OVERSEAS EMPLOYMENT

The imposition of joint and solidary liability is in line with the policy of the state to protect and
alleviate the plight of the working class. Verily, to allow petitioners to simply invoke the immunity from
suit of its foreign principal or to wait for the judicial determination of the foreign principals liability
before petitioner can be held liable renders the law on joint and solidary liability inutile. (ATCI
OVERSEAS CORPORATION, ET AL. v. MA. JOSEFA ECHIN, G.R. No. 178551, 11 October 2010)

EMPLOYMENT OF SEAFARERS

A. DISABILITY BENEFIT

Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings. And probability must be reasonable; hence it should, at least, be anchored on credible
information. Moreover, a mere possibility will not suffice; a claim will fail if there is only a possibility that
the employment caused the disease. (ARNALDO G. GABUNAS, SR.v. SCANMAR MARITIME
SERVICES, INC., MR. VICENTE BRILLANTES AND IUM SHIP MANAGEMENT, G.R. No.
188637, 15 December 2010)

That the exact and definite cause of petitioners illness is unknown cannot be used to justify grant
of disability benefits, absent proof that there is any reasonable connection between work actually
performed by petitioner and his illness. (JERRY M. FRANCISCO v. BAHIA SHIPPING SERVICES,
INC. and/or CYNTHIA C. MENDOZA, and FRED OLSEN CRUISE LINES, LTD, G.R. No. 190545,
22 November 2010)

Respondent was thus required to undergo post-employment medical examination by a company-
designated physician within three working days from arrival. He failed to comply with the requirement,
however, without explanation or justification therefor. Hence, he forfeited his right to claim disability
benefits. (PHILIPPINE TRANSMARINE CARRIERS, INC., GLOBAL NAVIGATION, LTD. v.
SILVINO A. NAZAM, G.R. No. 190804, 11 October 2010)

In addition, the Supreme Court (SC) explained that specifically with respect to mental diseases,
for the same to be compensable, the POEA-SEC requires that it must be due to traumatic injury to the
head which did not occur in this case. (PHILIPPINE TRANSMARINE CARRIERS, INC., GLOBAL
NAVIGATION, LTD. v. SILVINO A. NAZAM, G.R. No. 190804, 11 October 2010)

In the absence of substantial evidence, working conditions cannot be accepted to have caused or
at least increased the risk of contracting the disease, in this case, brief psychotic disorder. Substantial
evidence is more than a mere scintilla. The evidence must be real and substantial, and not merely
apparent; for the duty to prove work-causation or work-aggravation imposed by law is real and not
merely apparent. (EDGARDO M. PANGANIBAN v. TARA TRADING SHIPMANAGEMENT INC.
AND SHINLINE SDN BHD, G.R. No. 187032, 18 October 2010)

It appears premature at this time to consider petitioners disability as permanent and total because the
severity of his ailment has not been established with finality to render him already incapable of
performing the work of a seafarer. In fact, the medical expert termed his condition as brief psychotic
disorder. The SC also takes note, as the CA correctly did, that petitioner did not finish his treatment with
the company-designated physician, hence, there is no final evaluation yet on petitioner. (EDGARDO M.
PANGANIBAN v. TARA TRADING SHIPMANAGEMENT INC. AND SHINLINE SDN BHD,
G.R. No. 187032, 18 October 2010)

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The snap on the back of Illescas was not an accident, but an injury sustained by Illescas from
carrying the heavy basketful of fire hydrant caps, which injury resulted in his disability. The injury cannot
be said to be the result of an accident, that is, an unlooked for mishap, occurrence, or fortuitous event,
because the injury resulted from the performance of a duty. (NFD INTERNATIONAL MANNING
AGENTS, INC./BARBER SHIP MANAGEMENT LTD.v. ESMERALDO C. ILLESCAS, G.R. No.
183054, 29 September 2010)

The Supreme Court (SC) sustained the Labor Arbiter and the NLRC in granting total and
permanent disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted
colon cancer was, at the very least, aggravated by his working conditions, taking into consideration his
dietary provisions on board, his age, and his job as Chief Engineer, who was primarily in charge of the
technical and mechanical operations of the vessels to ensure voyage safety. (LEONIS NAVIGATION
CO., INC. and WORLD MARINE PANAMA, S.A. v. CATALINO U. VILLAMATER, et al., G.R. No.
179169, 3 March 2010)

Jurisprudence provides that to establish compensability of a non-occupational disease, reasonable
proof of work-connection and not direct causal relation is required. Probability, not the ultimate degree of
certainty, is the test of proof in compensation proceedings. (LEONIS NAVIGATION CO., INC. and
WORLD MARINE PANAMA, S.A. v. CATALINO U. VILLAMATER, et al., G.R. No. 179169, 3
March 2010)

It is mandatory for a claimant to be examined by a company-designated physician within
three days from his repatriation. The unexplained omission of this requirement will bar the filing
of a claim for disability benefits. (ALEX C. COOTAUCO v. MMS PHIL. MARITIME SERVICES,
INC., MS. MARY C. MAQUILAN AND/OR MMS CO. LTD., G.R. No. 184722, 15 March 2010)

Permanent disability is inability of a worker to perform his job for more than 120 days, regardless
of whether or not he loses the use of any part of his body. Total disability, on the other hand, means the
disablement of an employee to earn wages in the same kind of work of similar nature that he was trained
for, or accustomed to perform, or any kind of work which a person of his mentality and attainments
could do. It does not mean absolute helplessness. In disability compensation, it is not the injury which is
compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity.
(RIZALDY M. QUITORIANO v. JEBSENS MARITIME, INC./ MA. THERESA GUTAY and/or
ATLE JEBSENS MANAGEMENT A/S, G.R. No. 179868, 21 January 2010)

Since cholecystolithiasis or gallstone has been excluded as a compensable illness under the
applicable standard contract for Filipino seafarers that binds both respondent Abalos and the vessels
foreign owner, it was an error for the CA to treat Abalos illness as "work-related" and, therefore,
compensable. The standard contract precisely did not consider gallstone as compensable illness because
the parties agreed, presumably based on medical science, that such affliction is not caused by working on
board ocean-going vessels. Nor has respondent Abalos proved by some evidence that the nature of his
work on board a ship aggravated his illness. (BANDILA SHIPPING, INC., MR. REGINALDO A.
OBEN, BANDILA SHIPPING, INC. and FUYOH SHIPPING, INC., v. MARCOS C. ABALOS, G.R.
No. 177100, 22 February 2010)

Considering the circumstances prevailing in the instant case, the SC ruled that it did not matter
that the company-designated physician assessed petitioner as fit to work. It is undisputed that from the
time petitioner was repatriated, he was unable to work for more than 120 days as he was only certified fit
to work 199 days thereafter. Consequently, petitioner's disability is considered permanent and total. In
fact, from his repatriation until the filing of his petition before the SC, or for more than five years,
petitioner claims that he was unable to resume his job as a seaman which thus strongly indicates that his
disability is permanent and total. (CARMELITO N. VALENZONA v. FAIR SHIPPING
CORPORATION and/or SEJIN LINES COMPANY LIMITED, G.R. No. 176884, 19 October 2011)

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For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements
must concur: (1) the injury or illness must be work-related; and (2) the work-related injury or illness must
have existed during the term of the seafarers employment contract. In other words, to be entitled to
compensation and benefits under this provision, it is not sufficient to establish that the seafarers illness
or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal
connection between the seafarers illness or injury and the work for which he had been contracted.
(GILBERT QUIZORA v. DENHOLM CREW MANAGEMENT (PHILIPPINES), INC., G.R. No.
185412, November 16, 2011)

Lastly, there is also no proof that petitioners varicose veins caused him to suffer total and
permanent disability. The Pre-Employment Medical Examination (PEME) he underwent cannot serve as
enough basis to justify a finding of a total and permanent disability because of its non-exploratory nature.
The fact that respondent passed the companys PEME is of no moment. We have ruled that in the past
the PEME is not exploratory in nature. It was not intended to be a totally in-depth and thorough
examination of an applicants medical condition. (GILBERT QUIZORA v. DENHOLM CREW
MANAGEMENT (PHILIPPINES), INC., G.R. No. 185412, November 16, 2011)

Total disability, on the other hand, means the disablement of an employee to earn wages in the
same kind of work of similar nature that he was trained for, or accustomed to perform, or any kind of
work which a person of his mentality and attainments could do. It does not mean absolute helplessness.
In disability compensation, it is not the injury which is compensated, but rather it is the incapacity to
work resulting in the impairment of one's earning capacity. (FIL-STAR MARITIME CORPORATION,
CAPTAIN VICTORIO S. MIGALLOS and GRANDSLAM ENTERPRISE CORPORATION v.
HANZIEL O. ROSETE, G.R. No. 192686, November 23, 2011)

A total disability does not require that the employee be absolutely disabled or totally paralyzed.
What is necessary is that the injury must be such that the employee cannot pursue his usual work and earn
therefrom (Austria v. Court of Appeals, G.R. No. 146636, Aug. 12, 2002, 387 SCRA 216, 221). On the
other hand, a total disability is considered permanent if it lasts continuously for more than 120 days. (FIL-
STAR MARITIME CORPORATION, CAPTAIN VICTORIO S. MIGALLOS and GRANDSLAM
ENTERPRISE CORPORATION v. HANZIEL O. ROSETE, G.R. No. 192686, November 23, 2011)

A temporary total disability only becomes permanent when the company-designated physician,
within the 240 day period, declares it to be so, or when after the lapse of the same, he fails to make such
declaration. (ALEN H. SANTIAGO v. PACBASIN SHIPMANAGEMENT, INC. and/or MAJESTIC
CARRIERS, INC., G.R. No. 194677, 18 April 2012)

For purposes of determining the seafarers degree of disability, it is the company-designated
physician who must proclaim that he sustained a permanent disability, whether total or partial, due to
either injury or illness, during the term of his employment. (DANIEL M. ISON, v. CREWSERVE, INC.,
et al., G.R. No. 173951, 16 April 2012)

Permanent disability is the inability of a worker to perform his job for more than 120 days,
regardless of whether or not he losses the use of any part of his body. (MAGSAYSAY MARITIME
CORPORATION and/or WASTFEL-LARSEN MANAGEMENT A/S
+
vs. OBERTO S. LOBUSTA,
G.R. No. 177578, January 25, 2012)

The 120-day period is when the seafarer is considered to be totally yet temporarily disabled, thus,
entitling him to sickness wages. This is also the period given to the employer to determine whether the
seafarer is fit for sea duty or permanently disabled and the degree of such disability. (C.F. SHARP CREW
MANAGEMENT, INC., et al. v. JOEL D. TAOK, G.R. No. 193679, July 18, 2012)

When the company-designated physician made a declaration that Tomacruz was already fit to
work, 249 days had already lapsed from the time he was repatriated. As such, his temporary total disability
should be deemed total and permanent, pursuant to Article 192 (c)(1) of the Labor Code and its
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implementing rule. (PHILASIA SHIPPING AGENCY CORPORATION, et al. vs. ANDRES G.
TOMACRUZ, G.R. No. 181180, 15 August 2012)

A seafarer, to be entitled to disability benefits, must prove that the injury was suffered during the
term of the employment, and must submit himself to the company-designated physician for evaluation
within three days from his repatriation. (WALLEM MARITIME SERVICES, INC. VS. ERNESTO C.
TANAWAN, G.R. No. 160444, August 29, 2012)

It is evident that the maximum 240-day medical treatment period expired in this case without a
declaration of Medels fitness to work or the existence of his permanent disability determined.
Accordingly, Medels temporary total disability should be deemed permanent and thus, he is entitled to
permanent total disability benefits. (FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD. v.
JOSELITO T. MEDEL, G.R. No. 177907, 29 August 2012)

Permanent total disability means disablement of an employee to earn wages in the same kind of
work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work
which a person of his mentality and attainment could do. It does not mean absolute helplessness.
(PACIFIC OCEAN MANNING, INC. et al. v. BENJAMIN D. PENALES, G.R. No. 162809, 5 September
2012)

It is not necessary that the nature of the employment be the sole and only reason for the illness
suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by
the employee and his work to lead a rational mind to conclude that his work may have contributed to the
establishment or, at the very least, aggravation of any pre-existing condition he might have had. (ESSIE
V. DAVID, represented by his wife, MA. THERESA S. DAVID, and children, KATHERINE and
KRISTINA DAVID v. OSG SHIP MANAGEMENT MANILA, INC., and/or MICHAELMAR
SHIPPING SERVICES, G.R. No. 197205, 26 September 2012)

Jurisprudence is replete with pronouncements that it is the company-designated physician who is
entrusted with the task of assessing the seaman's disability, whether total or partial, due to either injury or
illness, during the term of the latter's employment. It is his findings and evaluations which should form
the basis of the seafarer's disability claim. His assessment, however, is not automatically final, binding or
conclusive on the claimant, the labor tribunal or the courts, as its inherent merits would still have to be
weighed and duly considered. The seafarer may dispute such assessment by seasonably exercising his
prerogative to seek a second opinion and consult a doctor of his choice. In case of disagreement between
the findings of the company-designated physician and the seafarer's doctor of choice, the employer and
the seaman may agree jointly to refer the latter to a third doctor whose decision shall be final and binding
on them. (RUBEN D. ANDRADA v. AGEMAR MANNING AGENCY, INC., and/or SONNET
SHIPPING LTD./MALTA, G.R. No. 194758, 24 October 2012)

A seafarers inability to resume his work after the lapse of more than 120 days from the time he
suffered an injury and/or illness is not a magic wand that automatically warrants the grant of total and
permanent disability benefits in his favor. The rule is that a temporary total disability only becomes
permanent when the company-designated physician, within the 240-day period, declares it to be so, or
when after the lapse of the same, he fails to make such declaration. (BENJAMIN C. MILLAN vs.
WALLEM MARITIME SERVICES, INC., et al., G.R. No. 195168, 12 November 2012)

Illnesses need not be shown to be work-related to be compensable under the 1996 POEA-SEC,
which covers all injuries or illnesses occurring in the lifetime of the employment contract. It is enough
that the seafarer proves that his or her injury or illness was acquired during the term of employment to
support a claim for disability benefits. (CAREER PHILIPPINES SHIPMANAGEMENT, INC. et al. v.
SALVADOR T. SERNA, G.R. No. 172086, 3 December 2012)

The obligation imposed by the mandatory reporting requirement under the 1996 POEA-SEC is
not solely on the seafarer. It requires the employer to likewise act on the report, and in this sense partakes
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of the nature of a reciprocal obligation. While the mandatory reporting requirement obliges the seafarer to
be present for the post-employment medical examination, which must be conducted within three (3)
working days upon the seafarers return, it also poses the employer the implied obligation to conduct a
meaningful and timely examination of the seafarer. (CAREER PHILIPPINES SHIPMANAGEMENT,
INC. et al. v. SALVADOR T. SERNA, G.R. No. 172086, 3 December 2012)

It would be fairly easy for a physician to determine whether the injury or ailment is work-related
within three-days from repatriation, to ignore the requirement would set a precedent with negative
repercussions which would open the floodgates to a limitless number of seafarers claiming disability
benefits. (LOADSTAR INTERNATIONAL SHIPPING, INC. VS. THE HEIRS OF THE LATE
ENRIQUE C. CALAWIGAN REPRESENTED BY THE LEGAL SPOUSE MARITESS C.
CALAWIGAN, G.R. No. 187337, 5 December 2012)

For an occupational disease and the resulting disability to be compensable, all of the following
conditions must be satisfied under the POEA-SEC: (1) the seafarers work must involve the risks
described in the contract; (2) the disease was contracted as a result of the seafarer's exposure to the
described risks; (3) the disease was contracted within a period of exposure and under such other factors
necessary to contract it; and (4) there was no notorious negligence on the part of the seafarer.
(LOADSTAR INTERNATIONAL SHIPPING, INC. VS. THE HEIRS OF THE LATE ENRIQUE C.
CALAWIGAN REPRESENTED BY THE LEGAL SPOUSE MARITESS C. CALAWIGAN, G.R.
No. 187337, 5 December 2012)

While the Court adheres to the principle of liberality in favor of the seafarer in construing the
POEA-SEC, it cannot allow claims for compensation based on conjectures and probabilities. When there
is no evidence on record to permit compensability, the Court has no choice but to deny the claim, lest
injustice is caused to the employer. (CREW AND SHIP MANAGEMENT INTERNATIONAL INC.
and SALENA INC. v. JINA T. SORIA, G.R. No. 175491, 10 December 2012)

The company-designated physician is expected to arrive at a definite assessment of the seafarers fitness
to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the
seafarers medical condition remains unresolved, the seafarer shall be deemed totally and permanently
disabled. (KESTREL SHIPPING CO., INC./ CAPT. AMADOR P. SERVILLON and ATLANTIC
MANNING LTD. v. FRANCISCO D. MUNAR, G.R. No. 198501, 30 January 2013)

A seafarers compliance with the under Section 20-B(3) of the POEA-SEC presupposes that the
company-designated physician came up with an assessment as to his fitness or unfitness to work before
the expiration of the 120-day or 240-day periods. Alternatively put, absent a certification from the
company-designated physician, the seafarer had nothing to contest and the law steps in to conclusively
characterize his disability as total and permanent. (KESTREL SHIPPING CO., INC./ CAPT. AMADOR
P. SERVILLON and ATLANTIC MANNING LTD. v. FRANCISCO D. MUNAR, G.R. No. 198501,
30 January 2013)

While it is the company-designated physician who must declare that the seaman suffered a
permanent disability during employment, it does not deprive the seafarer of his right to seek a second
opinion. Accordingly, if serious doubt exists on the company-designated physician's declaration of the
nature of a seaman's injury and its corresponding impediment grade, resort to prognosis of other
competent medical professionals should be made. (RAMON G. NAZARENO v. MAERSK FILIPINAS
CREWING INC., AND ELITE SHIPPING A/S, G.R. No. 168703, 26 February 2013)

B. SICKNESS BENEFITS

Contrary to petitioners' contention, respondent is entitled to sickness wages. The shooting pain
on his right foot is an injury which he suffered during the course of his employment and, therefore,
obligates petitioners to compensate him and provide him the appropriate medical treatment. Moreover,
petitioners were remiss in providing continuous treatment for respondent in accordance with the
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recommendation of their company physician that respondent should undergo a two-week confinement
and physical therapy and, if his condition does not improve, then he would have to be subjected to
surgical decompression to alleviate the pain on his right foot. Respondent's ailment required urgent
medical response, thereby necessitating him to seek immediate medical attention, even at his own
expense. (VARORIENT SHIPPING CO., INC., and. ARIA MARITIME CO., LTD. v. GIL A. FLORES,
G.R. No. 161934, 6 October 2010)

B. DEATH BENEFITS

The death of a seaman during the term of employment makes the employer liable to his heirs for
death compensation benefits, but if the seaman dies after the termination of his contract of employment,
his beneficiaries are not entitled to the death benefits. Federico did not die while he was under the employ
of petitioners. His contract of employment ceased when he arrived in the Philippines on March 30, 1998,
whereas he died on April 29, 2000. Thus, his beneficiaries are not entitled to the death benefits under the
Standard Employment Contract for Seafarers. (SOUTHEASTERN SHIPPING, SOUTHEASTERN
SHIPPING GROUP, LTD., v. FEDERICO U. NAVARRA, JR., G.R. No. 167678, 22 June 2010)

In Southeastern Shipping v. Navarra, Jr., we declared that "in order to avail of death benefits, the
death of the employee should occur during the effectivity of the employment contract." "The death of a
seaman during the term of employment makes the employer liable to his heirs for death compensation
benefits. Once it is established that the seaman died during the effectivity of his employment contract, the
employer is liable." Xxxx Indeed, the death of a seaman several months after his repatriation for illness
does not necessarily mean that: a) the seaman died of the same illness; b) his working conditions increased
the risk of contracting the illness which caused his death; and c) the death is compensable, unless there is
some reasonable basis to support otherwise. (MEDLINE MANAGEMENT, INC. and GRECOMAR
SHIPPING AGENCY v. GLICERIA ROSLINDA and ARIEL ROSLINDA, G.R. No. 168715, September
15, 2010)

The death of a seaman during the term of employment makes the employer liable to his heirs for
death compensation benefits. Once it is established that the seaman died during the effectivity of his
employment contract, the employer is liable. This rule, however, is not absolute. The employer may be
exempt from liability if he can successfully prove that the seaman's death was caused by an injury directly
attributable to his deliberate or willful act. (MARITIME FACTORS INC., v. BIENVENIDO R.
HINDANG, G.R. No. 151993, 19 October 2011)

Under the Amended POEA Contract, work-relatedness is now an important requirement. Thus,
there is a need to show that the injury resulting to disability or death must arise (1) out of employment,
and (2) in the course of employment. As a matter of general proposition, an injury or accident is said to
arise "in the course of employment" when it takes place within the period of the employment, at a place
where the employee reasonably may be, and while he is fulfilling his duties or is engaged in doing
something incidental thereto. (SUSANA R. SY v. PHILIPPINE TRANSMARINE CARRIERS, INC.,
AND/OR SSC SHIP MANAGEMENT PTE., LTD., G.R. No. 191740, 15 February 2013)

The absence of a post-employment medical examination cannot be used to defeat respondents
claim since the failure to subject the seafarer to this requirement was not due to the seafarers fault but to
the inadvertence or deliberate refusal of petitioners. (INTERORIENT MARITIME ENTERPRISES,
INC., INTERORIENT ENTERPRISES, INC., and LIBERIA AND DOROTHEA SHIPPING CO.,
LTD., v. LEONORA S. REMO, G.R. No. 181112, 29 June 2010)

Private respondents cannot deny liability for the subject death by claiming that the seafarers
death occurred beyond the term of his employment and worse, that there has been misrepresentation on
the part of the seafarer. For, as employer, the private respondents had all the opportunity to pre-qualify,
thoroughly screen and choose their applicants to determine if they are medically, psychologically and
mentally fit for employment. That the seafarer here was subjected to the required pre-qualification
standards before he was admitted as Cook-Steward, it thus has to be safely presumed that the late Remo
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was in a good state of health when he boarded the vessel. (INTERORIENT MARITIME
ENTERPRISES, INC., INTERORIENT ENTERPRISES, INC., and LIBERIA AND DOROTHEA
SHIPPING CO., LTD., v. LEONORA S. REMO, G.R. No. 181112, 29 June 2010)

Indeed, in order to avail of death benefits, the death of the employee should occur during the
effectivity of the employment contract. The death of a seaman during the term of employment makes the
employer liable to his heirs for death compensation benefits. This rule, however, is not absolute. The
employer may be exempt from liability if it can successfully prove that the seaman's death was caused by
an injury directly attributable to his deliberate or willful act. (CREWLINK, INC. and/or GULF MARINE
SERVICES v. EDITHA TERINGTERING, for her behalf and in behalf of minor EIMAEREACH ROSE
DE GARCIA TERINGTERING, G.R. No. 166803, 11 October 2012)

D. PRESCRIPTION OF ACTION
Article 291 [of the Labor Code] is the law governing the prescription of money claims of
seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard
Employment Contract for Seafarers which provides for claims to be brought only within one year from
the date of the seafarers return to the point of hire. Thus, for the guidance of all, Section 28 of the
Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the
seafarers may file their money claims, is hereby declared null and void. The applicable provision is Article
291 of the Labor Code, it being more favorable to the seafarers and more in accord with the States
declared policy to afford full protection to labor. (SOUTHEASTERN SHIPPING, SOUTHEASTERN
SHIPPING GROUP, LTD., v. FEDERICO U. NAVARRA, JR., G.R. No. 167678, 22 June 2010)

E. HOME ALLOTMENT PAY
Since Memorandum Circular No. 55, series of 1996 states that home allotment of seafarers
actually constitutes at least eighty percent (80%) of their salary, home allotment pay is not in the nature of
an extraordinary money or benefit, but should actually be considered as salary which should be paid for
services rendered. (SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES,
INC., LTD. v. NATHANIEL DOZA, ET AL., G.R. No. 175558, February 8, 2012)

F. DEPLOYMENT
While the POEA Standard Contract must be recognized and respected, neither the manning
agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.
(BRIGHT MARITIME CORPORATION (BMC)/DESIREE P. TENORIO v. RICARDO B.
FANTONIAL, G.R. No. 165935, February 8, 2012)

Thus, even if by the standard contract employment commences only upon actual departure of
the seafarer, this does not mean that the seafarer has no remedy in case of non-deployment without any
valid reason. (STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP
MANAGEMENT v. SULPECIO MEDEQUILLO, JR., G.R. No. 177498, 18 January 2012)

LABOR STANDARDS

OVERTIME WORK, OVERTIME PAY

The handwritten itemized computations are self-serving, unreliable and unsubstantial evidence to sustain
the grant of salary differentials, particularly overtime pay. Hence, in the absence of any concrete proof that
additional service beyond the normal working hours and days had indeed been rendered, we cannot affirm the grant
of overtime pay to Pigcaulan. (ABDULJUAHID R. PIGCAULAN v. SECURITY and
CREDITINVESTIGATION, INC. and/or RENE AMBY REYES, G.R. No. 173648, 16 January 2012)

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WAGE AND SALARY/FACILITIES AND SUPPLEMENTS / BENEFITS

As to the challenged policy, discussion of Articles 113 and 114 of the Labor Code is essential.
Article 113 is clear that there are only three exceptions to the general rule that no deductions from the
employees' salaries can be made. The exception which finds application in the instant petition is in cases
where the employer is authorized by law or regulations issued by the Secretary of Labor to effect the
deductions. On the other hand, Article 114 states that generally, deposits for loss or damages are not
allowed except in cases where the employer is engaged in such trades, occupations or business where the
practice of making deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules or regulations. It bears stressing that without proofs that requiring
deposits and effecting deductions are recognized practices, or without securing the Secretary of Labor's
determination of the necessity or desirability of the same, the imposition of new policies relative to
deductions and deposits can be made subject to abuse by the employers. This is not what the law intends.
NIA JEWELRY MANUFACTURING OF METAL ARTS, INC. (otherwise known as NIA
MANUFACTURING AND METAL ARTS, INC.) and ELISEA B. ABELLA v. MADELINE C.
MONTECILLO and LIZA M. TRINIDAD, G.R. No. 188169, 28 November 2011

Just like our local domestic house helpers who receive their wages directly from their employers
without any payslip or voucher to acknowledge payment and receipt, we do not expect the case of herein
complainant x xx to be any different. It is, therefore, understandable that no payslip or payroll could be
presented by respondent agency. (ONES INTERNATIONAL MANPOWER SERVICES, INC.,
represented by its President, EDWARD G. CUE v. BELLA AGCAOILI-BARIT, G.R. No. 181919, 20 July
2013)

Before the value of facilities can be deducted from the employees wages, the following requisites
must all be attendant: first, proof must be shown that such facilities are customarily furnished by the
trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to
allow deductions from employees wages. (SLL INTERNATIONAL CABLES SPECIALIST and
SONNY L. LAGON v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.. G.R. No.
172161, 2 March 2011)

The benefit or privilege given to the employee which constitutes an extra remuneration above
and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. (SLL INTERNATIONAL CABLES SPECIALIST and SONNY
L. LAGON v.NATIONAL LABOR RELATIONS COMMISSION, ET AL.. G.R. No. 172161, 2 March
2011)

The free board and lodging SIP furnished the employees cannot operate as a set-off for the
underpayment of their wages. The Supreme Court (SC) held in Mabeza v. National Labor Relations
Commission that the employer cannot simply deduct from the employees wages the value of the board
and lodging without satisfying the following requirements: (1) proof that such facilities are customarily
furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities;
and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear
from the records that SIP failed to comply with these requirements. (S.I.P. FOOD HOUSE and MR. and
MRS. ALEJANDRO PABLO v. RESTITUTO BATOLINA, et al., G.R. No. 192473, 11 October 2010)

It would be unfair to allow Ynson to recover something he has not earned and count not have
earned, since he could not discharge his work as NSM. WPI should be exempted from the burden of
paying backwages. The age-old rule governing the relation between labor and capital, or management and
employee, of "a fair day's wage for a fair day's labor" remains as the basic factor in determining
employee's wages. If there is no work performed by the employee, there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed, or otherwise illegally prevented from working, a situation which is not prevailing in the present
case. (WUERTH PHILIPPINES, INC., v. RODANTE YNSON, G.R. No. 175932, February 15, 2012)
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Any withholding of an employees wages by an employer may only be allowed in the form of
wage deductions under the circumstances provided in Article 113 of the Labor Code: (a) In cases where
the worker is insured with his consent by the employer, and the deduction is to recompense the employer
for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of
the worker or his union to check-off has been recognized by the employer or authorized in writing by the
individual worker concerned; and (c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor. (SHS PERFORATED MATERIALS, INC., ET AL. v. MANUEL F.
DIAZ, G.R. No. 185814, 13 October 2010)

The clause or for three months for every year of the unexpired term, whichever is less
provided in the 5
th
paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the
rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. The subject clause does not
state or imply any definitive governmental purpose; hence, the same violates not just therein petitioners
right to equal protection, but also his right to substantive due process under Section 1, Article III of the
Constitution. (CLAUDIO S. YAP v. THENAMARIS SHIPS MANAGEMENT and INTERMARE
MARITIME AGENCIES, INC., G.R. No. 179532, 20 May 2011)

Generally, employees have a vested right over existing benefits voluntarily granted to them by
their employer, thus, said benefits cannot be reduced, diminished, discontinued or eliminated by the latter.
This principle against diminution of benefits, however, is applicable only if the grant or benefit is founded
on an express policy or has ripened into a practice over a long period of time which is consistent and
deliberate. As pronounced by the Court in the case of Globe Mackay Cable and Radio Corporation v.
NLRC, the grant by an employer of benefits through an erroneous application of the law due to absence
of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally
discontinued. UNIVERSITY OF THE EAST v. UNIVERSITY OF THE EAST EMPLOYEES'
ASSOCIATION, G.R. No. 179593, September 14, 2011

GRANT OF BONUS AND OTHER BENEFITS

To be considered as a regular company practice, the employee must prove by substantial
evidence that the giving of the benefit is done over a long period of time, and that it has been made
consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of
time that company practice should have been exercised in order to constitute voluntary employer practice.
The common denominator in previously decided cases appears to be the regularity and deliberateness of
the grant of benefits over a significant period of time. The principle against diminution of benefits is
applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a
long period of time which is consistent and deliberate; it presupposes that a company practice, policy and
tradition favorable to the employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by them. (RICARDO E. VERGARA, JR. v.
COCA-COLA BOTTLERS PHILIPPINES, INC., G.R. No. 176985, 1 April 2013)

By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in
addition to what is ordinarily received by or strictly due the recipient. Generally, a bonus is not a
demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by
the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in
the CBA, the same partakes the nature of a demandable obligation. (LEPANTO CERAMICS, INC., v.
LEPANTO CERAMICS EMPLOYEES ASSOCIATION, G.R. No. 180866, 2 March 2010)
A bonus, however, becomes a demandable or enforceable obligation when it is made part of the
wage or salary or compensation of the employee. (EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC., v. EASTERN TELECOMS EMPLOYEES UNION, G.R. No. 185665, February 8,
2012)


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SEPARATION PAY

Article 283 of the Labor Code provides only the required minimum amount of separation pay,
which employees dismissed for any of the authorized causes are entitled to receive. Employers, therefore,
have the right to create plans, providing for separation pay in an amount over and above what is imposed
by Article 283. There is nothing therein that prohibits employers and employees from contracting on the
terms of employment, or from entering into agreements on employee benefits, so long as they do not
violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or
public policy. (MA. CORINA C. JIAO, ET Al. v. NATIONAL LABOR RELATIONS COMMISSION,
et al., G.R. No. 182331, 18 April 2012)

The language of Article 279 of the Labor Code is pregnant with the implication that a legally
dismissed employee is not entitled to separation pay. However, in exceptional cases, the Supreme Court
(SC) has granted separation pay to a legally dismissed employee as an act of "social justice" or based on
"equity." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2)
does not reflect on the moral character of the employee or would involve moral turpitude. The grant of
separation pay as a matter of equity to a validly dismissed employee is not contingent on whether the
ground for dismissal is expressly under Article 282(a) but whether the ground relied upon is akin to
serious misconduct or involves willful or wrongful intent on the part of the employee. (PHILIPPINE
AIRLINES, INC. v. NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO,
G.R. No. 123294, October 20, 2010)

In the recent case of Reno Foods v. NLM, this Court reiterated the Toyota ruling and maintained
that labor adjudicatory officials and the Court of Appeals must demur the award of separation pay based
on social justice when an employees dismissal is based on serious misconduct or willful disobedience;
gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the
person of the employer or his immediate family grounds under Art. 282 of the Labor Code that
sanction dismissals of employees. (BANK OF THE PHILIPPINE ISLANDS AND BPI FAMILY
BANK v. HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION)
AND MA. ROSARIO N. ARAMBULO, G.R. No. 179801, June 18, 2010)

Separation pay is only warranted when the cause for termination is not attributable to the employees fault,
such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which
reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause. (RENO FOODS,
INC., and/orVICENTE KHU v. Nagkakaisang Lakas ngManggagawa (NLM) - KATIPUNAN on behalf ofits member,
NENITA CAPOR., G.R. No. 164016)

Separation pay is only warranted when the cause for termination is not attributable to the
employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of
illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is
dismissed for just cause, such as serious misconduct.The award of financial assistance shall not be given
to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their
moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of
financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or
dishonest act, but an endorsement thereof. It will be an insult to all the laborers who despite their
economic difficulties, strive to maintain good values and moral conduct. (JULIET G. APACIBLE v.
MULTIMED INDUSTRIES INCORPORATED and THE BOARD OF DIRECTORS OF MULTIMED
INDUSTRIES, The President MR. JOSELITO TAMBUNTING, Managers MARLENE L. OROZCO,
VERONICA C. TIMOG, OLGA F. MARINO and MA. LUZ B. YAN, G.R. No. 178903, 30 May 2011)

The grant of separation pay or some other financial assistance to an employee dismissed for just
causes is based on equity. In Phil. Long Distance Telephone Co. v. NLRC, we ruled that severance
compensation, or whatever name it is called, on the ground of social justice shall be allowed only when
12 | P a g e

the cause of the dismissal is other than serious misconduct or for causes which reflect adversely on the
employees moral character. Caragdags dismissal being due to serious misconduct, it follows that he
should not be entitled to financial assistance. To rule otherwise would be to reward him for the grave
misconduct he committed. The Supreme Court emphasized that social justice is extended only to those
who deserve its compassion. (SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-
NUWHRAIN) v. HON. VOLUNTARY ARBITRATOR BUENAVENTURA C. MAGSALIN and
HOTEL ENTERPRISES OF THE PHILIPPINES, INC., G.R. No. 16493, 6 June 2011; and SAMAHAN
NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN) v. HOTEL ENTERPRISES
OF THE PHILIPPINES, INC., G.R. No. 172303)

There is no provision in the Labor Code which grants separation pay to voluntarily resigning
employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled
to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by
established employer practice or policy. (ROMEO VILLARUEL v. Y EO HAN GUAN, doing business
under the name and style YUHANS ENTERPRISES, G.R. No. 169191, 1 June 2011)

The SC, in a number of cases, has granted financial assistance to separated employees as a
measure of social and compassionate justice and as an equitable concession. Taking into consideration the
factual circumstances obtaining in the present case, the SC found that petitioner is entitled to this kind of
assistance. (ROMEO VILLARUEL v. Y EO HAN GUAN, doing business under the name and style
YUHANS ENTERPRISES, G.R. No. 169191, 1 June 2011)

Taking into consideration the provisions of both RA 1616 and MC No. 26-96, the separation
benefit due to the affected employees should be the balance received in MC No. 26-96 and the retirement
benefit received in RA 1616. Hence, those who have rendered at least 20 but less than 30 years of service
should receive 1 month salary for every year of service; and those who have rendered more than 30 years
should receive 1.5 month salary for every year of service. (METROPOLITAN WATERWORKS AND
SEWERAGE SYSTEM v. GABRIEL ADVINCULA, et al., G.R. No. 179217, February 2, 2011)

One who pleads payment has the burden of proving it, and even where the employees must
allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather
than on the employees to prove non-payment. (HEIRS OF MANUEL H. RIDAD, et al. v. GREGORIO
ARANETA UNIVERSITY FOUNDATION, G.R. No. 188659, 13 February 2013)

Article 283 of the Labor Code provides only the required minimum amount of separation pay,
which employees dismissed for any of the authorized causes are entitled to receive. Employers, therefore,
have the right to create plans, providing for separation pay in an amount over and above what is imposed
by Article 283. There is nothing therein that prohibits employers and employees from contracting on the
terms of employment, or from entering into agreements on employee benefits, so long as they do not
violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or
public policy. (MA. CORINA C. JIAO, ET Al. v. NATIONAL LABOR RELATIONS COMMISSION,
et al., G.R. No. 182331, 18 April 2012)

RETIREMENT PAY

It is axiomatic that a retirement plan giving the employer the option to retire its employees below
the ages provided by law must be assented to and accepted by the latter, otherwise, its adhesive
imposition will amount to a deprivation of property without due process of law. Acceptance by the
employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an
employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor
Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In other
words, only the implementation and execution of the option may be unilateral, but not the adoption and
institution of the retirement plan containing such option. For the option to be valid, the retirement plan
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containing it must be voluntarily assented to by the employees or at least by a majority of them through a
bargaining representative. (LOURDES A. CERCADO v. UNIPROM, INC., G.R. No. 188154, 13 October
2010)

The third paragraph of Article 287 states that in the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee upon reaching the age
of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. (KOREAN AIR CO., LTD. and
SUK KYOO KIM v. ADELINA A.S. YUSON, G.R. No. 170369, 16 June 2010)

In particular, Article 300 of the Labor Code, as amended, partly provides: Any employee may be
retired upon reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract. In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, that an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those provided herein. In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than
five (5) days of service incentive leaves. (ELEAZAR S. PADILLO v. RURAL BANK OF
NABUNTURAN, INC., ET AL., G.R. No. 199338, 21 January 2013)

Ultimately, the more important threshold to be considered in construing whether the retirement
agreement provides less benefits, compared to those provided by the Retirement Pay Law, is that the
retirement benefits in the said agreement should at least amount to one-half of the employees monthly
salary. (BANCO FILIPINO SAVINGS AND MORTGAGE BANK v. MIGUELITO M. LAZARO, G.R.
Nos. 185346, G.R. No. 185442, 27 June 2012)

EMPLOYER-EMPLOYEE RELATIONSHIP

The elements to determine the existence of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct. The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done, but also as to the means and
methods to accomplish it. (AD SONICMIX v. WILMER D. GENOVIA, G.R. No. 169757, November 23,
2011)

Guidelines indicative of labor law "control" do not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means and methods to
be employed in attaining the result. (GREGORIO V. TONGKO v. THE MANUFACTURERS LIFE
INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, G.R. No. 167622, 25 January
2011)

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests
to determine the existence of an employer-employee relationship, viz: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employees conduct. Of these elements, the most important criterion is whether the employer controls or
has reserved the right to control the employee not only as to the result of the work but also as to the
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means and methods by which the result is to be accomplished. (BITOY JAVIER (DANILO P. JAVIER)
v. FLY ACE CORPORATION/FLORDELYN CASTILLO, G.R. No. 192558, February 15, 2012)

In determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element. (CHARLIE JAO v. BCC PRODUCTS SALES INC., and
TERRANCE TY, G.R. No. 163700, 18 April 2012)

KINDS OF EMPLOYMENT

A. PROBATIONARY

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement. Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an
authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer. (ROBINSONS GALLERIA/ROBINSONS SUPERMARKET
CORPORATION and/or JESS MANUEL v. IRENE R. RANCHEZ, G.R. No. 177937, 19 January 2011)

A reality we have to face in the consideration of employment on probationary status of teaching
personnel is that they are not governed purely by the Labor Code. The Labor Code is supplemented with
respect to the period of probation by special rules found in the Manual of Regulations for Private
Schools. On the matter of probationary period, Section 92 of these regulations provides that subject in all
instances to compliance with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in
the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those
in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester basis. (YOLANDA M. MERCADO, CHARITO S.
DE LEON, DIANA R. LACHICA, MARGARITO M. ALBA, JR., and FELIX A. TONOG v. AMA
COMPUTER COLLEGE-PARAAQUE CITY, INC., G.R. No. 183572, April 13, 2010)

Of critical importance in invoking a failure to meet the probationary standards, is that the
[employer] should show as a matter of due process how these standards have been applied. This is
effectively the second notice in a dismissal situation that the law requires as a due process guarantee
supporting the security of tenure provision, and is in furtherance, too, of the basic rule in employee
dismissal that the employer carries the burden of justifying a dismissal. These rules ensure compliance
with the limited security of tenure guarantee the law extends to probationary employees. (TAMSON'S
ENTERPRISES, INC., NELSON LEE, LILIBETH ONG and JOHNSON NG, v. COURT OF
APPEALS and ROSEMARIE L. SY, G.R. No. 192881, November 16, 2011)

A reality we have to face in the consideration of employment on probationary status of teaching
personnel is that they are not governed purely by the Labor Code. The Labor Code is supplemented with
respect to the period of probation by special rules found in the Manual of Regulations for Private
Schools. It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the contract is
binding for the full three-year probationary period. (ST. PAUL COLLEGE QUEZON CITY, ET AL. v.
REMIGIO MICHAEL A. ANCHETA II and CYNTHIA A. ANCHETA, G.R. No. 169905, 7 September
2011)

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The essence of a probationary period of employment fundamentally lies in the purpose or
objective of both the employer and the employee during the period. While the employer observes the
fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable
standards for permanent employment. The trial period or the length of time the probationary employee
remains on probation depends on the parties agreement, but it shall not exceed six 6) months under
Article 281 of the Labor Code, unless it is covered by an apprenticeship agreement stipulating a longer
period. (CANADIAN OPPORTUNITIES UNLIMITED, INC., v. BART Q. DALANGIN, JR.,, G.R.
No. 172223, 6 February 2012)

Gala, as a probationary employee, his overall job performance and his behavior were being
monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his
probationary employment agreement. Gala does not deserve to remain in Meralcos employ as a regular
employee. He violated his probationary employment agreement, especially the requirement for him to
observe at all times the highest degree of transparency, selflessness and integrity in the performance of
their duties and responsibilities. He failed to qualify as a regular employee. (MANILA ELECTRIC
COMPANY v. JAN CARLO GALA, G.R. Nos. 191288 & 191304, 7 March 2012)

It can be gleaned from the foregoing provisions of law and jurisprudential pronouncement that
there are two grounds to legally terminate a probationary employee. It may be done either: a) for a just
cause; or b) when the employee fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the start of the employment. In all cases of
probationary employment, the employer shall make known to the employee the standards under which he
will qualify as a regular employee at the time of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular employee. (HACIENDA PRIMERA
DEVELOPMENT CORPORATION and ANNA KATRINA E. HERNANDEZ v. MICHAEL S.
VILLEGAS, G.R. No. 186243, April 11, 2011)

If the termination is for cause, it may be done anytime during the probation; the employer does
not have to wait until the probation period is over. (MYLENE CARVAJAL v. LUZON
DEVELOPMENT BANK, G.R. No. 186169, 1 August 2012)

B. APPRENTICESHIP

With the expiration of the first agreement and the retention of the employees, ATLANTA had,
to all intents and purposes, recognized the completion of their training and their acquisition of a regular
employee status. To foist upon them the second apprenticeship agreement for a second skill which was
not even mentioned in the agreement itself, is a violation of the Labor Codes implementing rules and is
an act manifestly unfair to the employees, to say the least. This we cannot allow. (ATLANTA
INDUSTRIES, INC. and/or ROBERT CHAN v. APRILITO R. SEBOLINO, ET AL., G.R. No. 187320,
26 January 2011)

C. PROJECT EMPLOYMENT

The test for distinguishing a "project employee" from a "regular employee" is whether or not he
has been assigned to carry out a "specific project or undertaking," with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitionercompany
contracted respondent Trinidads service by specific projects with the duration of his work clearly set out
in his employment contracts. He remained a project employee regardless of the number of years and the
various projects he worked for the company. (WILLIAM UY CONSTRUCTION CORP., et al, v. JORGE
R. TRINIDAD, G.R. No. 183250, 10 March 2010)

Generally, length of service provides a fair yardstick for determining when an employee initially
hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the construction industry, simply because
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construction firms cannot guarantee work and funding for its payrolls beyond the life of each project.
And getting projects is not a matter of course. Construction companies have no control over the
decisions and resources of project proponents or owners. (WILLIAM UY CONSTRUCTION CORP., et
al, v. JORGE R. TRINIDAD, G.R. No. 183250, 10 March 2010)

Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued
rehiring, as shown by the sample payrolls converted his status to that of a regular employee. Following
Cocomangas Beach Hotel Resort v. Visca, the repeated and continuing need for respondents services is
sufficient evidence of the necessity, if not indispensability, of his services to petitioner's business and, as a
regular employee, he could only be dismissed from employment for a just or authorized cause.
(MILLENNIUM ERECTORS CORPORATION v. VIRGILIO MAGALLANES, GR. No. 184362,
November 15, 2010)

The principal test used to determine whether employees are project employees is whether or not
the employees were assigned to carry out a specific project or undertaking, the duration or scope of which
was specified at the time the employees were engaged for that project. (JUDY O. DACUITAL, et al. v.
L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS, G.R. No. 176748 September
1, 2010)

Even though the absence of a written contract does not by itself grant regular status to
petitioners, such a contract is evidence that petitioners were informed of the duration and scope of their
work and their status as project employees. In this case, where no other evidence was offered, the absence
of the employment contracts raises a serious question of whether the employees were properly informed
at the onset of their employment of their status as project employees. (JUDY O. DACUITAL, et al. v.
L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS, G.R. No. 176748 September
1, 2010)

By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion of
the project. (LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU
TUCP v. PHILIPPINE NATIONAL OIL COMPANY - ENERGY DEVELOPMENT
CORPORATION, G.R. No. 170351, March 30, 2011)

D. SEASONAL

It is most disturbing to see how the CA regarded labor terms "paid on commission," "pakyaw"
and "seasonal worker" as one and the same. In labor law, they are different and have distinct meanings,
which the SC did not need to elaborate on in the present petition as they are not the issue here. A regular
status of employment is not based on how the salary is paid to an employee. An employee may be paid
purely on commission and still be considered a regular employee. Moreover, a seasonal employee may
also be considered a regular employee. (AGG TRUCKING AND/OR ALEX ANG GAEID v.
MELANIO B. YUAG, G.R. No. 195033, 12 October 2011)

E. ALIEN EMPLOYEE
The law and the rules are consistent in stating that the employment permit must be
acquired prior to employment. To grant Galeras prayer is to sanction the violation of the Philippine labor
laws requiring aliens to secure work permits before their employment. We hold that the status quo must
prevail in the present case and we leave the parties where they are. (WPP MARKETING
COMMUNICATIONS, INC., JOHN STEEDMAN,MARK WEBSTER, and NOMINADA LANSANG
v.JOCELYN M. GALERA, G.R. Nos. 169207, 169239, 25 March 2010)

F. MANAGER v. SUPERVISOR

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The test of "supervisory" or "managerial status" depends on whether a person possesses authority to
act in the interest of his employer and whether such authority is not merely routinary or clerical in nature,
but requires the use of independent judgment. (CLIENTLOGIC PHILPPINES, INC. (now known as
SITEL), JOSEPH VELASQUEZ, IRENE ROA, and RODNEY SPIRES v. BENEDICT CASTRO, G.R.
No. 186070, April 11, 2011)

The test of supervisory or managerial status depends on whether a person possesses
authority to act in the interest of his employer and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent judgment. (ROWENA DE LEON CRUZ v. BANK
OF THE PHILIPPINE ISLANDS, G.R. No. 173357, 13 February 13, 2013)

JOB CONTRACTING

A. ARTICLE 106 TO ARTICLE 109 OF THE LABOR CODE

ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and of the
latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event
that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code,
the employer shall be jointly and severally liable with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him. x x x. ART. 109. Solidary liability. The provisions of existing laws
to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter, they shall be considered as direct employers.
(GOVERNMENT SERVICE INSURANCE SYSTEM v. NATIONAL LABOR RELATIONS
COMMISSION (NLRC), DIONISIO BANLASAN, ALFREDO T. TAFALLA, TELESFORO D.
RUBIA, ROGELIO A. ALVAREZ, DOMINADOR A. ESCOBAL, and ROSAURO PANIS, G.R. No.
180045, November 17, 2010)

B. LABOR-ONLY CONTRACTING

A person is considered engaged in legitimate job contracting or subcontracting if the following
conditions concur: (a) The contractor carries on a distinct and independent business and undertakes the
contract work on his account under his own responsibility according to his own manner and method, free
from the control and direction of his employer or principal in all matters connected with the performance
of his work except as to the results thereof; (b) The contractor has substantial capital or investment; and
(c) The agreement between the principal and the contractor or subcontractor assures the contractual
employees' entitlement to all labor and occupational safety and health standards, free exercise of the right
to self-organization, security of tenure, and social welfare benefits. Failure to meet the above conditions,
one is considered as a labor contactor only. (EMMANUEL BABAS, DANILO T. BANAG, ARTURO
V. VILLARIN, SR., EDWIN JAVIER, SANDI BERMEO, REX ALLESA, MAXIMO SORIANO,
JR., ARSENIO ESTORQUE, and FELIXBERTO ANAJAO v. LORENZO SHIPPING
CORPORATION, G.R. No. 186091, December 15, 2010)

Accordingly, we hold that employer-employee ties exist between Teng and the respondent
workers. A finding that the maestros are labor-only contractors is equivalent to a finding that an
employer-employee relationship exists between Teng and the respondent workers. (ALBERT TENG,
doing business under the firm name ALBERT TENG FISH TRADING, and EMILIA TENG-CHUA v.
ALFREDO S. PAHAGAC, EDDIE D. NIPA, ORLANDO P. LAYESE, HERNAN Y. BADILLES
and ROGER S. PAHAGAC, G.R. No. 169704, November 17, 2010)

Department Order No. 18-02, Series of 2002, enunciates that labor-only contracting refers to an
arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to
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perform a job, work, or service for a principal, and any of the following elements are present: (i) the
contractor or subcontractor does not have substantial capital or investment which relates to the job,
work, or service to be performed and the employees recruited, supplied, or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the principal; or
(ii) the contractor does not exercise the right to control the performance of the work of the contractual
employee. (MANILA WATER COMPANY, INC. v. JOSE J. DALUMPINES, ET AL, G.R. No.
175501, October 4, 2010)

To be legitimate, contracting or subcontracting must satisfy the following requirements: 1) The
contractor or subcontractor carries on a distinct and independent business and undertakes to perform the
job, work or service on its own account and under its own responsibility, according to its own manners
and methods, and free from the control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof; 2) the contractor or subcontractor has
substantial capital or investment; and 3) the agreement between the principal and contractor or
subcontractor assures the contractual employees entitlement to all labor and occupational safety and
health standards, free exercise of right to self-organization, security of tenure, and social and welfare
benefit. (SPIC N' SPAN SERVICES CORPORATION v. GLORIA PAJE, LOLITA GOMEZ, MIRIAM
CATACUTAN, ESTRELLA ZAPATA, GLORIA SUMANG, JULIET DINGAL, MYRA AMANTE,
and FE S. BERNANDO, G.R. No. 174084, August 25, 2010)

Where labor-only contracting exists, the Labor Code itself establishes an employer-employee
relationship between the employer and the employees of the labor-only contractor." The statute
establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had been directly employed by the principal
employer. (JOEB M. ALIVIADO, ET AL. v. PROCTER & GAMBLE PHILS., INC., and PROMM-
GEM INC, G.R. No. 160506, 9March 2010)

The presumption is that a contractor is a labor-only contractor unless such contractor overcomes the
burden of proving that it has substantial capital, investment, tools and the like. (MARIALY O. SY v. FAIRLAND
KNITCRAFT CO., INC., G.R. Nos. 182915, 189658, 12 December 2011)

A finding that a contractor is a "labor-only" contractor, as opposed to permissible job
contracting, is equivalent to declaring that there is an employer-employee relationship between the
principal and the employees of the supposed contractor, and the "labor-only" contractor is considered as
a mere agent of the principal, the real employer. (POLYFOAM-RGC INTERNATIONAL, CORP. and
PRECILLA A. GRAMAJE v. EDGARDO CONCEPCION, G.R. No. 172349, 13 June 2012)

Generally, the presumption is that the contractor is a labor-only contracting unless such
contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the
like. In the present case, though GMM is not the contractor, it has the burden of proving that Requio
has sufficient capital or investment since it is claiming the supposed status of Requio as independent
contractor. GMM, however, failed to adduce evidence purporting to show that Requio had sufficient
capitalization. Neither did it show that she invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the completion of the service contract. (GARDEN
OF MEMORIES PARK and LIFE PLAN, INC. and PAULINA T. REQUIO v. NATIONAL LABOR
RELATIONS COMMISSION, et al., G.R. No. 160278, February 8, 2012)

Where an entity is declared to be a labor-only contractor, the employees supplied by said
contractor to the principal employer become regular employees of the latter. Having gained regular status,
the employees are entitled to security of tenure and can only be dismissed for just or authorized causes
and after they had been afforded due process. Termination of employment without just or authorized
cause and without observing procedural due process is illegal. (NORKIS TRADING CORPORATION v.
JOAQUIN BUENAVISTA, et al., G.R. No. 182018, 10 October 2012)

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A finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed contractor, and
the "labor only" contractor is considered as a mere agent of the principal, the real employer. The former
becomes solidarily liable for all the rightful claims of the employees. (SUPERIOR PACKAGING
CORPORATION v. ARNEL BALAGSAY, et al., G.R. No. 178909, 10 October 2012)

DISMISSAL FROM EMPLOYMENT

A. REQUISITES OF A VALID DISMISSAL

For an employees dismissal to be valid, (a) the dismissal must be for a valid cause, and (b) the
employee must be afforded due process. Procedural due process requires the employer to furnish an
employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of
the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and
(2) the notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense. (AD SONICMIX v. WILMER D.
GENOVIA, G.R. No. 169757, November 23, 2011)

The requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he
must be given an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid
cause as provided in Article 282 of the Labor Code or for any of the authorized causes under Articles 283
and 284 of the same Code. (PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v.
EUSEBIO M. HONRADO, G.R. No. 189366, December 8, 2010)

Under Article 279 of the Labor Code, an employer may terminate the services of an employee for
just causes or for authorized causes. Furthermore, under Article 277(b) of the Labor Code, the employer
must send the employee who is about to be terminated, a written notice stating the causes for termination
and must give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid
dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized
cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself.
(EFFREY NACAGUE v. SULPICIO LINES, INC., G.R. No. 172589, 8 August 2010)

In this regard, it is a hornbook doctrine that infractions committed by an employee should merit
only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with
the act, conduct or omission imputed to the employee and must be imposed in connection with the
disciplinary authority of the employer. (NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND
VICENTE TAN vs. ALVIN L. TENG, G.R. No. 187122, February 22, 2012)

B. JUST CAUSES

1. SERIOUS MISCONDUCT

Through his reckless driving and his schemes to defraud the ATC, Sagad committed serious
misconduct and breach of the trust and confidence of his employer, which, without doubt, are just causes
for his separation from the service. (SAMPAGUITA AUTO TRANSPORT CORPORATION v.
NATIONAL LABOR RELATIONS COMMISSION, et al., G.R. No. 197384, 30 January 2013)

The misconduct to be serious must be of such grave and aggravated character and not merely
trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the
employees work to constitute just cause for his separation. (WILFREDO M. BARON, ET AL. v.
NATIONAL LABOR RELATIONS COMMISSION and MAGIC SALES, INC. represented by JOSE Y. SY,
G.R. No. 182299, 22 February 2010)

As a bus conductor whose duties primarily include the collection of transportation fares, which is
the lifeblood of the PRBLI, petitioner should have exercised the required diligence in the performance
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thereof and his habitual failure to exercise the same cannot be taken for granted. Petitioners position is
imbued with trust and confidence because it involves handling of money and failure to collect the proper
fare from the riding public constitutes a grave offense which justifies his dismissal. (JERRY MAPILI v.
PHILIPPINE RABBIT BUS LINES, INC./NATIVIDAD NISCE, G.R. No. 172506, 27 July2011)

As suspension may not anymore suffice as penalty for the violation done as shown by petitioners
disregard of previous warnings and propensity to commit the same infraction over the years of his
employment, and to deter other employees who may be wont to violate the same company policy,
petitioners termination from employment is only proper. (JERRY MAPILI v. PHILIPPINE RABBIT
BUS LINES, INC./NATIVIDAD NISCE, G.R. No. 172506, 27 July2011)

Thus, for misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious;
(b) it must relate to the performance of the employees duties; and (c) it must show that the employee has
become unfit to continue working for the employer. (NISSAN MOTORS PHILS., INC. v. VICTORINO
ANGELO, G.R. No. 164181, September 14, 2011)

A willful or intentional disobedience of such rule, order or instruction justifies dismissal only
where such rule, order or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee,
and (3) connected with the duties which the employee has been engaged to discharge. (NISSAN
MOTORS PHILS., INC. v. VICTORINO ANGELO, G.R. No. 164181, September 14, 2011)

Theft committed against a co-employee is considered as a case analogous to serious misconduct,
for which the penalty of dismissal from service may be meted out to the erring employee. (COSMOS
BOTTLING CORP. v. WILSON FERMIN, G.R. No. 193676, 194303, 20 June 2012)

Misconduct is defined as the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. For serious misconduct to justify dismissal, the following requisites must be present: (a) it
must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that
the employee has become unfit to continue working for the employer. (NORMAN YABUT v. MANILA
ELECTRIC COMPANY and MANUEL M. LOPEZ, G.R. No. 190436, 16 January 2012)

For misconduct to be serious within the meaning and intendment of the law, the misconduct
must be of such grave and aggravated character and not merely trivial and unimportant. The alleged
misconduct of Gonzales, which was his failure to report for work on the new time schedule specified by
petitioners, could not be considered a ground for his termination from employment. (JOHANSEN
WORLD GROUP CORPORATION and ANNA LIZA F. HERNANDEZ v. RENE MANUEL
GONZALES III, G.R. No. 198733, 10 October 2012)

It is well to stress that in order to constitute serious misconduct which will warrant the
dismissal of an employee, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or conduct
must have been done with wrongful intent. (THE COCA-COLA EXPORT CORPORATION v.
CLARITA P. GACAYAN, G.R. No. 149433, 15 December 2010)

In order to constitute serious misconduct which will warrant the dismissal of an employee under
paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of
has violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent. (ALEX GURANGO v. BEST CHEMICALS AND
PLASTICS INC. and MOON PYO HONG, G.R. No. 174593, 25 August 2010)

For serious misconduct to justify dismissal under the law, (a) it must be serious, (b) must relate to the
performance of the employees duties; and (c) must show that the employee has become unfit to continue working
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for the employer. (NAGKAKAISANG LAKAS NGMANGGAGAWA SA KEIHIN(NLMK-OLALIA-KMU)
and HELEN VALENZUELA v. KEIHIN PHILIPPINESCORPORATION, G.R. No. 171115, 9 August 2010)

Misconduct is defined as improper or wrong conduct. It is the transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error of judgment. For misconduct to be a just cause for dismissal, (a) it must be
serious; (b) it must relate to the performance of the employees duties; and (c) it must show that the
employee has become unfit to continue working for the employer. To be serious within the meaning and
intendment of the law, the misconduct must be of such grave and aggravated character and not merely
trivial and unimportant. It requires a wrongful intent, which is apparently absent in respondent Briones
case. (BLAZER CAR MARKETING, INC., and FREDDIE CHUA v. SPOUSES TOMAS T.
BULAUAN and ANALYN A. BRIONES, G.R. No. 181483, 9 March 2010)

Where a penalty less punitive would suffice, whatever missteps may have been committed by an
employee ought not to be visited with a consequence so severe such as dismissal from employment.
(BLAZER CAR MARKETING, INC., and FREDDIE CHUA v. SPOUSES TOMAS T. BULAUAN and
ANALYN A. BRIONES, G.R. No. 181483, 9 March 2010)

The record of the case, however, gives us a different picture. Contrary to the CAs perception, we
find a work-connection in Amular's and Ducays assault on Mendoza. As the CA itself noted, the
underlying reason why Amular and Ducay confronted Mendoza was to question him about his report to
De Leon Technols PCD assistant supervisor regarding the duos questionable work behavior. The
motivation behind the confrontation, as we see it, was rooted on workplace dynamics as Mendoza,
Amular and Ducay interacted with one another in the performance of their duties. (TECHNOL EIGHT
PHILIPPINES CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION AND
DENNIS AMULAR, G.R. No. 187605, April 13, 2010)

Respondents acts constitute serious misconduct which is a just cause for termination under the
law. Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a
rule this Court leans over backwards to help workers and employees continue with their employment or
to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property,
petitioners income in this case, are a different matter. (MARIBAGO BLUEWATER BEACH RESORT,
INC. v. NITO DUAL, G.R. No. 180660, July 20, 2010)

2. WILLFUL DISOBEDIENCE TO LAWFUL ORDERS / INSUBORDINATION

An employer may terminate an employment on the ground of serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or representative in connection with
his work. Willful disobedience requires the concurrence of two elements: (1) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the
order violated must have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge. (Kakampi and its Members, Victor Panuelos, et al., represented by
David Dayalo, Kakampi Vice President and Attorney-in-Fact vs. Kingspoint Express and Logistic and/or MARY Ann
Co, G.R. No. 194813, April 25, 2012)

As the records show, and as Capt. B.H. Mun stressed in his letter of November 17, 1997 to the
agency management, Flores was also charged with inefficiency or neglect of duty, insubordination,
insolent and disrespectful behavior, and other actuations which made him unfit for his position and rank.
(ABOSTA SHIPMANAGEMENT CORPORATION v. NATIONAL LABOR RELATIONS
COMMISSION (FIRST DIVISION) and ARNULFO R. FLORES, G.R. No. 163252, 27 July 2011)

Pacias initial reluctance to prepare the checks, however, which was seemingly an act of disrespect
and defiance, was for honest and well intentioned reasons. Protecting LREI and Sumulong from liability
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under the Bouncing Checks Lawwas foremost in her mind. It was not wrongful or willful. Neither can it
be considered an obstinate defiance of company authority. (LORES REALTY ENTERPRISES, INC.,
LORENZO Y. SUMULONG III v. VIRGINIA E. PACIA, G.R. No. 171189, 9 March 2011)

Willful disobedience of an employee contemplates the concurrence of at least two requisites: the
employees assailed conduct must have been willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; and the order violated must have been reasonable, lawful and made
known to the employee, and must pertain to the duties which he had been engaged to discharge.
(MIRANT (PHILIPPINES) CORPORATION VS. DANILO A. SARIO, G.R. No. 197598, 21 November
2012)

It is noteworthy that upon receipt of the notice of suspension, petitioner did not question such
order at the first instance. He immediately defied the order by reporting on the first day of his suspension.
Deliberate disregard or disobedience of rules by the employee cannot be countenanced. It may encourage
him to do even worse and will render a mockery of the rules of discipline that employees are required to
observe. (JIMMY ARENO, JR. v. SKYCABLE PCC-BAGUIO, G.R. No. 180302, 5 February 2010)

Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of
at least two requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by
a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made
known to the employee, and must pertain to the duties which he had been engaged to discharge. The
facts of the case do not show the presence of the second requisite. The failure to return the vehicle and
the Purchase/Assignment of Car Agreement, from which Grandteq derives its claim of ownership over
the car, had no relation at all to the discharge of respondent's duties as a sales engineer. (GRANDTEQ
INDUSTRIAL STEEL PRODUCTS, INC., ABELARDO GONZALES, RONALD A. DE
LEON, NOEL AGUIRRE, FELIX ARPIA, AND NICK EUGENIO v. ANNALIZA M. ESTRELLA,
G.R. No. 192416, 23 March 2011)

As earlier pointed out, Tupas, his superior, made a report of the incident where Galang took
pictures of his co-janitors whom he considered as suspects in the alleged loss of money (P4,000.00) kept
in his locker. Tupas called a meeting to investigate the matter. She asked Galang to surrender the pictures,
but he refused and harassed the janitors and insulted Tupas in front of everybody. Tupas also reported
that on several occasions, Galang disobeyed her orders, often finding fault with his co-employees, and
was very hard to deal with. Thus, he was already a liability to the organization. (ROMEO A. GALANGv.
CITYLAND SHAW TOWER, INC. and VIRGILIO BALDEMOR, G.R. No. 173291, 8 February 2012)

3. GROSS AND HABITUAL NEGLECT OF DUTIES

Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and
habitual neglect of duties. Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. Gross negligence connotes want of care in the performance of ones duties. Habitual neglect
implies repeated failure to perform ones duties for a period of time, depending upon the
circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of
the employee. (ST. LUKES MEDICAL CENTER, INC. and ROBERT KUAN, Chairman v.
ESTRELITO NOTARIO, G.R. No. 152166, 20 October 2010)

Gross negligence has been defined as the want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. (PHILIPPINE NATIONAL BANK v. DAN PADAO, G.R. Nos.
180849 and 187143, November 16, 2011)

Four absences in her six years of service, to our mind, cannot be considered gross and habitual
neglect of duty, especially so since the absences were spread out over a six-month period. (CAVITE
APPAREL, INCORPORATED, ET AL. v. MICHELLE MARQUEZ, G.R. No. 172044, 06 February
2013)
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Employees of the Judiciary should observe punctuality in reporting to work. Tardiness, if
habitual, prejudices the efficiency of the service being rendered by the Judiciary to the people, and cannot
be tolerated. (RE: EMPLOYEES INCURRING HABITUAL TARDINESS IN THE SECOND
SEMESTER OF 2009 A.M. No. 2010-11-SC, 15March2011)

Under Article 282 of the Labor Code, as amended, gross and habitual neglect by the employee of
his duties is a sufficient and legal ground to terminate employment. Jurisprudence provides that serious
misconduct and habitual neglect of duties are among the just causes for terminating an employee. Gross
negligence connotes want of care in the performance of ones duties. Habitual neglect implies repeated
failure to perform ones duties for a period of time, depending upon the circumstances. (CARLOS V.
VALENZUELA v. CALTEX PHILIPPINES, INC, G.R. Nos. 169965-66, 15 December 2010)

Article 282 of the Labor Code, as amended, also provides fraud or willful breach by employee of
the trust reposed in him by his employer as a just cause for termination. It is always a serious issue for the
employer when an employee performs acts which diminish or break the trust and confidence reposed in
him. (CARLOS V. VALENZUELA v. CALTEX PHILIPPINES, INC, G.R. Nos. 169965-66, 15 December
2010)

And when he returned on May 24 after being away from work for more than three weeks, he did
not bother to submit a medical certificate to justify his long absence. True, he had himself examined by
company physicians on May 24 but that merely proves that he suffered from arthritis on that date. It
does not prove that he had suffered from that illness from April 28 to May 21, the period in question
when he was absent without permission. Parenthetically, Paduata was also absent on July 5 (Monday), 7
(Wednesday), 13 (Tuesday), and 14 (Wednesday), 1999 without prior leave yet he also did not submit the
required medical certificates. These intermittent unexplained leaves were of course not subject to
dismissal but they showed a pattern of disregard of company rules. (DANIEL O. PADUATA v.
MANILA ELECTRIC COMPANY, G.R. No. 170098, 29 February 2012)

4. FRAUD OR WILLFUL BREACH OF TRUST / LOSS OF CONFIDENCE

Loss of confidence as a just cause for termination of employment is premised from the fact that
an employee concerned holds a position of trust and confidence. This situation holds where a person is
entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the
employer's property. But, in order to constitute a just cause for dismissal, the act complained of must be
work-related such as would show the employee concerned to be unfit to continue working for the
employer. (NORMAN YABUT v. MANILA ELECTRIC COMPANY and MANUEL M. LOPEZ, G.R.
No. 190436, 16 January 2012)

In Jardine Davies, Inc. v. National Labor Relations Commission, we held that loss of confidence as a just
cause for termination of employment can be invoked when an employee holds a position of
responsibility, trust and confidence. In order to constitute a just cause for dismissal, the act complained of
must be related to the performance of the duties of the dismissed employee and must show that he or she
is unfit to continue working for the employer for violation of the trust reposed in him or her.
(DOLORES T. ESGUERRA vs. VALLE VERDE COUNTRY CLUB, INC. and ERNESTO
VILLALUNA, G.R. No. 173012, June 13, 2012)

The basic premise for dismissal on the ground of loss of confidence is that the employees
concerned hold a position of trust and confidence. It is the breach of this trust that results in the
employers loss of confidence in the employee. (WILFREDO M. BARON, ET AL. v. NATIONAL LABOR
RELATIONS COMMISSION and MAGIC SALES, INC. represented by JOSE Y. SY, G.R. No. 182299, 22
February 2010)

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As the banking industry is impressed with public interest, all bank personnel are burdened with a
high level of responsibility insofar as care and diligence in the custody and management of funds are
concerned. Loss of confidence applies to situations where the employee is routinely charged with the care
and custody of employers money or property. "If the employees are cashiers, managers, supervisors,
salesmen or other personnel occupying positions of responsibility, the employers loss of trust and
confidence in said employees may justify termination of their employment. (JESUS E. DYCOCO, JR. v.
EQUITABLE PCI BANK (NOW BANCO DE ORO), et al., G.R. No. 188271, 16 August 2010)

Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with
not only to ensure efficient bank operation which is imbued with public interest but also to serve the best
interest of the bank as he holds a position of trust and confidence. As emphasized by petitioner,
respondent was in charge of the overall administration of the branch and is tasked to ensure that all
policies and procedures are strictly followed. Indubitably, any negligence in the exercise of his
responsibilities can be sufficient ground for loss of trust and confidence demanded by his position.
(EQUITABLE PCI BANK (Now Banco De Oro Unibank, Inc.) v. CASTOR A. DOMPOR, G.R. Nos. 163293
& 163297, 8 December 2010)

As a general rule, employers are allowed a wider latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, perform functions which by
their nature require the employers full trust and confidence. This must be distinguished from the case of
ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher
proof of involvement in the events in question; mere uncorroborated assertions and accusations by the
employer will not suffice. (LEANDRO M. ALCANTARA v. THE PHILIPPINE COMMERCIAL
AND INTERNATIONAL BANK, G.R. No. 151349, 20 October 2010)

Verily, there was a dearth of evidence directly linking respondent Mongcal to the commission of
the crime of theft, as his mere act of loading the dump truck with aggregates did not show that he knew
of Rasote's plan to deliver the load to a place other than petitioner's construction site. The only
conclusion, therefore, is that petitioner illegally dismissed respondent Mongcal. (SARGASSO
CONSTRUCTION and DEVELOPMENT CORPORATION v. NATIONAL LABOR RELATIONS
COMMISSION and GORGONIO MONGCAL, G.R. No. 164118, 9 February 2010)

To be a valid cause for termination of employment, the act or acts constituting breach of trust
must have been done intentionally, knowingly, and purposely; and they must be founded on clearly
established facts. (WENSHA SPA CENTER, INC. and/or XU ZHI JIE v. LORETA T. YUNG G.R. No.
185122, 16 August 2010)

The right of an employer to dismiss an employee on the ground that it has lost its trust and
confidence in him must not be exercised arbitrarily and without just cause. Loss of trust and confidence,
to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly
established facts. The basis for the dismissal must be clearly and convincingly established, but proof
beyond reasonable doubt is not necessary. It must rest on substantial grounds and not on the employers
arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of
the employer. CENTURY CANNING CORPORATION, RICARDO T. PO, JR. and AMANCIO C.
RONQUILLO v. VICENTE RANDY R. RAMIL, G.R. No. 171630, 8 August 2010)

The loss of trust and confidence must be based not on ordinary breach by the employee of the
trust reposed in him by the employer, but, in the language of Article 282 (c) of the Labor Code, on willful
breach. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on
substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion; otherwise, the
employee would eternally remain at the mercy of the employer. (LIMA LAND, INC., LEANDRO JAVIER,
SYLVIA DUQUE, and PREMY ANN BELOY v. MARLYN CUEVAS, G.R. No. 169523, 16 June 2010)
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It is unsatisfactory, revealing a mind that was willing to disregard bank rules and regulations when
other branch officers concurred. The PNB rightfully separated her from work for willful breach of the
trust that it reposed in her under the Labor Code. Her defense that the PNB did not suffer any loss is of
no moment. The focal point is that she betrayed the trust of the bank in her fidelity to its interest and
rules. (LUZVIMINDA A. ANG v. PHILIPPINE NATIONAL BANK, G.R. No. 178762, 16 June 2010)

As the company's purchasing manager, Rivera held a position of trust and confidence; his role in
the procurement of the company's operational requirements is critical. That a rush job was involved, is no
excuse as a canvass could be done even in a day's time as shown by the audit departments canvass. That
Rivera was responsible for concealment and omissions also appears clear; he failed to seasonably disclose
to PJI, under dubious circumstances, material information with financial impact on the purchase
transaction. Thus, substantial evidence exists justifying Riveras dismissal for a just cause loss of trust
and confidence. (PHILIPPINE JOURNALISTS, INC., v. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER FEDRIEL S. PANGANIBAN and EDUARDO S. RIVERA, G.R.
No. 187120, 16 February 2010)

Loss of trust and confidence, as a just cause for termination of employment, is premised on the
fact that the employee concerned holds a position of responsibility, trust and confidence. The employee
must be invested with confidence on delicate matters, such as the custody, handling, care and protection
of the employers property and funds. As a superintendent, Agad occupied a position tasked to perform
key and sensitive functions which necessarily involved the custody and protection of Caltexs properties.
Consequently, Agad comes within the purview of the trust and confidence rule. (CALTEX
(PHILIPPINES), INC., WILLIAM P. TIFFANY, E.C. CAVESTANY, and E.M., CRUZ v. HERMIE G.
AGAD and CALTEX UNITED SUPERVISORS' ASSOCIATION, G.R. No. 162017, April 23, 2010)

Loss of confidence, as a just cause for termination of employment, is premised on the fact that
the employee concerned holds a position of responsibility, trust and confidence. He must be invested
with confidence on delicate matters, such as the custody, handling, care, and protection of the employer's
property and/or funds. In order to constitute a just cause for dismissal, the act complained of must be
"work-related" such as would show the employee concerned to be unfit to continue working for the
employer. (ROLANDO P. ANCHETA v. DESTINY FINANCIAL PLANS, INC. And ARSENIO
BARTOLOME, G.R. No. 179702, 16 February 2010)

In Fungo v. Lourdes School of Mandaluyong, we restated the guidelines for the application of
loss of trust and confidence as a just cause for dismissal of an employee from the service, thus: a) loss of
confidence should not be simulated; b) it should not be used as subterfuge for causes which are improper,
illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
(BIBIANA FARMS AND MILLS, INC. v. ARTURO LADO, G.R. No. 157861, February 2, 2010)

To warrant removal from service for gross and habitual neglect of duty, it must be shown that
the negligence should not merely be gross, but also habitual. In breach of trust and confidence, so long as
it is shown there is some basis for management to lose its trust and confidence and that the dismissal was
not used as an occasion for abuse, as a subterfuge for causes which are illegal, improper, and unjustified
and is genuine, that is, not a mere afterthought intended to justify an earlier action taken in bad faith, the
free will of management to conduct its own business affairs to achieve its purpose cannot be denied.
(PAMELA FLORENTINA P. JUMUAD v. HI-FLYER FOOD, INC. and/or JESUS R.
MONTEMAYOR, G.R. No. 187887, 7 September 2011)

Loss of confidence as a just cause of dismissal was never intended to provide employers with a
blank check for terminating employment. Loss of confidence should ideally apply only (1) to cases
involving employees occupying positions of trust and confidence, or (2) to situations where the employee
is routinely charged with the care and custody of the employers money or property. (ELMER LOPEZ v.
KEPPEL BANK PHILIPPINES, INC., MANUEL BOSANO III and STEFAN TONG WAI MUN,
G.R. No. 176800, 5 September 2011)
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Loss of confidence as a just cause for termination of employment is premised on the fact that the employee
concerned holds a position of responsibility or trust and confidence. He must be invested with confidence on
delicate matters, such as custody handling or care and protection of the property and assets of the employer. And, in
order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the
employee concerned is unfit to continue to work for the employer. (JAMES BEN L. JERUSALEM v. KEPPEL
MONTE BANK, HOE ENGHOCK, SUNNY YAP and JOSEFINAPICART, G.R. No. 169564, 6 April 2011)

In order to constitute a just cause for dismissal, the act complained of must be work-related and
shows that the employee concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence or that the employee concerned is
entrusted with confidence with respect to delicate matters, such as the handling or care and protection of
the property and assets of the employer (QUIRICO LOPEZ v. ALTURAS GROUP OF COMPANIES
and/or MARLITO UY, G.R. No. 191008, 11 April 2011)

Willful breach of trust or loss of confidence requires that the employee (1) occupied a position of
trust or (2) was routinely charged with the care of the employers property. (ROMEO E. PAULINO v.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY, INCORPORATE, G.R. No. 176184, June 13, 2012)

Loss of confidence should ideally apply only to cases involving employees occupying positions of
trust and confidence or to those situations where the employee is routinely charged with the care and
custody of the employer's money or property. To the first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such
managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those
who, in the normal and routine exercise of their functions, regularly handle significant amounts of money
or property. (PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LABOR UNION and
SANDY T. VALLOTA v. NATIONAL LABOR RELATIONS COMMISSION, et al., G.R. No. 185335,
13 June 2012)

Villanueva worked for MERALCO as a Branch Representative whose tasks included the issuance
of Contracts for Electric Service after receipt of the amount due for service connection from customers.
Obviously, he was entrusted not only with the responsibility of handling company funds but also to cater
to customers who intended to avail of MERALCOs services. This is nothing but an indication that trust
and confidence were reposed in him by the company, although his position was not strictly managerial by
nature. MERALCOs loss of trust and confidence arising out of Villanuevas act of misappropriation of
company funds in the course of processing customer applications has been proven by substantial
evidence, thus, justified. Verily, the issuance of additional receipts for excessive payments exacted from
customers is a willful breach of the trust reposed in him by the company. (VICENTE VILLANUEVA,
JR. v. THE NATIONAL LABOR RELATIONS COMMISSIO, et al., G.R. No. 176893, 13 June 2012)

Loss of trust and confidence as a ground for termination of an employee under Article 282 of the
Labor Code requires that the breach of trust be willful, meaning it must be done intentionally, knowingly,
and purposely, without justifiable excuse. The basic premise for dismissal on the ground of loss of
confidence is that the employees concerned hold a position of trust and confidence. It is the breach of
this trust that results in the employers loss of confidence in the employee. To our mind, the failure to
reach the monthly sales quota cannot be considered an intentional and unjustified act of respondent
amounting to a willful breach of trust on his part that would call for his termination based on loss of
confidence. This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of
the Labor Code. Indeed, the low sales performance could be attributed to several factors which are
beyond respondents control. To be a valid ground for an employees dismissal, loss of trust and
confidence must be based on a willful breach. To repeat, a breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse. (NORKIS DISTRIBUTORS, INC. AND ALEX D.
BUAT vs. DELFIN S. DESCALLAR, G.R. No. 185255, March 14, 2012)
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An employees acquittal in a criminal case, especially one that is grounded on the existence of
reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the
employers interests. In the reverse, the finding of probable cause is not followed by automatic adoption
of such finding by the labor tribunals. Just cause is required for a valid dismissal. The Labor Code
provides that an employer may terminate an employment based on fraud or willful breach of the trust
reposed on the employee. Such breach is considered willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. It must also be based on substantial evidence and not on the employers
whims or caprices or suspicions; otherwise, the employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a
claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of confidence as a just cause for termination of
employment is premised on the fact that the employee concerned holds a position of responsibility, trust
and confidence or that the employee concerned is entrusted with confidence with respect to delicate
matters, such as the handling or care and protection of the property and assets of the employer. The
betrayal of this trust is the essence of the offense for which an employee is penalized. (LYNVIL
FISHING ENTERPRISES, INC. and/or ROSENDO S. DE BORJA, v. ANDRES G. ARIOLA, JESSIE
D. ALCOVENDAS, JIMMY B. CALINAO AND LEOPOLDO G. SEBULLEN, G.R. No. 181974, 1
February 2012)
PDGCCs termination of the Oasays employment was for a cause provided under the Labor
Code. In terminating Oasays employment, PDGCC invoked loss of trust and confidence. The first
requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must
be holding a position of trust and confidence. Here, it is indubitable that the Oasay holds a position of
trust and confidence. The position of Building Administrator, being managerial in nature, necessarily
enjoys the trust and confidence of the employer. The second requisite is that there must be an act that
would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for
dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis
for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not
necessary. (SEBASTIAN F. OASAY, JR. v.PALACIO DEL GOBERNADOR CONDOMINIUM
CORPORATION and/or OMAR T. CRUZ, G.R. No. 194306, 6 February 2012)

The Bank should be reminded that for a dismissal based on loss of trust and confidence to be
valid, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and
purposely, without justifiable excuse. Loss of trust and confidence stems from a breach of trust founded
on dishonest, deceitful or fraudulent act. This is obviously not the case here. (PRUDENTIAL BANK
(now Bank of the Philippine Islands) v. ANTONIO S.A. MAURICIO, et al., G.R. No. 183350, January 18, 2012)

For loss of trust and confidence to be a valid ground for dismissal, it must be based on a willful
breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. (MANILA ELECTRIC COMPANY v. MA. LUISA
BELTRAN G.R. No. 173774, January 30, 2012)

Jurisprudence provides that an employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their nature require the
employers full trust and confidence. As distinguished from a rank and file personnel, mere existence of a
basis for believing that a managerial employee has breached the trust of the employer justifies dismissal.
"[L]oss of confidence as a ground for dismissal does not require proof beyond reasonable doubt as the
law requires only that there be at least some basis to justify it. (FLORDELIZA MARIA REYES-RAYEL
v. PHILIPPINE LUEN THAI HOLDINGS, et al, G.R. No. 174893, 11 July 2012)

The mere existence of a basis for the loss of trust and confidence justifies the dismissal of the
managerial employee because when an employee accepts a promotion to a managerial position or to an
28 | P a g e

office requiring full trust and confidence, such employee gives up some of the rigid guaranties available to
ordinary workers. Infractions, which if committed by others would be overlooked or condoned or
penalties mitigated, may be visited with more severe disciplinary action. Proof beyond reasonable doubt is
not required provided there is a valid reason for the loss of trust and confidence, such as when the
employer has a reasonable ground to believe that the managerial employee concerned is responsible for
the purported misconduct and the nature of his participation renders him unworthy of the trust and
confidence demanded by his position. (CECILIA T. MANESE, JULIETES E. CRUZ, and EUFEMIO
PENANO II v. JOLLIBEE FOODS CORPORATION, TONY TAN CAKTIONG, ELIZABETH
DELA CRUZ, DIVINA EVANGELISTA, and SYLVIA M. MARIANO, G.R. No. 170454, 11 October
2012)

The basic premise for dismissal on the ground of loss of confidence is that the employees
concerned hold a position of trust and confidence. It is the breach of this trust that results in the
employer's loss of confidence in the employee. (ROWENA DE LEON CRUZ v. BANK OF THE
PHILIPPINE ISLANDS, G.R. No. 173357, 13 February 13, 2013)

Among the just cause for termination is the employers loss of trust and confidence in its
employee. Article 296 (c) of the Labor Code provides that an employer may terminate the services of an
employee for fraud or willful breach of the trust reposed in him. But in order for the said cause to be
properly invoked, certain requirements must be complied with, namely, (1) the employee concerned must
be holding a position of trust and confidence and (2) there must be an act that would justify the loss of
trust and confidence. Being involved in the handling of company funds, Episcope is undeniably
considered an employee occupying a position of trust and confidence and as such, was expected to act
with utmost honesty and fidelity. (PHILIPPINE PLAZA HOLDINGS, INC. v. MA. FLORA M.
EPISCOPE, G.R. No. 192826, 27 February 2013)

Loss of trust and confidence as a ground for dismissal has never been intended to afford an
occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which
are illegal, improper and unjustified. It must be genuine, not a mere afterthought intended to justify an
earlier action taken in bad faith. (ROLANDO DS. TORRES v. RURAL BANK OF SAN JUAN, INC., et
al., G.R. No. 184520, 13 March 2013)

5. ANALOGOUS CASES

ABANDONMENT

It seems petitioners rested their case on the defense of respondents abandonment of work. For
this cause to prosper, petitioners should have proved (1) that the failure to report for work was without
justifiable reason, and (2) respondents intention to sever the employer-employee relationship as shown
by some overt acts. (PASIG CYLINDER MFG., CORP., A.G. & E ALLIED SERVICES, MANUEL
ESTEVANEZ, SR., and VIRGILIO GERONIMO, SR. v. DANILO ROLLO, et al., G.R. No. 173631,
September 8, 2010)

That Siazar lost no time in filing a complaint for illegal dismissal negates the notion that he
voluntarily left or abandoned his job. An employee who files a suit to claim his job back raises serious
doubts that he even entertained the idea of leaving it in the first place. (AGRICULTURAL AND
INDUSTRIAL SUPPLIES CORPORATION, DAILY HARVEST MERCANTILE, INC., JOSEPH C.
SIA HETIONG and REYNALDO M. RODRIGUEZ, v. JUEBER P. SIAZAR and THE HONORABLE
NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 177970, August 25, 2010)

A persons duty to his family is not incompatible with his job-related commitment to come to the
rescue of victims of disasters. Disasters do not strike every day. Besides, knowing that his job as senior
medical health officer entailed the commitment to make a measure of personal sacrifice, he had the
choice to resign from it when he realized that he did not have the will and the heart to respond.(DR.
EDILBERTO ESTAMPA, JR. v. CITY GOVERNMENT OF DAVAO, G.R. No. 190681, 21 June 2010)
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Jurisprudence has held time and again that abandonment is totally inconsistent with the
immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for
reinstatement. In the present case, however, petitioner filed his complaint more than one year after his
alleged termination from employment. Moreover, petitioner and the other complainants inconsistency in
their stand is also shown by the fact that in the complaint form which they personally filled up and filed
with the NLRC, they only asked for payment of separation pay and other monetary claims. They did not
ask for reinstatement. It is only in their Position Paper later prepared by their counsel that they asked for
reinstatement. This is an indication that petitioner and the other complainants never had the intention or
desire to return to their jobs. In fact, there is no evidence to prove that petitioner and his former co-
employees ever attempted to return to work after they were dismissed from employment. (ELPIDIO
CALIPAY v.NATIONAL LABOR RELATIONS COMMISSION, TRIANGLE ACE
CORPORATION and JOSE LEE, G.R. No. 166411, 3 August 2010)

Being a matter of intention, moreover, abandonment cannot be inferred or presumed from
equivocal acts. As a just and valid ground for dismissal, it requires the deliberate, unjustified refusal of the
employee to resume his employment, without any intention of returning. Two elements must concur: (1)
failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever
the employer-employee relationship, with the second element as the more determinative factor and being
manifested by some overt acts. (FUNCTIONAL, INC. v. SAMUEL C. GRANFIL, G.R. No. 176377,
November 16, 2011)

For a valid finding of abandonment, these two factors should be present: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more determinative factor which is manifested by overt acts
from which it may be deduced that the employee has no more intention to work. (DUP SOUND PHILS.
and/or MANUEL TAN v. COURT OF APPEALS and CIRILO A. PIAL, G.R. No. 168317, November 21,
2011)
Jurisprudence provides for two essential requirements for abandonment of work to exist. The
"failure to report for work or absence without valid or justifiable reason" and "clear intention to sever the
employer-employee relationship x x x manifested by some overt acts" should both concur. Further, the
employees deliberate and unjustified refusal to resume his employment without any intention of
returning should be established and proven by the employer. (HARPOON MARINE SERVICES, Inc.
and JOSE LIDO T. ROSIT v. FERNAN H. FRANCISCO, G.R. No. 167751, March 2, 2011)

The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot
lightly be presumed from certain equivocal acts. To constitute abandonment, two elements must
concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intent, manifested through overt acts, to sever the employer-employee relationship. (NATIONWIDE
SECURITY ANDALLIED SERVICES, INC. v. RONALD P. VALDERAMA, G.R. No. 186614, 23
February 201)

It is a settled rule that failure to report for work after a notice to return to work has been served
does not necessarily constitute abandonment. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified. (E.G & I. CONSTRUCTION CORPORATION and
EDSEL GALEOS v. ANANIAS P. SATO, NILO BERDIN, ROMEO M. LACIDA, JR., and HEIRS
OF ANECITO S. PARANTAR, SR., namely: YVONNE, KIMBERLY MAE, MARYKRIS, ANECITO,
JR., and JOHN BRYAN, all surnamed PARANTAR, G.R. No. 182070, February 16, 2011)

Thus, we have ruled in a series of cases that there are two elements that must concur in order for
an act to constitute abandonment: (1) failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever the employer-employee relationship. The second element is the
more determinative factor, which must be manifested by some overt acts. Mere absence or failure to
report for work does not, ipso facto, amount to abandonment of work. (JOSAN, JPS, SANTIAGO
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CARGO MOVERS, and MARY GRACE S. PARUNGAO, v.
EDUARDO RAMOS ADUNA, G.R. No. 190794, February 22, 2012)

The mere absence of an employee is not sufficient to constitute abandonment. As an employer,
TCP has the burden of proof to show the deliberate and unjustified refusal of the employee to resume the
latters employment without any intention of returning. (TEGIMENTA CHEMICAL PHILS., and
VIVIAN ROSE D. GARCIA v. MARY ANNE OCO, G.R. No. 175369, 27 February 2013)

IMMORAL CONDUCT

An employer is free to regulate all aspects of employment. It may make reasonable rules and
regulations for the government of its employees which become part of the contract of employment
provided they are made known to the employee. In the event of a violation, an employee may be validly
terminated from employment on the ground that an employer cannot rationally be expected to retain the
employment of a person whose lack of morals, respect and loyalty to his employer, regard for his
employers rules and application of the dignity and responsibility, has so plainly and completely been
barred. (ALILEM CREDIT COOPERATIVE, INC., NOW KNOWN AS ALILEM MULTIPURPOSE
COOPERATIVE, INC. v. SALVADOR M. BANDIOLA, JR., G.R. No. 173489, 25 February 2013)

C. AUTHORIZED CAUSES

1. REDUNDANCY

Redundancy, for purposes of the Labor Code, exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a
position is redundant where it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or undertaken by the
enterprise. It is not enough for a company to merely declare that it has become overmanned. It must
produce adequate proof of such redundancy to justify the dismissal of the affected employees. (COCA-
COLA BOTTLERS PHILIPPINES, INC. v. ANGEL U. DEL VILLAR, G.R. No. 163091, 6 October
2010)

However, an employer cannot simply declare that it has become overmanned and dismiss its
employees without producing adequate proof to sustain its claim of redundancy. Among the requisites of
a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position;
and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, such as but
not limited to: preferred status, efficiency, and seniority. (NELSON A. CULILI v. EASTERN
TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive
Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA
GARCIA (Assistant Vice President), G.R. No. 165381, February 9, 2011)

It has been ruled that an employer has no legal obligation to keep more employees than are
necessary for the operation of its business. For the implementation of a redundancy program to be valid,
however, the employer must comply with the following requisites: (1) written notice served on both the
employees and the DOLE at least one month prior to the intended date of termination of employment;
(2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good
faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what
positions are to be declared redundant and accordingly abolished. (LENN MORALES v.
METROPOLITAN BANK AND TRUST COMPANY. G.R. No. 182475, 21 November 2012)

The characterization of an employees services as superfluous or no longer necessary and,
therefore, properly terminable, is an exercise of business judgment on the part of the employer. The
exercise of such judgment, however, must not be in violation of the law, and must not be arbitrary or
malicious. A company cannot simply declare redundancy without basis. To exhibit its good faith and that
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there was a fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over
manned must produce adequate proof of the same. (GENERAL MILLING CORPORATION v.
VIOLETA L. VIAJAR, G.R. No. 181738, 30 January 2013)

2. RETRENCHMENT

Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the
management to meet clear and continuing economic threats or during periods of economic recession to
prevent losses. There is no need for the employer to wait for substantial losses to materialize before
exercising ultimate and drastic option to prevent such losses. (PLASTIMER INDUSTRIAL
CORPORATION and TEO KEE BIN v. NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA
T. AMPARADO, MIGNON H. JOSEPH, AMELIA L. CANDA, MARISSA D. LABUNOS,
MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA CABASA, G.R. No.
183390, February 16, 2011)

The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity
of the cause of termination. Non-compliance with this rule clearly violates the employees right to statutory due
process. (SHIMIZU PHILS.CONTRACTORS, INC. v. VIRGILIO P. CALLANTA, G.R. No. 165923, 29
September 2010)

Talam insinuates that the share in the companys operating costs of personnel expenses is
misleading, contending that the bulk of the expense goes into management fees. While this may be so, it
cannot be denied that the management group is still part of the personnel component of the company,
and absent any showing of bad faith, the choice of who should be retrenched must be conceded to the
company for as long as there exists a basis for it. (FRANCIS RAY TALAM v. NATIONAL LABOR
RELATIONS COMMISSION, 4th DIVISION, CEBU CITY, THE SOFTWARE FACTORY, INC.
and/or TERESA GRAPILON, Office Manager, and WOLFGANG HERMLE, Chief Executive Officer, G.R.
No. 175040, April 6, 2010)

As petitioners failed to establish a valid retrenchment, respondents were clearly dismissed
without just, valid or authorized cause. (SAMEER OVERSEAS PLACEMENT AGENCY, INC. AND
RIZALINA LAMSON, PETITIONERS, VS. MARICEL N. BAJARO, et al., G.R. No. 170029, 21
November 2012)

There are three (3) basic requisites for a valid retrenchment, namely: (a) proof that the retrenchment is
necessary to prevent losses or impending losses; (b) service of written notices to the employees and to the
DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation
pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service,
whichever is higher. (GENUINO ICE COMPANY, INC., HECTOR S. GENUINO AND EDGAR A.
CARRJAGA v. ERIC Y. LAVA AND EDDIE BOY SODELA, G.R. No. 190001, March 23, 2011)

Retrenchment is subject to faithful compliance with the substantative and procedural
requirements laid down by law and jurisprudence. For a valid retrenchment, the following elements must
be present: (1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected,
are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the
employer served written notice both to the employees and to the Department of Labor and Employment
at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched
employees separation pay equivalent to one (1) month pay or at least month pay for every year of
service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the employees right to security
of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers. (WATERFRONT CEBU CITY HOTEL vs. MA.
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MELANIE P. JIMENEZ, JACQUELINE C. BAGUIO, LOVELLA V. CARILLO, and MAILA G.
ROBLE, G.R. No. 174214, June 13, 2012)

Proper notice to the DOLE within 30 days prior to the intended date of retrenchment is
necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. To
stress, despite the employers failure to comply with the one-month notice to the DOLE prior to
respondents termination, it is only a procedural infirmity which does not render the retrenchment illegal.
(INTERNATIONAL MANAGEMENT SERVICES/MARILYN C. PASCUAL v. ROEL P.
LOGARTA, G.R. No. 163657, 18 April 2012)

Essentially, the prerogative of an employer to retrench its employees must be exercised only as a
last resort, considering that it will lead to the loss of the employees' livelihood. It is justified only when all
other less drastic means have been tried and found insufficient or inadequate. Corollary thereto, the
employer must prove the requirements for a valid retrenchment by clear and convincing evidence;
otherwise, said ground for termination would be susceptible to abuse by scheming employers who might
be merely feigning losses or reverses in their business ventures in order to ease out employees. These
requirements are: 1. That retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer; 2. That the
employer served written notice both to the employees and to the Department of Labor and Employment
at least one month prior to the intended date of retrenchment; 3. That the employer pays the retrenched
employees separation pay equivalent to one (1) month pay or at least one-half () month pay for every
year of service, whichever is higher; 4. That the employer exercises its prerogative to retrench employees
in good faith for the advancement of its interest and not to defeat or circumvent the employees right to
security of tenure; and 5. That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers. (PEPSI-COLA PRODUCTS PHILIPPINES, INC.
v. ANECITO MOLON et al., G.R. No. 175002, 18 February 2013)

3. CLOSURE OF BUSINESS

Closure of business is the reversal of fortune of the employer whereby there is a complete
cessation of business operations and/or an actual locking-up of the doors of the establishment, usually
due to financial losses. Closure of business, as an authorized cause for termination of employment, aims
to prevent further financial drain upon an employer who can no longer pay his employees since business
has already stopped. Where the charge of ownership is done in bad faith, or is used to defeat the rights of
labor, the successor-employer is deemed to have absorbed the employees and is held liable for the
transgressions of his or her predecessor. (PEAFRANCIA TOURS AND TRAVEL TRANSPORT,
INC. v. JOSELITO P. SARMIENTO and RICARDO S. CATIMBAN, G.R. No. 178397, 20 October 2010)

Mere poor sales collection, coupled with mismanagement of its affairs does not amount to
serious business losses. (MARC II MARKETING, INC. and LUCILA V. JOSON v. ALFREDO M.
JOSON, G.R. No. 171993, 12 December 2011)

Article 283 of the Labor Code identifies closure or cessation of operation of the establishment as
an authorized cause for terminating an employee. Similarly, the said provision mandates that employees
who are laid off from work due to closures that are not due to business insolvency should be paid
separation pay equivalent to one-month pay or to at least one-half month pay for every year of service,
whichever is higher. A fraction of at least six months shall be considered one whole year. (EVER
ELECTRICAL MANUFACTURING, INC., (EEMI) and VICENTE GO v. SAMAHANG
MANGGAGAWA NG EVER ELECTRICAL/ NAMAWU LOCAL 224, G.R. No. 194795, 13
June201)

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For a dismissal based on the closure of business to be valid, three (3) requirements must be
established. Firstly, the cessation of or withdrawal from business operations must be bona fide in
character. Secondly, there must be payment to the employees of termination pay amounting to at least
one-half (1/2) month pay for each year of service, or one (1) month pay, whichever is higher. Thirdly, the
company must serve a written notice on the employees and on the DOLE at least one (1) month before
the intended termination. (VIVIAN T. RAMIREZ, et al. vs. MAR FISHING CO., INC., MIRAMAR
FISHING CO., INC., ROBERT BUEHS AND JEROME SPITZ, G.R. No. 168208, June 13, 2012)
D. DUE PROCESS / TWIN-NOTICE REQUIREMENT

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282
but the employer failed to comply with the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer
failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process
was initiated by the employer's exercise of his management prerogative. (NELSON A. CULILI v.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and
Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President)
and STELLA GARCIA (Assistant Vice President), G.R. No. 165381, February 9, 2011)

The law requires that two notices be given to an employee prior to a valid termination: the first
notice is to inform the employee of the charges against her with a warning that she may be terminated
from her employment and giving her reasonable opportunity within which to explain her side, and the
second notice is the notice to the employee that upon due consideration of all the circumstances, she is
being terminated from her employment. This is a requirement of due process and clearly, Loreta did not
receive any of those required notices. . (WENSHA SPA CENTER, INC. and/or XU ZHI JIE v.
LORETA T. YUNG G.R. No. 185122, 16 August 2010)

Respondents failure to observe due process in the termination of employment of petitioner for a
just cause does not invalidate the dismissal but makes respondent company liable for non-compliance
with the procedural requirements of due process. The violation of petitioners right to statutory due
process warrants the payment of nominal damages, the amount of which is addressed to the sound
discretion of the court, taking into account the relevant circumstances. (ROLANDO P. ANCHETA v.
DESTINY FINANCIAL PLANS, INC. And ARSENIO BARTOLOME, G.R. No. 179702, 16 February
2010)

The right to counsel and the assistance of one in investigations involving termination cases is
neither indispensable nor mandatory, except when the employee himself requests for one or that he
manifests that he wants a formal hearing on the charges against him. (QUIRICO LOPEZ v. ALTURAS
GROUP OF COMPANIES and/or MARLITO UY, G.R. No. 191008, 11 April 2011)

The following are the guiding principles in connection with the hearing requirement in dismissal
cases: (a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense, whether
in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference
becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes
exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the ample
opportunity to be heard standard in the Labor Code prevails over the hearing or conference
requirement in the implementing rules and regulations. (FLORDELIZA MARIA REYES-RAYEL v.
PHILIPPINE LUEN THAI HOLDINGS, et al, G.R. No. 174893, 11 July 2012)

The validity of an employees dismissal from service hinges on the satisfaction of the two
substantive requirements for a lawful termination. These are, first, whether the employee was accorded
due process the basic components of which are the opportunity to be heard and to defend himself. This
is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor
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Code of the Philippines. This constitutes the substantive aspect. (ERECTOR ADVERTISING SIGN
GROUP, INC. and ARCH. JIMMY C. AMOROTO, v. NATIONAL LABOR RELATIONS
COMMISSION, G.R. No. 167218, July 2, 2010)

In dismissing an employee from service, the employer has the burden of proving its observance of
the two-notice requirement and its accordance to the employee of a real opportunity to be heard. (JARL
CONSTRUCTION and ARMANDO K. TEJADA v. SIMEON A. ATENCIO, G.R. No. 175969, 1 August
2012)

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish
the employee with two written notices before termination of employment can be effected: a first written
notice that informs the employee of the particular acts or omissions for which his or her dismissal is
sought, and a second written notice which informs the employee of the employer's decision to dismiss
him. In considering whether the charge in the first notice is sufficient to warrant dismissal under the
second notice, the employer must afford the employee ample opportunity to be heard. (JONATHAN I.
SANG-AN v. EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY, INC., G.R. No.
173189, 13 February 2013)

The memorandum did not specify the grounds for which her dismissal would be sought, and for
that reason was at best a mere reminder to De Jesus to submit her report on the status of her accounts.
The memorandum did not provide the notice of dismissal under the law because it only directed her to
explain why she should not be dismissed for cause. (MARIA LOURDES C. DE JESUS v. HON. RAUL
T. AQUINO, et al., G.R. Nos. 164662, 165787, 18 February 2013)

While notice to the DOLE was short of the one-month notice requirement, the affected
employees were sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners
failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not
render the retrenchment illegal. In Agabon v. NLRC, we ruled that when the dismissal is for a just cause,
the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the
employer should indemnify the employee for the violation of his statutory rights. (PLASTIMER
INDUSTRIAL CORPORATION and TEO KEE BIN v. NATALIA C. GOPO, KLEENIA R. VELEZ,
FILEDELFA T. AMPARADO, MIGNON H. JOSEPH, AMELIA L. CANDA, MARISSA D.
LABUNOS, MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA
CABASA, G.R. No. 183390, February 16, 2011)

In order to validly dismiss an employee, the employer is required to observe both substantive and
procedural aspects the termination of employment must be based on a just or authorized cause of
dismissal and the dismissal must be effected after due notice and hearing. (MANSION PRINTING
CENTER and CLEMENT CHENG v. DIOSDADO BITARA, JR., G.R. No. 168120, January 25, 2012)

Contrary to Esguerras allegation, the law does not require that an intention to terminate ones
employment should be included in the first notice. It is enough that employees are properly apprised of
the charges brought against them so they can properly prepare their defenses; it is only during the second
notice that the intention to terminate ones employment should be explicitly stated. (DOLORES T.
ESGUERRA vs. VALLE VERDE COUNTRY CLUB, INC. and ERNESTO VILLALUNA
G.R. No. 173012, June 13, 2012)

Prior or advance notice of termination is not part of procedural due process if the termination is
brought about by the completion of the contract or phase thereof for which the employee was
engaged. (D.M. CONSUNJI, INC. v. ANTONIO GOBRES, MAGELLAN DALISAY, GODOFREDO
PARAGSA, EMILIO ALETA and GENEROSO MELO, G.R. No. 169170, 8 August 2010)

Labor tribunals are mandated to use all reasonable means to ascertain the facts in each case speedily,
objectively and without regard to technicalities of law or procedure. However, in every proceeding before it, the
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fundamental and essential requirements of due process should not to be ignored but must at all times be respected.
(PABLO POLSOTIN, JR., ET AL. v. DE GUIA ENTERPRISES, INC., G.R. No. 172624, 5 December 2011)

The evidence shows that he was afforded due process. The essence of due process is an
opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one's side.
A formal or trial-type hearing is not essential. (ANTONIO A. ABOC v. METROPOLITAN BANK AND
TRUST COMPANY/ METROPOLITAN BANK AND TRUST COMPANY vs. ANTONIO A. ABOC,
G.R. Nos. 170542-43/G.R. No. 176460, December 13, 2010)
E. BURDEN OF PROOF IN TERMINATION CASES

In termination cases, the burden of proof rests on the employer to show that the dismissal was
for a just cause or authorized cause. An employee's dismissal due to serious misconduct and loss of trust
and confidence must be supported by substantial evidence. (ANTONIO A. ABOC v. METROPOLITAN
BANK AND TRUST COMPANY/ METROPOLITAN BANK AND TRUST COMPANY vs.
ANTONIO A. ABOC, G.R. Nos. 170542-43/G.R. No. 176460, December 13, 2010)

In illegal dismissal cases, the employer is burdened to prove just cause for terminating the
employment of its employee with clear and convincing evidence. To be sure, unsubstantiated suspicions,
accusations, and conclusions of employers do not provide for legal justification for dismissing employees.
In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of
labor laws and the Constitution. DUTY FREE PHILIPPINES SERVICES, INC. v. MANOLITO Q.
TRIA, G.R. No. 174809, 27 June 2012)

The law mandates that the burden of proving the validity of the termination of employment rests
with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal
was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of
employers do not provide for legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the
Constitution. (PARK HOTEL, J's PLAYHOUSE, BURGOS CORP., INC., and/or GREGG HARBUTT,
General Manager, ATTY. ROBERTO ENRIQUEZ, President, and BILL PERCY v. MANOLO SORIANO,
LESTER GONZALES, and YOLANDA BADILLA, G.R. No. 171118, 10 September 2012)

We are not unmindful of the rule in labor cases that the employer has the burden of proving that
the termination was for a valid or authorized cause; however, it is likewise incumbent upon the employees
that they should first establish by competent evidence the fact of their dismissal from employment. The
one who alleges a fact has the burden of proving it and the proof should be clear, positive and
convincing. (ROMEO BASAY, JULIAN LITERAL and JULIAN ABUEVA v. HACIENDA
CONSOLACION, and/or BRUNO BOUFFARD III, et al., G.R. No. 175532, April 19, 2010)

The rule in termination cases is that the employer bears the burden of proving that he dismissed his
employee for a just cause. And, when the employer claims that the employee resigned from work, the
burden is on the employer to prove that he did so willingly. Whether that is the case would largely depend
on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with
the employees intent to give up work. (ELSA S. MALIG-ON v. EQUITABLE GENERAL
SERVICES, INC., G.R. No. 185269, 29 June 2010)

F. RELIEFS FOR ILLEGAL DISMISSAL

1. REINSTATEMENT

While the PNP may have validly suspended Roaquin from the service pending the adjudication
of the criminal case against him, he was entitled after his acquittal not only to reinstatement but also to
payment of the salaries, allowances, and other benefits withheld from him by reason of his discharge from
the service. (P/CHIEF SUPERINTENDENT ROBERTO L. CALINISAN, and P/CHIEF
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SUPERINTENDENT REYNALDO M. ACOP, v. SPO2 REYNALDO ROAQUIN y LADERAS, G.R.
No. 159588 , September 15, 2010)

Having firmly established that petitioner dismissed respondent without just cause, and without
notice and hearing, then it is only proper to apply Article 279 of the Labor Code which provides that an
illegally dismissed employee "shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement." In addition to full backwages, the Court has also repeatedly ruled that in cases where
reinstatement is no longer feasible due to strained relations, then separation pay may be awarded instead
of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated that the separation pay, as an
alternative to reinstatement, should be equivalent to one (1) month salary for every year of service.
(DIVERSIFIED SECURITY, INC. v. ALICIA V. BAUTISTA, G.R. No. 152234, April 15, 2010)

A transfer of work assignment without any justification therefor, even if Velasco would
be presumably doing the same job with the same pay, cannot be deemed faithful compliance
with the reinstatement order. In other words, in this instance, there was no real, bona fide
reinstatement to speak of prior to the reversal by the Court of Appeals of the finding of illegal
dismissal. An order for reinstatement entitles an employee to receive his accrued backwages from
the moment the reinstatement order was issued up to the date when the same was reversed by a
higher court without fear of refunding what he had received. Thus, the payment of such wages
cannot be deemed as unjust enrichment on Velascos part. (PFIZER, INC., ET AL., v.
GERALDINE VELASCO, G.R. No. 177467, 9March2011)
Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on
the part of the employer to reinstate and pay the wages of the dismissed employee during the period of
appeal until reversal by the higher court. (COLLEGE OF THE IMMACULATE CONCEPTION v.
NATIONAL LABOR RELATIONS COMMISSION and ATTY. MARIUS F. CARLOS, PH.D., G.R.
No. 167563, 22 March 2010)

A dismissed employee whose case was favorably decided by the LA is entitled to receive wages
pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it
is ministerial upon the LA to implement the order of reinstatement and it is mandatory on the employer
to comply therewith. After the LAs decision is reversed by a higher tribunal, the employee may be barred
from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer. (ISLRIZ TRADING/VICTOR HUGO LU v.
EFREN CAPADA, et al., G.R. No. 168501, 31 January 2011)

Article 223 of the Labor Code provides that in case there is an order of reinstatement, the
employer must admit the dismissed employee under the same terms and conditions, or merely reinstate
the employee in the payroll. The order shall be immediately executory. Thus, 3rd Alert cannot escape
liability by simply invoking that Navia did not report for work. Since the proceedings below indicate that
3rd Alert failed to adduce additional evidence to show that it tried to reinstate Navia, either physically or
in the payroll, we adopt as correct the finding that there was no earnest effort to reinstate Navia. The CA
was correct in affirming the judgment of the NLRC in this regard. (3RD ALERT SECURITY AND
DETECTIVE SERVICES, INC. vs. ROMUALDO NAVIA, G.R. No. 200653, June 13, 2012)

In case of strained relations or non-availability of positions, the employer is given the option to
reinstate the employee merely in the payroll, precisely in order to avoid the intolerable presence in the
workplace of the unwanted employee. (RADIO PHILIPPINES NETWORK, INC., et al. v. Ruth F. YAP,
et al., G.R. No. 187713, 1 August 2012)

Reinstatement is the rule and, for the exception of "strained relations" to apply, it should be
proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism would be generated
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as to adversely affect the efficiency and productivity of the employee concerned. (APO CHEMICAL
MANUFACTURING CORPORATION and MICHAEL CHENG v. RONALDO A. BIDES, G.R. No.
186002, 19 September 2012)

2. SEPARATION PAY IN LIEU OF REINSTATEMENT (DOCTRINE OF STRAINED
RELATIONS)

Under the doctrine of stained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter opinion is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be highly oppressive work environment. On the other
hand, it release the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust. (FELIX MARTOS, et al. v. NEW SAN JOSE BUILDERS, INC., G.R.
No. 192650, 24 October 2012)

In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the
amount to be awarded shall be equivalent to one month salary for every year of service reckoned from
the first day of employment until the finality of the decision. Payment of separation pay is in addition to
payment of backwages. And if separation pay is awarded instead of reinstatement, backwages shall be
computed from the time of illegal termination up to the finality of the decision. (AGRICULTURAL
AND INDUSTRIAL SUPPLIES CORPORATION, DAILY HARVEST MERCANTILE, INC.,
JOSEPH C. SIA HETIONG and REYNALDO M. RODRIGUEZ, v. JUEBER P. SIAZAR and THE
HONORABLE NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 177970, August 25, 2010)

Reinstatement, under the circumstances, would no longer be practical as it would not be in the
interest of both parties. Under the law and jurisprudence, an illegally dismissed employee is entitled to
two reliefs - backwages and reinstatement, which are separate and distinct. If reinstatement would only
exacerbate the tension and further ruin the relations of the employer and the employee, or if their
relationship has been unduly strained due to irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in the company, it would be prudent to order
payment of separation pay instead of reinstatement. (WENSHA SPA CENTER, INC. and/or XU ZHI
JIE v. LORETA T. YUNG G.R. No. 185122, 16 August 2010)

Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
salary for every year of service should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages. (FERDINAND A. PANGILINAN v. WELLMADE
MANUFACTURING CORPORATION, G.R. No. 187005, April 7, 2010)

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to
reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and the employee
has been unduly strained by reason of their irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement. (BANK OF LUBAO, INC vs. ROMMEL J.
MANABAT and the NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 188722, February 1,
2012)

3. BACKWAGES

Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality of
the decision. (BANK OF LUBAO, INC vs. ROMMEL J. MANABAT and the NATIONAL LABOR
RELATIONS COMMISSION, G.R. No. 188722, February 1, 2012)

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Article 264(a) authorizes the award of full backwages only when the termination of employment
is a consequence of an unlawful lockout. Backwages are not granted to employees participating in an
illegal strike simply accords with the reality that they do not render work for the employer during the
period of the illegal strike. Under the principle of a fair days wage for a fair days labor, the petitioners
were not entitled to the wages during the period of the strike (even if the strike might be legal), because
they performed no work during the strike. (DANILO ESCARIO, et al. v. NATIONAL LABOR
RELATIONS COMMISSION (THIRD DIVISION), PINAKAMASARAP CORPORATION, DR. SY
LIAN TIN, AND DOMINGO TAN, G.R. No. 160302, 27 September 2010)

No essential change is made by a re-computation as this step is a necessary consequence that
flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an
original computation, if no previous computation has been made) is a part of the law specifically,
Article 279 of the Labor Code and the established jurisprudence on this provision that is read into the
decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as
expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal
dismissal upon execution of the decision does not constitute an alteration or amendment of the final
decision being implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle of immutability of
final judgments. (SESSION DELIGHTS ICE CREAM AND FAST FOODS v. THE HON. COURT OF
APPEALS, et al., G.R. No. 172149, 8 February 2010)

The base figure in computing the award of back wages to an illegally dismissed employee is the
employees basic salary plus regular allowances and benefits received at the time of dismissal, unqualified
by any wage and benefit increases granted in the interim. (BPI EMPLOYEES UNION METRO
MANILA and ZENAIDA UY v. BANK OF THE PHILIPPINE ISLANDS/ BANK OF THE
PHILIPPINE ISLANDS v. BPI EMPLOYEES UNION - METRO MANILA and ZENAIDA UY, G.R.
No. 178699/ G.R. No. 178735, September 21, 2011)

It is the employees actual receipt of the full amount of his separation pay that will effectively
terminate the employment of an illegally dismissed employee. Otherwise, the employer-employee
relationship subsists and the illegally dismissed employee is entitled to backwages, taking into account the
increases and other benefits, including the 13th month pay, that were received by his co-employees who
are not dismissed. It is the obligation of the employer to pay an illegally dismissed employee or worker the
whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which
he would have been normally entitled had he not been dismissed and had not stopped working.
(TIMOTEO H. SARONA v. NATIONAL LABOR RELATIONS COMMISSION, ROYALE
SECURITY AGENCY (FORMERLY SCEPTRE SECURITY AGENCY) and CESAR S. TAN
G.R. No. 185280, January 18, 2012)

It is basic in jurisprudence that illegally dismissed workers are entitled to reinstatement with
backwages plus interest at the legal rate. AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), et al.
v. PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, et al., G.R. Nos. 160138, 160192,
16 January 2013)

The basis for computing backwages is usually the length of the employees service while that for
separation pay is the actual period when the employee was unlawfully prevented from
working. (GOLDEN ACE BUILDERS and ARNOLD U. AZUL v. JOSE A. TALDE, G.R. No. 187200,
5 May 2010)

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date
of the Labor Arbiter's decision until the dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, the Supreme Court (SC) has consistently ruled that backwages shall
be computed from the time of illegal dismissal until the date the decision becomes final. (DANIEL P.
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JAVELLANA, JR. v. ALBINO BELEN, G.R. No. 181913, 5 March 2010; and ALBINO BELEN v.
DANIEL P. JAVELLANA, JR. and JAVELLANA FARMS, INC, G.R. No. 182158)

Being project employees, Aro, et al are only entitled to full backwages, computed from the date
of the termination of their employment until the actual completion of the work. Illegally dismissed
workers are entitled to the payment of their salaries corresponding to the unexpired portion of their
employment where the employment is for a definite period. (WILFREDO ARO, et al. v. NATIONAL
LABOR RELATIONS COMMISSION, et al., G.R. No. 174792, 7 March 2012)

No essential change is made by a re-computation as this step is a necessary consequence that
flows from the nature of the illegality of dismissal declared in that decision. By the nature of an illegal
dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the
Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and
this is not a violation of the principle of immutability of final judgments. (LEO A. GONZALES v.
SOLID CEMENT CORPORATION and ALLEN QUERUBIN, G.R. No. 198423, 23 October 2012)

The computation of separation pay and backwages due to illegally dismissed employees should
not go beyond the date when they were deemed to have been actually separated from their employment,
or beyond the date when their reinstatement was rendered impossible. (ROBERTO BORDOMEO, et al. v.
COURT OF APPEALS, G.R. No. 161596, 20 February 2013)

When the illegally dismissed employees employment contract has a term of less than one year,
he/she shall be entitled to recovery of salaries representing the unexpired portion of his/her employment
contract. A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment
contract or three (3) months salary for every year of the unexpired term, whichever is less, comes into
play only when the employment contract concerned has a term of at least one (1) year or more.
(LORENZO T. TANGGA-AN v. PHILIPPINE TRANSMARINE CARRIERS, INC., et al.
G.R. No. 180636, 13 March 2013)

4. ATTORNEY'S FEES

On the matter of attorneys fees, under Article 2208 of the Civil Code, attorneys fees can be
recovered in actions for recovery of wages of laborers and actions for indemnity under employers liability
laws. Attorneys fees are also recoverable when the defendants act or omission has compelled the
plaintiff to incur expenses to protect his interest. (MAGSAYSAY MARITIME CORPORATION and/or
WASTFEL-LARSEN MANAGEMENT A/S
+
vs. OBERTO S. LOBUSTA, G.R. No. 177578, January
25, 2012)

We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are
two commonly accepted concepts of attorneys fees the ordinary and extraordinary. In its ordinary
concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal
services the former renders; compensation is paid for the cost and/or results of legal services per
agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed indemnity for
damages ordered by the court to be paid by the losing party to the winning party. KAISAHAN AT
KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA MWC-EAST ZONE UNION and
EDUARDO BORELA, representing its members v. MANILA WATER, G.R. No. 174179, November 16,
2011)

5. DAMAGES

Despite the above conclusion, we note that the company itself admits that it failed to observe
procedural due process in Pastorils dismissal and, for this reason, it states that the payment of indemnity
40 | P a g e

in the form of nominal damages is warranted. (WHITE DIAMOND TRADING CORPORATION
and/or JERRY UY and JESSIE UY v. NATIONAL LABOR RELATIONS COMMISSION, NORLITO
ESCOTO, MARY GRACE PASTORIL and MARIA MYRNA OMELA, G.R. No. 186019, March 29,
2010)

An employer is liable to pay indemnity in the form of nominal damages to an employee who has
been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due
process. (LOLITA S. CONCEPCION v. MINEX IMPORT CORPORATION/MINERAMA
CORPORATION, KENNETH MEYERS, SYLVIA P. MARIANO, and VINA MARIANO, G.R. No.
153569, January 24, 2012)

RESIGNATION

There can be no valid resignation where the act was made under compulsion or under
circumstances approximating compulsion, such as when an employees act of handing in his resignation
was a reaction to circumstances leaving him no alternative but to resign. (MANOLO A. PEAFLOR v.
OUTDOOR CLOTHING MANUFACTURING CORPORATION, NATHANIEL T. SYFU, President,
MEDYLENE M. DEMOGENA, Finance Manager, and PAUL U. LEE, Chairman, G.R. No. 177114, 21
January 2010)

Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice
but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office,
with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to
relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the
alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or
her employment. Clearly, her use of words of appreciation and gratitude negates the notion that she was
forced and coerced to resign. (MA. JOY TERESA O. BILBAO v. SAUDI ARABIAN AIRLINES, G.R.
No. 183915, 14 December 2011)

Resignation is defined as "the voluntary act of employees who are compelled by personal reasons
to disassociate themselves from their employment. It must be done with the intention of relinquishing an
office, accompanied by the act of abandonment." The filing of a complaint for illegal dismissal just three
weeks later is difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily
relinquish his employment after being unceremoniously dismissed by no less than the company president,
he would not have sought redress from the NLRC and vigorously pursued this case against the
respondents. (JHORIZALDY UY v. CENTRO CERAMICA CORPORATION AND/OR RAMONITA
Y. SY and MILAGROS U. GARCIA, G.R. No. 174631, 19 October 2011)
In illegal dismissal cases, fundamental is the rule that when an employer interposes the defense of
resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily
resigned. (SAN MIGUEL PROPERTIES PHILIPPINES, INC. v. GWENDELLYN ROSE S.
GUCABAN, G.R. No. 153982, 18 July 2011)

The rule that filing of a complaint for illegal dismissal is inconsistent with resignation does not
hold true in this case. The filing of the complaint one year after his alleged termination, coupled with the
clear tenor or his resignation letter should be taken to mean that Cervantes's filing or the illegal dismissal
case was a mere afterthought. (ROLANDO L. CERVANTES v. PAL MARITIME CORPORATION
and/or WESTERN SHIPPING AGENCIES, PTE., LTD., G.R. No. 175209, 16 January 2013)

The resignation letter indicates that he was resigning "to pursue the establishment of his own
business or explore opportunities with other companies." The reasons stated for relinquishing his
position are but logical options for a person of his experience and standing. (NELSON B. GAN vs.
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GALDERMA PHILIPPINES, INC. and ROSENDO C. VENERACION, G.R. No. 177167, 17 January
2013)

PREVENTIVE SUSPENSION

In any event, what the Rules require is that the employer act on the suspended workers status of
employment within the 30-day period by concluding the investigation either by absolving him of the
charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension
exceeds the 30-day period without any corresponding action on the part of the employer, the employer
must reinstate the employee or extend the period of suspension, provided the employees wages and
benefits are paid in the interim. (GENESIS TRANSPORT SERVICE, INC. and RELY L. JALBUNA v.
UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT (UMMGT), and JUAN
TAROY. GR No. 182114, April 5, 2010)

In Mandapat v. Add Force Personnel Services, Inc., we explained that preventive suspension may be
legally imposed on an employee whose alleged violation is the subject of an investigation. The purpose of
the suspension is to prevent an employee from causing harm or injury to his colleagues and to the
employer. The maximum period of suspension is 30 days, beyond which the employee should either be
reinstated or be paid wages and benefits due to him.( BLUE SKY TRADING COMPANY, INC. and/or
JOSE TANTIANSU and LINDA TANTIANSU vs. ARLENE P. BLAS and JOSEPH D. SILVANO
G.R. No. 190559, March 7, 2012)

CONSTRUCTIVE DISMISSAL

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it would foreclose any choice except to forego continued employment. It exists
when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as an offer
involving a demotion in rank and a diminution in pay. (BEBINA G. SALVALOZA, representing her late husband,
GREGORIO SALVALOZAv. NATIONAL LABOR RELATIONS COMMISSION, GULF PACIFIC
SECURITY AGENCY, INC., and ANGEL QUIZON, G.R. No. 182086, 24 November 2010)

Constructive dismissal is defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It exists
when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to
the employee leaving him with no option but to forego with his continued employment. Here, there was
no diminution of petitioners salary and other benefits. There was no evidence that she was harassed or
discriminated upon, or that respondents made it difficult for her to continue with her other duties.
(ESTRELLA VELASCO v. TRANSIT AUTOMOTIVE SUPPLY, INC. and ANTONIO DE DIO, G.R.
No. 171327, 18 June 2010)

Such act of "off-detailing" Malig-on was not the equivalent of dismissal so long as her floating
status did not continue beyond a reasonable time. But, when it ran up to more than six months, the
company may be considered to have constructively dismissed her from work. (ELSA S. MALIG-ON v.
EQUITABLE GENERAL SERVICES, INC., G.R. No. 185269, June 29, 2010)

The test of constructive dismissal is whether a reasonable person in the employees position
would have felt compelled to give up his position under the circumstances. In constructive dismissal
cases, the employer has the burden of proving that its conduct and action or the transfer of an employee
are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to
be considered a constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to overcome this
burden of proof taints the employees transfer as a constructive dismissal. (PHILIPPINE VETERANS
BANK v. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION) and BENIGNO
MARTINEZ, G.R. No. 188882, March 30, 2010)

42 | P a g e

The test of constructive dismissal is whether a reasonable person in the employee's position
would have felt compelled to give up his position under the circumstances. It is an act amounting to
dismissal but is made to appear as if it were not. Constructive dismissal is therefore a dismissal in
disguise. The law recognizes and resolves this situation in favor of employees in order to protect their
rights and interests from the coercive acts of the employer. (MARIO B. DIMAGAN v. DACWORKS
UNITED, INCORPORATED AND/OR DEAN A. CANCINO, G.R. No. 191053, 28 November 2011)

Constructive dismissal is a derivative of dismissal without cause; an involuntary resignation, nay,
a dismissal in disguise. It occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay
or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee leaving the latter with no other option but to quit. (UNITED LABORATORIES, INC. v.
JAIME DOMINGO substituted by his spouse CARMENCITA PUNZALAN DOMINGO, ANONUEVO
REMIGIO, RODOLFO MARCELO, RAUL NORICO AND EUGENIO OZARAGA, G.R. No.
186209, September 21, 2011)

Constructive dismissal exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution
in pay. Constructive dismissal is a dismissal in disguise or an act amounting to dismissal but made to
appear as if it were not. In constructive dismissal cases, the employer is, concededly, charged with the
burden of proving that its conduct and action or the transfer of an employee is for valid and legitimate
grounds such as genuine business necessity. (MA. MELISSA A. GALANG vs. JULIA MALASUGUI,
G.R. No. 174173, March 7, 2012)

In constructive dismissal cases, the employer has the burden of proving that the transfer of an
employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer
does not involve a demotion in rank or a diminution in salary and other benefits. "If the employer fails to
overcome this burden of proof, the employees transfer is tantamount to unlawful constructive dismissal."
(JULIES BAKESHOP AND/OR EDGAR REYES v. HENRY ARNAIZ, EDGAR NAPAL, AND
JONATHAN TOLORES, G.R. No. 173882, February 15, 2012)

Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive
dismissal as a situation when an employee quits his work because of the agency heads unreasonable,
humiliating, or demeaning actuations which render continued work impossible. Hence, the employee is
deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of
salary of the employee. It may be a transfer from one position of dignity to a more servile or menial job.
(REPUBLIC OF THE PHILIPPINES, represented by the CIVIL SERVICE COMMISSION, v.
MINERVA M.P. PACHEO, G.R. No. 178021, January 25, 2012)

Unlawful acts committed by a co-employee will not bring the matter within the ambit of
constructive dismissal. (JOMAR S. VERDADERO v. BARNEY AUTOLINES GROUP OF
COMPANIES TRANSPORT, INC., et al., G.R. No. 195428, 29 August 2012)

They were compelled by the dismal state of their employment to give up their jobs; effectively,
they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued
employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank
and a diminution in pay." A reasonable mind would not approve of a substituted contract that pays a
diminished salary or an extended at such inferior terms, or a "free and suitable" housing which is hours
away from the job site, cramped and crowded, without potable water and exposed to air pollution.
(PERT/CPM MANPOWER EXPONENT CO., INC. v. ARMANDO A. VINUYA, et al., G.R. No.
197528, 5 September 2012)

Even though transfers or reassignments per se are indeed valid and fall within the ambit of
management prerogatives, the exercise of these rights must remain within the boundaries of justice and
43 | P a g e

fair play. The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic element of justice and fair play. (MICHELLE T. TUASON v.
BANK OF COMMERCE, RAUL B. DE MESA AND MARIO J. PADILLA, G.R. No. 192076, 21
November 2012)

When a lay-off is temporary, the employment status of the employee is not deemed terminated,
but merely suspended. Article 286 of the Labor Code provides, in part, that the bona fide suspension of
the operation of the business or undertaking for a period not exceeding six months does not terminate
employment. (MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. and/or
FORTUNATO V. DE CASTRO v. NAGKAHIUSANG MAMUMUO SA MINTERBRO
SOUTHERN PHILIPPINES FEDERATION OF LABOR and/or MANUEL ABELLANA, et al.
G.R. No. 174300, 5 December 2012)

Being piece-rate workers assigned to individual sewing machines, respondents earnings
depended on the quality and quantity of finished products. That their work output might have been
affected by the change in their specific work assignments does not necessarily imply that any resulting
reduction in pay is tantamount to constructive dismissal. Workers under piece-rate employment have no
fixed salaries and their compensation is computed on the basis of accomplished tasks. (BEST WEAR
GARMENTS, et al. v. ADELAIDA B. DE LEMOS, et al., G.R. No. 191281, 5 December 2012)

Temporary off-detail of floating status is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post until they
are transferred to a new one. For as long as such temporary inactivity does not continue for a period
exceeding six months, it has been ruled that placing an employee on temporary off-detail or floating
status is not equivalent to dismissal. (LEOPARD SECURITY AND INVESTIGATION AGENCY v.
TOMAS QUITOY, et al., G.R. No. 186344, 20 February 2013)

QUITCLAIMS

However, the Court, in other cases, has upheld quitclaims if found to comply with the following
requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the
part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a
third person with a right recognized by law. (MA. CORINA C. JIAO, ET Al. v. NATIONAL LABOR
RELATIONS COMMISSION, et al., G.R. No. 182331, 18 April 2012)

Other than the fact that the Acknowledgment and Undertaking did not provide for any
consideration given in favor of Lutero, it is likewise evident that the terms thereof are unconscionable and
that petitioners merely wangled them from the unsuspecting Lutero who, at that time, just arrived in the
country after having been confined in a hospital in Dubai for a heart ailment. (INTERORIENT
MARITIME ENTERPRISES, INC., INTERORIENT ENTERPRISES, INC., and LIBERIA AND
DOROTHEA SHIPPING CO., LTD., v. LEONORA S. REMO, G.R. No. 181112, 29 June 2010)

A perusal of the provisions of the Receipt and Quitclaim shows that respondent would be
releasing and discharging petitioners from all claims, demands, causes of action, and the like in an all-
encompassing manner, including the fact that he had not contracted or suffered any illness or injury in
the course of his employment and that he was discharged in good and perfect health. These stipulations
clearly placed respondent in a disadvantageous position vis--vis the petitioners. (VARORIENT
SHIPPING CO., INC., and. ARIA MARITIME CO., LTD. v. GIL A. FLORES, G.R. No. 161934, 6
October 2010)

Indeed, quitclaims executed by employees are commonly frowned upon as being contrary to
public policy. But where the person making the waiver has done so voluntarily, with a full understanding
thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be
44 | P a g e

recognized as being a valid and binding undertaking. (DANIEL M. ISON, v. CREWSERVE, INC., et al.,
G.R. No. 173951, 16 April 2012)

In certain cases, however, the Court has given effect to quitclaims executed by employees if the
employer is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the
quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public
policy, morals or good customs, or prejudicial to a third person with a right recognized by law.
(GOODRICH MANUFACTURING CORPORATION & MR. NILO CHUA GOY v. EMERLINA
ATIVO, et al., G.R. No. 188002, February 1, 2010)

An employees execution of a final settlement and receipt of amounts agreed upon do not
foreclose his right to pursue a claim for illegal dismissal. (BERNADETH LONDONIO AND JOAN
CORCORO v. BIO RESEARCH, INC. AND WILSON Y. ANG, G.R. No. 191459, 17 January 2011)

Although quitclaims are generally against public policy, voluntary agreements entered into and
represented by a reasonable settlement are binding on the parties which may not be later disowned simply
because of a change of mind. (DIONISIO F. AUZA, JR., ADESSA F. OTARRA, AND ELVIE
JEANJAQUET, V.MOL PHILIPPINES, INC. AND CESAR G. TIUTAN, G.R. NO. 175481,
NOVEMBER 21, 2012)

Absent any evidence that any of the vices of consent is present and considering the petitioners
position and education, the quitclaim executed by the petitioner constitutes a valid and binding
agreement. (HYPTE R. AUJERO v. PHILIPPINE COMMUNICATIONS SATELLITE
CORPORATION, G.R. No. 193484, January 18, 2012)

They were given only half of the amount they were legally entitled to. To be sure, a settlement
under these terms is not and cannot be a reasonable one, given their length of service. Considering that
they were in dire straits when they executed the release/quitclaim affidavits, without jobs and with
families to support, being forced by the circumstances, the quitclaim should not be considered binding.
(RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY v. DOMINGO Z. YBAROLA, JR., et
al., G.R. No. 198662, 12 September 2012)

Although quitclaims are generally against public policy, voluntary agreements entered into and
represented by a reasonable settlement are binding on the parties which may not be later disowned simply
because of a change of mind. It is only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of the settlement are unconscionable, that the law will step
in to bail out the employee. (DIONISIO F. AUZA, JR., et al. v. MOL PHILIPPINES, INC., et al., G.R.
No. 175481, 21, November 2012)

MANAGEMENT PREROGATIVE

While the Court recognizes managements prerogative to discipline its employees, the exercise of
this prerogative should at all times be reasonable and should be tempered with compassion and
understanding. Dismissal is the ultimate penalty that can be imposed on an employee. Where a penalty
less punitive may suffice, whatever missteps may be committed by labor ought not to be visited with a
consequence so severe for what is at stake is not merely the employees position, but his very livelihood
and perhaps the life and subsistence of his family. (CAVITE APPAREL, INCORPORATED, ET AL. v.
MICHELLE MARQUEZ, G.R. No. 172044, 06 February 2013)

The hiring, firing, transfer, demotion, and promotion of employees have been traditionally
identified as a management prerogative subject to limitations found in the law, a collective bargaining
agreement, or in general principles of fair play and justice. This is a function associated with the
employer's inherent right to control and manage effectively its enterprise. Even as the law is solicitous of
the welfare of employees, it must also protect the right of an employer to exercise what are clearly
45 | P a g e

management prerogatives. The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied. (SCA HYGIENE PRODUCTS CORPORATION EMPLOYEES
ASSOCIATION-FFW v. SCA HYGIENE PRODUCTS CORPORATION, G.R. No. 182877, 9 August
2010)

The Court is wont to reiterate that while an employer has its own interest to protect, and
pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an
employee must be exercised without abuse of discretion. Its implementation should be tempered with
compassion and understanding. The employer should bear in mind that, in the execution of said
prerogative, what is at stake is not only the employees position, but his very livelihood, his very
breadbasket. (PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. JOEY B. TEVES, G.R.
No. 143511, November 15, 2010)

The rule is well settled that labor laws discourage interference with an employer's judgment in the
conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. As long as the company's
exercise of the same is in good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.
(PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.), et al. v. RICARDO P.
ALBAYDA, JR, G.R. No. 172724, 23 August 2010)

Work reassignment of an employee as a genuine business necessity is a valid management prerogative.
(DANNIE M. PANTOJA v. SCA HYGIENE PRODUCTSCORPORATION, G.R. No. 163554, 23 April 2010)

For a transfer not to be considered a constructive dismissal, the employer must be able to show
that the transfer is for a valid reason, entails no diminution in the terms and conditions of employment,
and must be unreasonably inconvenient or prejudicial to the employee. If the employer fails to meet these
standards, the employees transfer shall amount, at the very least, to constructive dismissal. The
petitioners, unfortunately for them, failed to come up to these standards. (EMIRATE SECURITY AND
MAINTENANCE SYSTEMS, INC. and ROBERTO A. YAN v. GLENDA M. MENESE, G.R. No.
182848, 5 October 2011)

Management prerogative must be exercised in good faith and with due regard to the rights of the
workers in the spirit of fairness and with justice in mind. (PHILBAG INDUSTRIAL
MANUFACTURING CORPORATION v. PHILBAG WORKERS UNION-LAKAS AT GABAY NG
MANGGAGAWANG NAGKAKAISA, G.R. No. 182486, 20 June 2012)

Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to conduct
its own business affairs to achieve its purpose cannot be denied. (ERNESTO G. YMBONG v. ABS-CBN
BROADCASTING CORPORATION, et al., G.R. No. 184885, 7 March 2012)

A contract of perpetual employment deprives management of its prerogative to decide whom to
hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may
validly waive it prerogatives, such waiver should not be contrary to law, public order, public policy,
morals or good customs. An absolute and unqualified employment for life in the mold of petitioners
concept of perpetual employment is contrary to public policy and good customs, as it unjustly forbids the
employer from terminating the services of an employee despite the existence of a just or valid cause.
(RONILO SORREDA v. CAMBRIDGE ELECTRONICS CORPORATION, G.R. No. 172927, 11
February 2010)

TRANSFER / REASSIGNMENT OF EMPLOYEES

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The employer cannot simply conclude that an employee is ipso facto notified of a transfer when
there is no evidence to indicate that the employee had knowledge of the transfer order. Hence, the failure
of an employee to report for work at the new location cannot be taken against him as an element of
abandonment. It is the employers burden to show that the employee was duly notified of the transfer.
Verily, an employer cannot reasonably expect an employee to report for work in a new location without
first informing said employee of the transfer. Petitioners insistence on the sufficiency of mere issuance of
the transfer order is indicative of bad faith on their part. (ALERT SECURITY AND
INVESTIGATION AGENCY, INC. AND/OR MANUEL D. DASIG v. SAIDALI PASAWILAN, et
al., G.R. No. 182397, 14 September 2011)

In cases involving security guards, a relief and transfer order in itself does not sever the
employment relationship between the security guards and their agency. Employees have the right to
security of tenure, but this does not give them such a vested right to their positions as would deprive the
company of its prerogative to change their assignment or transfer them where their services, as security
guards, will be most beneficial to the client. (SALVADOR O. MOJAR, EDGAR B. BEGONIA, Heirs of
the late JOSE M. CORTEZ, RESTITUTO GADDI, VIRGILIO M. MONANA, FREDDIE RANCES,
and EDSON D. TOMAS v. AGRO COMMERCIAL SECURITY SERVICE AGENCY, INC., et al., G.
R. No. 187188, 27 June 2012)

Revised Rules on Reassignment has clearly confined the coverage of the phrase reassignment
outside geographical location to the following: (1) reassignment from one provincial office to another;
(2) reassignment from the regional office to the central office; and (3) reassignment from the central
office to the regional office. (RUSSEL ULYSSES I.NIEVES v. JOCELYN LB. BLANCO, in her capacity
as the Regional Director, Regional Office No. V, Department of Trade and Industry, G.R. No. 190422, 19 June 2012)

An employer may transfer or assign employees from one office or area of operation to another,
provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the
action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. ( JONATHAN V. MORALES v. HARBOUR CENTRE PORT
TERMINAL, INC., G.R. No. 174208, January 25, 2012)

An employer has the inherent right to transfer or assign an employee in pursuance of its
legitimate business interest, subject only to the condition that the move be not motivated by bad faith. An
employer had the right to reassign an employee the moment that confidence was breached. (JOSEPHINE
RUIZ v. WENDEL OSAKA REALTY CORP., et al., G.R. No. 189082, 11 July 2012)

DISCIPLINE

It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion
to regulate all aspects of employment, including the prerogative to instill discipline on his
employees and to impose penalties, including dismissal, if warranted, upon erring employees.
This is a management prerogative. Indeed, the manner in which management conducts its own
affairs to achieve its purpose is within the managements discretion. The only limitation on the
exercise of management prerogative is that the policies, rules, and regulations on work-related
activities of the employees must always be fair and reasonable, and the corresponding penalties,
when prescribed, commensurate to the offense involved and to the degree of the infraction.
Regualos policy of suspending drivers who fail to remit the full amount of the boundary was fair
and reasonable under the circumstances. (PRIMO E. CAONG, JR., ET AL. v. AVELINO
REGUALOS, G.R. No. 179428, 26 January 2011)

SOCIAL AND WELFARE LEGISLATION

A. SSS LAW (R.A. NO. 8282)

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A spouse who claims entitlement to death benefits as a primary beneficiary under the Social
Security Law must establish two qualifying factors, to wit: (1) that he/she is the legitimate spouse; and (2)
that he/she is dependent upon the member for support. (SOCIAL SECURITY COMMISSION AND
SOCIAL SECURITY SYSTEM v. TERESA G. FAVILA, G.R.No. 170195, 28 March 2011)

Gatus did not discharge the burden of proof imposed under the Labor Code to show that his
ailment was work-related. While he might have been exposed to various smoke emissions at work for 30
years, he did not submit satisfactory evidence proving that the exposure had contributed to the
development of his disease or had increased the risk of contracting the illness. (ALEXANDER B.
GATUS v. SOCIAL SECURITY SYSTEM, G.R. No. 174725, 26 January 2011)

B. GSIS LAW (R.A. NO. 8291 / PD 626)

The requirement that the injury must arise out of and in the course of employment proceeds
from the limiting premise that the injury must be the result of an accident. Significantly, an accident
excludes that which happens with intention or design, with ones foresight or expectation or that which
under the circumstances is expected by the person to whom it happens. (GOVERNMENT SERVICE
INSURANCE SYSTEM v. JUM ANGEL, G.R. No. 166863, 20 July 2011)

Under the increased risk theory, there must be a reasonable proof that the employees working
condition increased his risk of contracting the disease, or that there is a connection between his work and
the cause of the disease. Only a reasonable proof of work-connection, not direct causal relation, however,
is required to establish compensability of a non-occupational disease. Probability, and not certainty, is the
yardstick in compensation proceedings; thus, any doubt should be interpreted in favor of the employees
for whom social legislations, like PD No. 626, were enacted. (GOVERNTMENT SERVICE
INSURANCE SYSTEM v. MANUEL P. BESITA, G.R. No. 178901, November 23, 2011)

Retirement laws, in particular, are liberally construed in favor of the retiree because their
objective is to provide for the retirees sustenance and, hopefully, even comfort, when he no longer has
the capability to earn a livelihood. (GOVERNMENT SERVICE INSURANCE SYSTEM v.
FERNANDO P. DE LEON, G.R. No. 186560, 17 November 2010)

If it can proven that at the time of injury, the employee was acting within the scope of his
employment and performing an act reasonably necessary in his work, his injury is compensable.
(GOVERNMENT SERVICE INSURANCE SYSTEM v. FELICITAS ZARATE, G.R. No. 170847, 3
August 2010)

It should be remembered that the GSIS laws are in the nature of social legislation, to be liberally
construed in favor of the government employees. The money subject of the instant request consists of
personal contributions made by the employee, premiums paid in anticipation of benefits expected upon
retirement. The occurrence of a contingency, i.e., his dismissal from the service prior to reaching
retirement age, should not deprive him of the money that belongs to him from the outset. To allow
forfeiture of these personal contributions in favor of the GSIS would condone undue enrichment.
(CARMELITA LLEDO v. ATTY. CESAR V. LLEDO, A.M. No. P-95-1167, 9 February 2010)

The phrase "financial assistance," in light of the preceding words with which it is associated,
should also be construed as an incentive scheme to induce employees to retire early or as an assistance
plan to be given to employees retiring earlier than their retirement age. Such is not the case with the GSIS
RFP. Its very objective, to motivate and reward employees for meritorious, faithful, and satisfactory
service," contradicts the nature of an early retirement incentive plan, or a financial assistance plan, which
involves a substantial amount that is given to motivate employees to retire early. Instead, it falls exactly
within the purpose of a retirement benefit, which is a form of reward for an employees loyalty and
lengthy service, in order to help him or her enjoy the remaining years of his life. To credit the years of
service of GSIS retirees in their previous government office into the computation of their retirement
benefits under the GSIS RFP, notwithstanding the fact that they had received or had been receiving the
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retirement benefits under the applicable retirement law they retired in, would be to countenance double
compensation for exactly the same services. (GOVERNMENT SERVICE INSURANCE SYSTEM
(GSIS), et al. v. COMMISSION ON AUDIT (COA), et al., G.R. No. 162372, 19 October 2011)

If an employee is suspended as a penalty, it effectively interrupts the continuity of his
government service at the commencement of the service of the said suspension. The Civil Service
Commission (CSC) has taken this to mean that the computation of the three year period requirement will
only be extended by the number of days that the employee was under suspension. In other words, the
grant of step increment will only be delayed by the same number of days that the employee was under
suspension. This is akin to the status of an employee who incurred vacation leave without pay for
purposes of the grant of step increment. (THE BOARD OF TRUSTEES OF THE GOVERNMENT
SERVICE INSURANCE SYSTEM and WINSTON F. GARCIA v. ALBERT M. VELASCO and
MARIO I. MOLINA, G.R. No. 170463, 2 February 2011)

C. EMPLOYEES COMPENSATION

A heart disease, such as myocardial infarction, can be considered work-related, with or without
the complicating factors of other non-occupational illnesses. Resolution No. 432 provides (as one of the
conditions) that a heart disease is compensable if it was known to have been present during employment,
there must be proof that an acute exacerbation was clearly precipitated by the unusual strain by reason of
the nature of his work. (GOVERNMENT SERVICE INSURANCE SYSTEM v. MARILOU
ALCARAZ, G.R. No. 187474, 06 February 2013)


D. AGRARIAN REFORM LAW

While we uphold the amount derived from the old formula, since the application of the new
formula is a matter of law and thus, should be made applicable, the parties are not precluded from asking
for any additional amount as may be warranted by the new formula. (LAND BANK OF
THE PHILIPPINES v. ESTHER ANSON RIVERA, ANTONIO G. ANSON AND CESAR G.
ANSON, G.R. No. 182431, 17 November 2010).

It is clear from Sec. 16 of RA 6657 that it is the initial valuation made by the DAR and the LBP
that must be released to the landowner in order for DAR to take possession of the property. Otherwise
stated, Sec. 16 of RA 6657 does not authorize the release of the PARADs determination of just
compensation for the land which has not yet become final and executory. (LAND BANK OF THE
PHILIPPINES v. HON. ERNESTO P. PAGAYATAN, in his capacity as Presiding Judge of the Regional Trial
Court, Branch 46, San Jose, Occidental Mindoro; and JOSEFINA S. LUBRICA, in her capacity as Assignee of
Federico Suntay, G.R. No. 177190, February 23, 2011)

The DARAB has jurisdiction over agrarian disputes. An agrarian dispute refers to any
controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship, or otherwise, over
lands devoted to agriculture, including disputes concerning farmworkers associations or representation of
persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of such
tenurial arrangements. It includes any controversy relating to compensation of lands acquired and other
terms and conditions of transfer of ownership from landowner to farmworkers, tenants, and other
agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee. (HEIRS OF JOSE M. CERVANTES v. JESUS
G. MIRANDA, G.R. No. 183352, 9 August 2010)

The LBP is primarily responsible for the valuation and determination of compensation for all
private lands. It has the discretion to approve or reject the land valuation and just compensation for a
private agricultural land placed under the CARP. In case the LBP disagrees with the valuation of land and
determination of just compensation by a party, the DAR, or even the courts, the LBP not only has the
right, but the duty, to challenge the same, by appeal to the CA or to the SC, if appropriate. (LAND
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BANK OF THE PHILIPPINES v. HEIR OF TRINIDAD S. VDA. DE ARIETA represented by the sole
and only heir, ALICIA ARIETA TAN, G.R. No. 161834, 11 August 2010)

In this case, Domingo subleased his agricultural landholding to Sergio. It is prohibited, except in
the case of illness or temporary incapacity where he may employ laborers. Domingo does not claim illness
or temporary incapacity in his Answer. Therefore, we hereby declare the dispossession of Domingo and
Sergio from the subject agricultural land of the leaseholder. (FELISA R. FERRER v. DOMINGO
CARGANILLO, et al., G.R. No. 170956, 12 May 2010)

While the subject lands were acquired under Presidential Decree No. 27, the complaint for just
compensation was only lodged before the court on 23 November 2000 or long after the passage of
Republic Act No. 6657 in 1988. Therefore, Section 17 of Republic Act No. 6657 should be the principal
basis of the computation for just compensation. (LAND BANK OF THE PHILIPPINES [LBP] v.
DOMINGO AND MAMERTO SORIANO, G.R. Nos. 180772 and 180776, 6 May 2010)

P.D. 1472 exempts from land reform those lands that petitioner NHA acquired for its housing
and resettlement programs whether it acquired those lands when the law took effect or afterwards. The
language of the exemption is clear: the exemption covers lands or property acquired x xx or to be
acquired by NHA. Its Section 1 does not make any distinction whether the land petitioner NHA
acquired is tenanted or not. (NATIONAL HOUSING AUTHORITY v. THE DEPARTMENT OF
AGRARIAN REFORM ADJUDICATION BOARDand MATEO VILLARUZ, substituted byhis heirs,
namely, SONIA VILLARUZ,MARGARITA VILLARUZ and CARLOS H. VILLARUZ,
G.R. No. 175200, 4 May 2010)

An action for Ejectment for Non-Payment of lease rentals is clearly an agrarian dispute,
cognizable at the initial stage by the PARAD and thereafter by the DARAB. But issues with respect to the
retention rights of the respondents as landowners and the exclusion/exemption of the subject land from
the coverage of agrarian reform are issues not cognizable by the PARAD and the DARAB, but by the
DAR Secretary because, as aforementioned, the same are Agrarian Law Implementation (ALI) Cases.
(NAPOLEON MAGNO v. GONZALO FRANCISCO and REGINA VDA. DE LAZARO, G.R. No.
168959, March 25, 2010)

The primary official in charge of investigating the land sought to be exempted as livestock land,
the Municipal Agrarian Reform Officer (MARO)s findings on the use and nature of the land, if
supported by substantial evidence on record, are to be accorded greater weight, if not
finality. (REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF AGRARIAN
REFORM, through the HON. SECRETARY NASSER C. PANGANDAMAN v. SALVADOR N.
LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ, JR., President and General
Manager, G.R. Nos. 178895, 179071, 10 January 2011)

At the first instance, only the DARAB, as the DARs quasi-judicial body, can determine and
adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the
implementation of the CARP. An agrarian dispute refers to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship, or otherwise, over lands devoted to agriculture,
including disputes concerning farmworkers associations or representation of persons in negotiating,
fixing, maintaining, changing, or seeking to arrange terms or conditions of such tenurial arrangements. It
includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowner to farmworkers, tenants, and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee. (DEL MONTE PHILIPPINES INC. EMPLOYEES
AGRARIAN REFORM BENEFICIARIES COOPERATIVE (DEARBC) v. JESUS SANGUNAY and
SONNY LABUNO, G.R. No. 180013, 31 January 2011)

The power of local government units to convert or reclassify lands from agricultural to non-
agricultural prior to the passage of Republic Act (RA) No. 6657 the Comprehensive Agrarian Reform
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Law (CARL) is not subject to the approval of the Department of Agrarian Reform (DAR). ((HEIRS OF
LUIS A. LUNA, et al. v. RUBEN S. AFABLE, et al., G.R. No. 188299, 23 January 2013)

Considering that the Agreement shows that the payment of just compensation was already fully
executed, and that the affected properties were already delivered to Land Bank of the Philippines, thereby
leaving nothing further to be complied with by the parties. (LAND BANK OF THE PHILIPPINES v.
HEIRS OF SPOUSES JORJA RIGOR-SORIANO AND MAGIN SORIANO, G.R. No. 178312, 30
January 2013)

Land reform process is completed only upon payment of just compensation. Hence, where the
subject property was acquired during the effectivity of P.D. 27 but the just compensation was only paid
during the effectivity of R.A. 6657, the provisions of the latter statue will prevail as to the computation of
the just compensation. (LAND BANK OF THE PHILIPPINES v. SPS. ROKAYA AND SULAIMAN
BONA, G.R. No. 180804, November 12, 2012)

The release of the offered compensation to the landowner pending the determination of the
final valuation of their properties is allowable. The concept of just compensation embraces not only the
correct determination of the amount to be paid to the owners of the land, but also payment within a
reasonable time from its taking. Without prompt payment, compensation cannot be considered just
inasmuch as the property owner is made to suffer the consequences of being immediately deprived of his
land while being made to wait for a decade or more before actually receiving the amount necessary to
cope with his loss. (LAND BANK OF THE PHILIPPINES v. SPOUSES PLACIDO AND CLARA DY
ORILLA, G.R. No. 194168, 13 February 2013)

LABOR RELATIONS

A. UNION MEMBERSHIP

Capatazes or foremen are not rank-and-file employees because they are an extension of the
management, and as such they may influence the rank-and-file workers under them to engage in
slowdowns or similar activities detrimental to the policies, interests or business objectives of the
employers. Hence, they could form their own union. (LEPANTO CONSOLIDATEDMINING
COMPANY v. THE LEPANTO CAPATAZ UNION, G.R. No. 157086, 18 February 2013)

B. PETITION FOR CANCELLATION OF UNION REGISTRATION

More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a
petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership: SC therein reiterated its ruling in Tagaytay
Highlands that the inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code. (SAMAHANG
MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES
FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union
President v. CHARTER CHEMICAL and COATING CORPORATION, G.R. No. 169717, 16March2011)

Failure to comply with the reportorial requirements shall not be a ground for cancellation of
union registration but shall subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty. (THE HERITAGE HOTEL MANILA, acting through its owner,
GRAND PLAZA HOTEL CORPORATION v. NATIONAL UNION OF WORKERS IN THE
HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA
SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), G.R. No. 178296, 12 January 2011)

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Once a certificate of registration is issued to a union, its legal personality cannot be subject to a collateral
attack. In may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule
V, Book V of the Implementing Rules. (LEGEND INTERNATIONAL RESORTS LIMITED v. KILUSANG
MANGGAGAWA NG LEGENDA (KML-INDEPENDENT), G.R. No. 169754, 23 February 2011)

C. EFFECT OF AFFILIATION OF A LOCAL UNION WITH FEDERATION

A local labor union is a separate and distinct unit primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-members. A local union does not
owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its members. The mere act of affiliation does not divest the
local union of its own personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency where the former acts in
representation of the latter. (CIRTEK EMPLOYEES LABOR UNION-FEDERATIONOF FREE
WORKERS v. CIRTEK ELECTRONICS, INC., G.R. No. 190515, 6 June 2011)

D. RIGHT TO COLLECTIVE BARGAINING

While the law makes it an obligation for the employer and the employees to bargain collectively
with each other, such compulsion does not include the commitment to precipitately accept or agree to the
proposals of the other. All it contemplates is that both parties should approach the negotiation with an
open mind and make reasonable effort to reach a common ground of agreement. (MANILA MINING
CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER, SAMUEL
G. ZUIGA, in his capacity as President v. MANILA MINING CORP. and/or ARTEMIO F. DISINI,
President, et al.. G.R. Nos. 178222-23, 29 September 2010)

It is only the labor organization designated or selected by the majority of the employees in an
appropriate collective bargaining unit which is the exclusive representative of the employees in such unit
for the purpose of collective bargaining. (EDEN GLADYS ABARIA v. NATIONAL LABOR
RELATIONS COMMISSION, et al., G.R. Nos. 154113, 187778, 187861, 196156, 7 December 2011)

E. COLLECTIVE BARGAINING AGREEMENT

If the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall prevail. In the case at bar, the contested provision of the CBA is
clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of
vacation leave shall be under the option of the employer. The preference requested by the employees is
not controlling because respondent retains its power and prerogative to consider or to ignore said request.
(PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS
ORGANIZATION (PSTMSDWO), represented by its President, RENE SORIANO v. PNCC SKYWAY
CORPORATION, G.R. No. 171231, 17 February 2010)


No law or public policy prohibits the Union and the Company from mutually waiving the strike
and lockout maces available to them to give way to voluntary arbitration. (C. ALCANTARA & SONS,
INC.v. COURT OF APPEALS, et al., G.R. Nos. 155109, 155135, 179220, 29 September 2010)

In any event, any doubt in resolving any interpretative conflict is settled by subsequent
developments in the course of the parties implementation of the CBA, specifically, by the establishment
of the company regulation in November 2002 requiring prior approval before the union leave can be
used. The union accepted this regulation without objection since its promulgation (or more than a year
before the present dispute arose), and the rule on its face is not unreasonable, oppressive, nor violative of
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CBA terms. (MALAYAN EMPLOYEES ASSOCIATION-FFW and RODOLFO MANGALINO, v.
MALAYAN INSURANCE COMPANY, INC., G.R. No. 181357, February 2, 2010)

While the terms of the MOA undoubtedly reduced the salaries and certain benefits previously
enjoyed by the members of the Union, it cannot escape this Court's attention that it was the execution of
the MOA which paved the way for the re-opening of the hotel, notwithstanding its financial
distress. (INSULAR HOTEL EMPLOYEES UNION-NFLv. WATERFRONT INSULAR HOTEL
DAVAO, G.R. Nos. 174040-41, 22 September 2010)

Even if there is an existing CBA but the same does not provide for retirement benefits equal or
superior to that which is provided under Article 287 of the Labor Code, the latter will apply. In this
manner, the employee can be assured of a reasonable amount of retirement pay for his sustenance.
(BIBIANO C. ELEGIR v. PHILIPPINE AIRLINES, INC., G.R. No. 181995, 16 July 2012)

The previous affirmance of the Court of Appeals finding that DLSU erred in suspending
collective bargaining negotiations with the union and in placing the union funds in escrow considering
that the intra-union dispute between the Aliazas and Baez factions was not a justification therefor is
binding herein. (DE LA SALLE UNIVERSITY v. DE LA SALLE UNIVERSITY EMPLOYEES
ASSOCIATION, G.R. No. 169254, 23 August 2012)

While the contracting parties may establish such stipulations, clauses, terms and conditions, as
they may see fit, the right to contract is still subject to the limitation that the agreement must not be
contrary to law or public policy. The requirement of a masteral degree for tertiary education teachers is
not unreasonable. The operation of educational institutions involves public interest. They may be
required to take an examination or to possess postgraduate degrees as prerequisite to employment.
(LEANOR JAVIER, RONNIE GILLEGO and DR. JOSE C. BENEDICTO vs. ANALIZA F.
PEPANIO and MARITI D. BUENO, G.R. No. 193897, 23 January 2013)

1. UNION SECURITY CLAUSE

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union
shop," "maintenance of membership," or any other form of agreement which imposes upon employees
the obligation to acquire or retain union membership as a condition affecting employment. In terminating
the employment of an employee by enforcing the union security clause, the employer needs only to
determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support
the decision of the union to expel the employee from the union. (GENERAL MILLING
CORPORATION v. ERNESTO CASIO, et al., G.R. No. 149552, 10 March 2010)

It is well-settled that termination of employment by virtue of a union security clause embodied in
a CBA is recognized in our jurisdiction. However, although it is accepted that non-compliance with a
union security clause is a valid ground for an employees dismissal, jurisprudence dictates that such a
dismissal must still be done in accordance with due process. (BANK OF THE PHILIPPINE ISLANDS
v. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK,
G.R. No. 164301, 19October2011)

In terminating the employment of an employee by enforcing the union security clause, the
employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is
requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient
evidence to support the decision of the union to expel the employee from the union. These requisites
constitute just cause for terminating an employee based on the union security provision of the CBA.
(PICOP RESOURCES, INCORPORATED (PRI) v. ANACLETO L. TAECA, G.R. No. 160828, 9
August 2010)

2. NO STRIKE-NO LOCKOUT CLAUSE
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A strike may be regarded as invalid although the labor union has complied with the strict
requirements for staging one as provided in Article 263 of the Labor Code when the same is held
contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the
CBA between the parties contained a "no strike, no lockout" provision that enjoined both the Union and
the Company from resorting to the use of economic weapons available to them under the law and to
instead take recourse to voluntary arbitration in settling their disputes. (ALCANTARA & SONS, INC.,
PETITIONER, VS. COURT OF APPEALS, et al, G.R. No. 155109, September 29, 2010)

3. UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING

Thus, when a valid and binding CBA had been entered into by the workers and the employer, the
latter is behooved to observe the terms and conditions thereof bearing on union dues and representation.
If the employer grossly violates its CBA with the duly recognized union, the former may be held
administratively and criminally liable for unfair labor practice. Verily, when an employer proceeds to
negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive
bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire
CBA. (EMPLOYEES UNION OF BAYER PHILS., et al. v. BAYER PHILIPPINES, INC., et al.
G.R. No. 162943, 6 December 2010)

For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill
will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good
customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety
resulted in suspending negotiations with CABEU-NFL. (CENTRAL AZUCARERA DE BAIS
EMPLOYEES UNION-NFL [CABEU-NFL], represented by its President, PABLITO SAGURAN v.
CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President, ANTONIO STEVEN L.
CHAN, G.R. No. 186605, November 17, 2010)

An employer is guilty of unfair labor practice if it interferes with, restrains or coerces its
employees in the exercise of their right to self-organization or if it discriminates in regard to wages, hours
of work and other terms and conditions of employment in order to encourage or discourage membership
in any labor organization. (PRINCE TRANSPORT, INC. and MR. RENATO CLAROS v. DIOSDADO
GARCIA, et al., G.R. No. 167291, 12 January 2011)

ILLEGAL STRIKE

The Court has consistently ruled that once the Secretary of Labor assumes jurisdiction over a
labor dispute, such jurisdiction should not be interfered with by the application of the coercive processes
of a strike or lockout. A strike that is undertaken despite the issuance by the Secretary of Labor of an
assumption order and/or certification is a prohibited activity and thus illegal. The liabilities of individual
respondents must be determined under Article 264 (a) of the Labor Code, as amended: Any worker
whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to
reinstatement with full back wages. Any union officer who knowingly participates in an illegal strike and
any worker or union officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status: Provided, That mere participation of a worker in a
lawful strike shall not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike. (SOLIDBANK CORPORATION
(now known as FIRST METRO INVESTMENT CORPORATION) v. ERNESTO U. GAMIER, ELENA
R. CONDEVILLAMAR, JANICE L. ARRIOLA and OPHELIA C. DE GUZMAN / SOLIDBANK
CORPORATION and/or its successor-in-interest, FIRST METRO INVESTMENT CORPORATION,
DEOGRACIAS N. VISTAN AND EDGARDO MENDOZA, JR. v. SOLIDBANK UNION AND ITS
DISMISSED OFFICERS AND MEMBERS, namely: EVANGELINE J. GABRIEL, et al., G.R. No.
159460 / G.R. No. 159461, November 15, 2010)

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Since the Unions strike has been declared illegal, the Union officers can, in accordance with law
be terminated from employment for their actions. This includes the shop stewards. They cannot be
shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and
placed them in positions of leadership and power over the men in their respective work units.
(ALCANTARA & SONS, INC., PETITIONER, VS. COURT OF APPEALS, et al, G.R. No. 155109,
September 29, 2010)

The above union letter clearly shows the involvement of the entire union leadership in defying
the Labor Secretary's assumption of jurisdiction order as well as return-to-work orders. For having
participated in a prohibited activity not once, but twice, the union officers, except those our Decision can
no longer reach because of the amicable settlement they entered into with the company, legally deserve to
be dismissed from the service. (BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH
INTERNATIONAL, represented by SABINO F. GRAGANZA, Union President, and REYVILOSA
TRINIDAD v. SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and
TRIUMPH INTERNATIONAL (PHILS.), INC. / TRIUMPH INTERNATIONAL (PHILS.), INC. v.
BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, ELOISA
FIGURA, JERRY JAICTEN, ROWELL FRIAS, MARGARITA PATINGO and ROSALINDA
OLANGAR, G.R. No. 167401/G.R. No. 167407, July 5, 2010)

Despite the validity of the purpose of a strike and compliance with the procedural requirements,
a strike may still be held illegal where the means employed are illegal. The means become illegal when
they come within the prohibitions under Article 264(e) of the Labor Code. The obstructive nature of the
picket was aggravated by the placement of benches, with strikers standing on top, directly in front of the
open wing of the company gates, clearly obstructing the entry and exit points of the company compound.
The Supreme Court (SC) explained in Samahang Manggagawasa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines,
Inc. that the effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction
between participating workers and union officers. The services of an ordinary striking worker cannot be
terminated for mere participation in an illegal strike; proof must be adduced showing that he or she
committed illegal acts during the strike. The services of a participating union officer, on the other hand,
may be terminated, not only when he actually commits an illegal act during a strike, but also if he
knowingly participates in an illegal strike. It does not appear from the evidence that the union officers
were specifically informed of the charges against them and given the chance to explain and present their
side. Without the specifications they had to respond to, they were arbitrarily separated from work in total
disregard of their rights to due process and security of tenure. (PHIMCO INDUSTRIES, INC. v.
PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al., G.R. No. 170830, 11 August 2010)

For union officers, knowingly participating in an illegal strike is a valid ground for termination of
their employment. But for union members who participated in a strike, their employment may be
terminated only if they committed prohibited and illegal acts during the strike and there is substantial
evidence or proof of their participation, i.e., that they are clearly identified to have committed such
prohibited and illegal acts. (MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE and
SANLOR MOTORS CORP. v. KILUSANG MANGGAGAWA NG LGS, MAGDALA
MULTIPURPOSE & LIVELIHOOD CORPERATIVE (KMLMS) and UNION MEMBERS/
STRIKERS, et al., G.R. Nos. 191138-39, 19 October 2011)

Here, what is involved is a slowdown strike. Unlike other forms of strike, the employees involved
in a slowdown do not walk out of their jobs to hurt the company. They need only to stop work or reduce
the rate of their work while generally remaining in their assigned post. (YOLITO FADRIQUELAN,
ARTURO EGUNA, ET AL v. MONTEREY FOODS CORPORATION/ MONTEREY FOODS
CORPORATION v. BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT
BUKLOD NG MANGGAGAWA, et al, G.R. No. 178409; G.R. No. 178434, June 8, 2011)

The Court ruled that the concerted mass action was actually a strike and not a legitimate exercise
of their right to freedom of expression. Since petitioners therein failed to present proof that the union
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members participated in the commission of an illegal act during the said strike, their dismissal was
unjustified. (SOLIDBANK UNION, et al. VS. METROPOLITAN BANK AND TRUST COMPANY
G.R. Nos. 153799, 157169, 157327, 157506, 17 September 2012)

PROCEDURE AND JURISDICTION

It is true that questions of jurisdiction may be raised at any stage. It is also true, however, that in
the interest of fairness, questions challenging the jurisdiction of courts will not be tolerated if the party
questioning such jurisdiction actively participates in the court proceedings and allows the court to pass
judgment on the case, and then questions the propriety of said judgment after getting an unfavorable
decision. While jurisdiction may be assailed at any stage, a partys active participation in the proceedings
before a court without jurisdiction will estop such party from assailing the lack of it. It is an undesirable
practice of a party to participate in the proceedings, submit his case for decision and then accept the
judgment, if favorable, but attack it for lack of jurisdiction, when adverse. (MAXICARE PCIB CIGNA
HEALTHCARE (NOW MAXICARE HEALTHCARE CORPORATION), ERIC S. NUBLA, JR.
M.D. AND RUTH A. ASIS, M.D. v. MARIAN BRIGITTE A. CONTRERAS, M.D., G.R. No. 194352,
30 January 2013)

LRTA, being a government-owned or controlled corporation created by an original charter, is
beyond the reach of the Department of Labor and Employment which has jurisdiction over workers in
the private sector. (EMMANUEL S. HUGO, et al. v. LIGHT RAIL TRANSIT AUTHORITY, G.R.
No. 181866, 18 March 2010)

Not all disputes tribunals. The Court differentiated between abandonment per se and the manner
and consequent effects of such abandonment and ruled that the first, is a labor case, while the second, is a
civil law case. The "Goodwill Clause" in this case is a postemployment issue should brook no argument.
The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after the
cessation of the employment relationship between the parties. In accordance with jurisprudence, breach
of the undertaking is a civil law dispute, not a labor law case. Between an employer and his employee(s)
fall within the jurisdiction of the labor. (MARIETTA N. PORTILLO v. RUDOLF LIETZ, INC., et al.,
G.R. No. 196539, 10 October 2012)

A. LABOR ARBITER

As a rule, the illegal dismissal of an officer or other employee of a private employer is properly
cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended. Where the
complaint for illegal dismissal concerns a corporate officer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission (now the Regional Trial Court). (MATLING
INDUSTRIAL AND COMMERCIAL CORPORATION, et al. v. RICARDO R. COROS, G.R. No.
157802, 13 October 2010)

Under Art. 217, it is clear that a labor arbiter has original and exclusive jurisdiction over
termination disputes. On the other hand, under Article 261, a voluntary arbitrator has original and
exclusive jurisdiction over grievances arising from the interpretation or enforcement of company policies.
As a general rule then, termination disputes should be brought before a labor arbiter, except when the
parties, under Art. 262, unmistakably express that they agree to submit the same to voluntary arbitration.
(NEGROS METAL CORPORATION v. ARMELO J. LAMAYO, G.R. No. 186557, 25 August 2010)

Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive
jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the
Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and
decide all disciplinary action cases and other special cases administrative in character involving such
workers. (EASTERN MEDITERRANEAN MARITIME LTD., et al. v. ESTANISLAO SURIO, et al.,
G.R. No. 154213, 23 August 2012)
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B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)

The National Labor Relations Commission had no appellate jurisdiction to review the decision of
the POEA in disciplinary cases involving overseas contract workers. (EASTERN MEDITERRANEAN
MARITIME LTD., et al. v. ESTANISLAO SURIO, et al., G.R. No. 154213, 23 August 2012)

On appeal, the Commission shall limit itself only to the specific issues that were elevated for
review, all other matters being final and executory [Rule VIII, Sec. 5(c), Revised Rules of the NLRC.
(RODOLFO LUNA v. ALLADO CONSTRUCTION CO., INC., and/or RAMON ALLADO, G.R. No.
175251, 30 May 2011)

Time and again, we have said that the perfection of an appeal within the period prescribed by law
is jurisdictional, and the lapse of the appeal period deprives the courts of jurisdiction to alter the final
judgment. Thus, there is no other recourse but to respect the findings and ruling of the labor arbiter.
Clearly, therefore, the CA committed grave abuse of discretion in entertaining the Petition filed before it
after the NLRC had dismissed the case based on lack of jurisdiction. The assailed CA Decision did not
even resolve Salengas consistent and persistent claim that the NLRC should not have taken cognizance
of the appeal in the first place, absent a board resolution. Thus, LA Darlucios Decision with respect to
the liability of the corporation still stands. (ANTONIO P. SALENGA and NATIONAL LABOR
RELATIONS COMMISSION v. COURT OF APPEALS and CLARK DEVELOPMENT
CORPORATION, G.R. Nos. 174941, 1 February 2012)

Inasmuch as mere allegation is not evidence, the basic evidentiary rule is to the effect that the
burden of evidence lies with the party who asserts the affirmative of an issue has the burden of proving
the same with such quantum of evidence required by law. In administrative or quasi-judicial proceedings
like those conducted before the NLRC, the standard of proof is substantial evidence which is understood
to be more than just a scintilla or such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion. (GENERAL MILLING CORPORATION-INDEPENDENT
LABOR UNION (GMC-ILU) v. GENERAL MILLING CORPORATION/ GENERAL MILLING
CORPORATION v. GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION
(GMC-ILU), et al., G.R. No. 183122/G.R. No. 183889, June 15, 2011)

The bare invocation of the interest of substantial justice line is not some magic want that will
automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let
alone dismissed simply because their non-observance may have resulted in prejudice to a party's
substantial rights. The Court cannot countenance relaxation of the rules absent the showing of
extraordinary circumstances to justify the same. (BUILDING CARE CORPORATION / LEOPARD
SECURITY & INVESTIGATION AGENCY AND/OR RUPERTO PROTACIO VS. MYRNA
MACARAEG, G.R. No. 198357, 10 December 2012)

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the LA. The intention of the lawmakers to make the bond a mandatory
requisite for the perfection of an appeal by the employer is clearly limned in the provision that an appeal
by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only"
makes it perfectly plain that the lawmakers intended the posting of a cash or surety bond by the employer
to be the essential and exclusive means by which an employer's appeal may be perfected. (MINDANAO
TIMES CORPORATION v. MITCHEL R. CONFESOR, G.R. No. 183417, February 5, 2010)

Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award
may be perfected only upon the posting of a cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to resolve controversies on their merits.
These circumstances include: (1) fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special circumstances of the case combined with its
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legal merits, and the amount and the issue involved. (CESAR V. GARCIA, CARLOS RAZON,
ALBERTO DE GUZMAN, TOMAS RAZON, OMER E. PALO, RIZALDE VALENCIA, ALLAN
BASA, JESSIE GARCIA,JUANITO PARAS, ALEJANDRO ORAG, ROMMEL PANGAN, RUEL
SOLIMAN, and CENEN CANLAPAN, represented by SERENO, and CESAR V. GARCIA vs. KJ
COMMERCIAL and REYNALDO QUE, G.R. No. 196830, February 29, 2012)

Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on
appeal as technical rules are not binding in cases submitted before them. However, any delay in the
submission of evidence should be adequately explained and should adequately prove the allegations
sought to be proven. (MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE v.VIRGILIO
M. CAGALAWAN, G.R. No. 175170, 5 September 2012)

C. DOLE SECRETARY

If a complaint is brought before the DOLE to give effect to the labor standards provisions of the
Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the
DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC.
(PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.) v.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, et al., G.R. No.
179652, 6 March 2012)

D. VOLUNTARY ARBITRATION / GRIEVANCE MACHINERY

Article 262 of the same Code provides the exception: Jurisdiction over other labor disputes.
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear
and decide all other labor disputes including unfair labor practices and bargaining deadlocks. The parties
in this case clearly agreed to resort to voluntary arbitration. Thus, the Labor Arbiter should have
immediately disposed of the complaint and referred the same to the voluntary arbitrator when the
university moved to dismiss the complaint for lack of jurisdiction. (THE UNIVERSITY OF THE
IMMACULATE CONCEPTION and MO. MARIA ASSUMPTA DAVID, RVM v. NATIONAL
LABOR RELATIONS COMMISSION and TEODORA AXALAN, G.R. No. 181146, 26 January 2011)

Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators
have jurisdiction over cases arising from the interpretation or implementation of collective bargaining
agreements. Stated differently, the instant case involves a situation where the special statute (R.A. 8042)
refers to a subject in general, which the general statute (Labor Code) treats in particular. From the
foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary
arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA. It is
settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a
dispute to voluntary arbitration then that procedure should be strictly observed. (ESTATE OF NELSON
R. DULAY, represented by his wife MERRIDY JANE P. DULAY, v. ABOITIZ JEBSEN MARITIME,
INC. and GENERAL CHARTERERS, INC., G.R. No. 172642 , 13 June 2012)

In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, we ruled that the voluntary arbitrator
had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope
of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. A more
recent case is Ludo&Luym Corporation v. Saornido where we recognized that voluntary arbitrators are
generally expected to decide only those questions expressly delineated by the submission agreement; that,
nevertheless, they can assume that they have the necessary power to make a final settlement on the related
issues, since arbitration is the final resort for the adjudication of disputes. (MANILA PAVILION
HOTEL, owned and operated by ACESITE (PHILS.) Hotel Corporation vs. HENRY DELADA, G.R. No.
189947, January 25, 2012)

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It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or
panel of voluntary arbitrators over the present dispute, not only because of the clear language of the
parties CBA on the matter; more importantly, we so uphold the voluntary arbitrators jurisdiction, in
recognition of the States express preference for voluntary modes of dispute settlement, such as
conciliation and voluntary arbitration as expressed in the Constitution, the law and the rules. It is settled
that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute
to voluntary arbitration then that procedure should be strictly observed. (ACE NAVIGATION CO.,
INC., et al. v. TEODORICO FERNANDEZ, assisted by GLENITA FERNANDEZ, G.R. No. 197309, 10
October 2012)

Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a
final settlement since arbitration is the final resort for the adjudication of disputes. (GOYA, INC. vs.
GOYA, INC. EMPLOYEES UNION-FFW, G.R. No. 170054, 21 January 2013)

It is settled that when parties have validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure should be strictly observed. The premature
invocation of the courts judicial intervention is fatal to ones cause of action. (CARLOS L. OCTAVIO v.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, G.R. No. 175492, 27 February 2013)

E. COURT OF APPEALS

1. RULE 65, RULES OF COURT

Heavy workload is relative and often self-serving. Thus, heavy workload, standing alone, is not
considered a compelling reason to justify a request for extension of time to file a petition for certiorari
under Rule 65 of the Rules of Court. (HEIRS OF RAMON B. GAYARES, represented by EMELINDA
GAYARES, et al. v. PACIFIC ASIA OVERSEAS SHIPPING CORPORATION, and KUWAIT OIL
TANKER, CO., S.A.K., G.R. No. 178477, 16 July 2012)

F. SUPREME COURT

1. RULE 45, RULES OF COURT

The existence of an employer-employee relationship between the parties is essentially a question
of fact, beyond the ambit of a petition for review on certiorari under Rule 45 of the Rules of Court unless
there is a clear showing of palpable error or arbitrary disregard of evidence which does not obtain in this
case. (THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-BOTE v.
FRANCISCO N. DAKILA, G.R. No. 199547, 24 September 2012)