January 2013 Philippine Supreme Court Decisions on Labor Law and New

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January 2010 Philippine Supreme CourtDecisions on Labor Law and ProcedureLabor Law

Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v. National LaborRelations Commission [273 SCRA 576], a claim for benefit under the companys retirement plan becomesmoot when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code. ByYusons acceptance of her retirement benefits through a compromise agreement entered into with heremployer, she is deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v.

Adelina A.S. Yuson,G.R. No. 170369, June 16, 2010.

Approval for companys early retirement program; management prerogative. Approval of applications for theearly retirement program (ERP) is within the employers management prerogatives. The exercise ofmanagement prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, orwanton manner. In the present case, the Court sees no bad faith on the part of the employer. The 21 August2001 memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees. Thememorandum also states that the reason for the ERP was to prevent further losses. Petitioner did not abuse its

discretion when it excluded respondent in the ERP because the latter is already about to retire. To allowrespondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltdand Suk Kyoo Kim v. Adelina A.S. Yuson,G.R. No. 170369, June 16, 2010.

Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient thatthe doctor was its agent. The two factors that determined apparent authority in this case were: first, thehospitals implied manifestation to the patient which led the latter to conclude that the doctor was the hospitalsagent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent withordinary care and prudence.It is of record that the hospital required a consent for hospital care to be signed preparatory to the surgery ofthe patient. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the

Medical City General Hospital to perform such diagnostic procedures and to administer such medications and

treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the

confinement of xxx.By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of itshospital, rather than one independently practicing in it; that the medications and treatments he prescribed werenecessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc.vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr.

Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and

Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No.

127590, February 2, 2010.

Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20%membership of rank-and-file employees in the employees union. Twenty percent (20%) of 112 rank-and-fileemployees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4).

When the EREU filed its application for registration on December 19, 2005, there were clearly 30 unionmembers. Thus, when the certificate of registration was granted, there is no dispute that the Union compliedwith the mandatory 20% membership requirement. Accordingly, the retraction of six union members who latersevered and withdrew their union membership cannot cause the cancellation of the unions registration.Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for unionregistration or even way back to the organizational meeting. Before their withdrawal, the six employees inquestion were bona fide union members. They never disputed affixing their signatures beside their handwrittennames during the organizational meetings. While they alleged that they did not know what they were signing,their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them oflittle, if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would
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still be compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 unionmembers constitute more than the 20% membership requirement of 22 employees. Eagle Ridge Gold &Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010.

CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit and aretherefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, petitioners are

members of the appropriate bargaining unit because they are regular rank-and-file employees and do notbelong to any of the excluded categories. Most importantly, the labor arbiters decision of January 17, 2002 affirmed all the way to the CA ruled against the companys submission that they are independent contractors.Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBAs expressterms, they are entitled to its benefits.CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether thepetitioners are regular rank-and-file employees of the company. The tribunals below uniformly answered thisquestion in the affirmative. From this factual finding flows legal effects touching on the terms and conditionsof the petitioners regular employment. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R.

No. 183810, January 21, 2010.

Cessation of operations; financial assistance. Based on Article 283, in case of cessation of operations, theemployer is only required to pay his employees a separation pay of one month pay or at least one-half month

pay for every year of service, whichever is higher. That is all that the law requires.In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of theirgross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves.Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, the LaborArbiter ordered petitioner to pay respondents an additional amount, equivalent to one months salary, as a formof financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had compliedwith the requirements of the law. The Court also point out that petitioner may, as it has done, grant on avoluntary and ex gratiabasis, any amount more than what is required by the law, but to insist that morefinancial assistance be given is certainly something that the Court cannot countenance. Moreover, any award ofadditional financial assistance to respondents would put them at an advantage and in a better position than the

rest of their co-employees who similarly lost their employment because of petitioners decision to cease itsoperations. SolidBank Corporation vs. National Labor Relations Commission, et al.,G.R. No. 165951, March30, 2010.

Compensable illness. Since cholecystolithiasisor gallstone has been excluded as a compensable illness underthe applicable standard contract for Filipino seafarers that binds the seafarer and the vessels foreign owner, itwas an error for the CA to treat such illness as work-related and, therefore, compensable. The standardcontract precisely did not consider gallstone as compensable illness because the parties agreed, presumablybased on medical science, that such affliction is not caused by working on board ocean-going vessels.Nor is there any evidence to prove that the nature of the seafarers work on board a ship aggravated hisillness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it ishighly probable that he already had it when he boarded his assigned ship although it went undiagnosed becausehe had yet to experience its symptoms.Bandila Shipping, Inc. et al. vs. Marcos C. Abalos,G.R. No. 177100,February 22, 2010.

Compensable illness; work related. Melanoma is not listed as an occupational disease under Annex A of theRules on Employees Compensation. Hence, respondent has the burden of proving, by substantial evidence, thecausal relationship between her illness and her working conditions.Substantial evidence means such relevantevidence as a reasonable mind might accept to support a conclusion.The Court in this case agreed with the petitioner and the ECC that respondent was not able to positively provethat her ailment was caused by her employment and that the risk of contracting the disease was increased byher working conditions. While the law requires only a reasonable work-connection and not a direct causalrelation, respondent still failed to show that her illness was really brought about by the wound she sustained
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during the supervised gardening activity in school. The CA accepted the allegation that the mole appeared righton the spot where respondent sustained the injury without any further proof that the mole appeared because ofthe injury. The CA further ruled that the risk of acquiring the said ailment increased by the nature of[respondents] work in going to school and in returning to her residence during school days x x x. However,the CA failed to consider that in a tropical country like the Philippines, exposure to sunlight iscommon. Unlike farmers, fishermen or lifeguards, it was not shown that respondent had chronic long-term

exposure to the sun considered necessary for the development of melanoma. Thus, the Court did not find therisk of contracting the disease to have been heightened by respondents exposure to sunlight in going to workand returning to her residence. Government Service Insurance System vs. Rosalinda A. Bernadas,G.R. No.164731, February 11, 2010

Compensable illness. Jurisprudence provides that to establish compensability of a non-occupational disease,reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimatedegree of certainty, is the test of proof in compensation proceedings.In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent disabilitybenefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at thevery least, aggravated by his working conditions, taking into consideration his dietary provisions on board, hisage, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations ofthe vessels to ensure voyage safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. CatalinoU. Villamater, et al.,G.R. No. 179169, March 3, 2010.

Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injuryor illness must have existed during the term of the seafarers employment contract. In other words, to beentitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarersillness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causalconnection between the seafarers illness or injury and the work for which he had been contracted.The 2000 POEA-SEC defines work-related injury as injury(ies) resulting in disability or death arising outof and in the course of employment and work-related illness as any sickness resulting to disability or deathas a result of an occupational disease listed under Section 32-A of this contract with the conditions set thereinsatisfied.

Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-designated physicianwho is entrusted with the task of assessing the seamans disability.

While it is true that medical reports issued by the company-designated physicians do not bind the courts, theCourts examination of Dr. Ong-Salvadors Initial Medical Report have led it to agree with her findings. Dr.Ong-Salvador was able to sufficiently explain her basis in concluding that the respondents illness was notwork-related: she found the respondent not to have been exposed to any carcinogenic fumes, or to any viralinfection in his workplace. Her findings were arrived at after the respondent was made to undergo a physical,neurological and laboratory examination, taking into consideration his past medical history, family history, andsocial history. In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist. Theseries of tests and evaluations show that Dr. Ong-Salvadors findings were not arrived at arbitrarily; neitherwere they biased in the companys favor.

The respondent, on the other hand, did not adduce proof to show a reasonable connection between his work asan assistant housekeeping manager and his lymphoma. There was no showing how the demands and nature ofhis job vis--vis the ships working conditions increased the risk of contracting lymphoma. The non-workrelatedness of the respondents illness is reinforced by the fact that under the Implementing Rules andRegulations of the Labor Code (ECC Rules), lymphoma is considered occupational only when contracted byoperating room personnel due to exposure to anesthetics. The records do not show that the respondents workas an assistant housekeeping manager exposed him to anesthetics.
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Accordingly, the Court held that the respondent is not entitled to total and permanent disability benefits onaccount of his failure to refute the company-designated physicians findings that: (1) his illness was not work-related; and (2) he was fit to resume sea duties. Magsaysay Maritime Corporation and/or Cruise ShipsCatering Services International N.V. vs. National Labor Relations Commissions, et al., G.R. No. 186180,

March 22, 2010.

Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse expenses incurredby officials and employees of the government in the performance of their official functions. It is not paymentin consideration of the fulfillment of official duty. As defined, cost of living refers to the level of pricesrelating to a range of everyday items or the cost of purchasing those goods and services which are includedin an accepted standard level of consumption. Based on this premise, COLA is a benefit intended to coverincreases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.In the present case, the Court is not persuaded that the continued grant of COLA to the uniformed personnel tothe exclusion of other national government officials run afoul the equal protection clause of the Constitution.The fundamental right of equal protection of the laws is not absolute, but is subject to reasonableclassification. If the groupings are characterized by substantial distinctions that make real differences, oneclass may be treated and regulated differently from another. The classification must also be germane to thepurpose of the law and must apply to all those belonging to the same class.

The Court found valid reasons to treat the uniformed personnel differently from other national governmentofficials. Being in charge of the actual defense of the State and the maintenance of internal peace and order,they are expected to be stationed virtually anywhere in the country. They are likely to be assigned to a varietyof low, moderate, and high-cost areas. Since their basic pay does not vary based on location, the continuedgrant of COLA is intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez,et al. vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit,

et al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng mga

Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and Management, et

al./National Housing Authority vs. Epifanio P. Recana, et al./ Insurance Commission Officers and Employees,

et al. vs. Department of Budget and Management, et al./Fiber Industry Development Authority Employees

Association (FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry

Employees Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re: Request of

Sandiganbayan for authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16,1999,G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No. 172713/G.R. No.

173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18, 2010.

Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that itsconduct and action or the transfer of an employee are for valid and legitimate grounds such as genuinebusiness necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employermust 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 constructivedismissal.In the present case, the employer failed to discharge this burden. The combination of harsh actions taken bythe bank rendered the employment condition of the employee hostile and unbearable for the following reasons:First, there is no showing of any urgency or genuine business necessity to transfer the employee to the MakatiHead Office. The banks stated reason that the employee had to undergo branch head training because of hisgross inefficiency was not supported by any proof that the employee had a record of gross inefficiency.Second, the employees transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient andoppressive, since the respondent and his family are residents of Dumaguete City. Third, the employer failed topresent any valid reason why it had to require the employee to go to the Makati Head Office to undergo branchhead training when it could have just easily required the latter to undertake the same training in the VISMINarea. Finally, there was nothing in the order of transfer indicating the position which the employee wouldoccupy after his training; thus, the employee was effectively placed in a floating status. The bankscontention that the employee was assigned to a sensitive position in the DUHO Task Force is suspect when
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considered with the fact that he was made to undergo branch head training which is totally different from aposition that entails reconciling book entries of all branches of the former. Reconciling book entries isessentially an accounting task.

The test of constructive dismissal is whether a reasonable person in the employees position would have feltcompelled to give up his position under the circumstances. Based on the factual considerations in the present

case, the Court held that the hostile and unreasonable working conditions of the bank justified the finding ofthe NLRC and the CA that the employee was constructively dismissed. Philippine Veterans Bank vs. National

Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010.

Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three working days from arrival for diagnosis and treatment. Applying Section20(B), paragraph (3) of the 2000 Amended Standard Terms and Conditions Governing the Employment ofFilipino Seafarers on Board Ocean-Going Vessels, petitioner is required to undergo post-employment medicalexamination by a company-designated physician within three working days from arrival, except when he isphysically incapacitated to do so, in which case, a written notice to the agency within the same period wouldsuffice. InMaunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554 SCRA 446, 459] thisCourt explicitly declared that it is mandatory for a claimant to be examined by a company-designated

physician within three days from his repatriation. The unexplained omission of this requirement will bar thefiling of a claim for disability benefits. Alex C. Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C.Maquilan, and/or MMS Co. Ltd.,G.R. No. 184722, March 15, 2010.

Dismissal; due process. The essence of due process is the opportunity to be heard; it is the denial of thisopportunity that constitutes violation of due process of law. The employee was given the opportunity to beheard when a proper notice of investigation was sent to him, although the notice did not reach him for reasonsoutside the employers control. The employee was not also totally unheard on the matter as he was able toexplain his side through the two (2) explanation letters he submitted. These letters are clear indications that heintimately knew of the matter for which he was being investigated. If he was denied due process at all, thedenial was with respect to the charges of extortion, tardiness and absenteeism, which are grounds invokedseparately from loss of trust and confidence. These grounds were not serious considerations in the dismissal

that followed, and therefore, were not considered by the Court as material to the present case.Bibiana Farmsand Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010.

Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving the lawful causesustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidencethat the dismissal was for a justifiable cause. The employees behavior constituted just cause. However, thecompany cannot deny that it failed to observe due process. The law requires that the employer must furnish theworker sought to be dismissed with two written notices before termination of employment can be legallyeffected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal issought; and (2) the subsequent notice which informs the employee of the employers decision to dismisshim. Violation of the employees right to statutory due process, even if the dismissal was for a just cause,warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended topenalize the employer but to vindicate or recognize the employees right to statutory due process, which wasviolated by the employer in the present case.Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias

Dy, G.R. No. 164860, February 2, 2010.

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

Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin requirementsof notice and hearing are essential elements of due process. The employer must furnish the worker with twowritten notices before termination of employment can be legally effected: (1) a notice apprising the employeeof the particular acts or omissions for which his dismissal is sought, and (2) a subsequent notice informing the

employee of the employers decision to dismiss him. With regard to the requirement of a hearing, the essenceof due process lies simply in an opportunity to be heard, and not that an actual hearing should always andindispensably be held.Likewise, there is no requirement that the notices of dismissal themselves be couched in the form and languageof judicial or quasi-judicial decisions. What is required is for the employer to conduct a formal investigationprocess, with notices duly served on the employees informing them of the fact of investigation, andsubsequently, if warranted, a separate notice of dismissal. Through the formal investigatory process, theemployee must be accorded the right to present his or her side, which must be considered and weighed by theemployer. The employee must be sufficiently apprised of the nature of the charge, so as to be able tointelligently defend himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor

Relations Commission, et al., G.R. No. 182299, February 22, 2010.

Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an employer mayterminate an employment due to gross and habitual neglect by the employee of his duties. To sustain atermination of employment based on this provision of law, the negligence must not only be gross but alsohabitual.In the present case, the employer asserts that the employees failed to regularly undertake a monthly physicalinventory of the outlets merchandise. The Court was not persuaded as it found that inventory preparation andreporting did not fall on the employees shoulders since they were to assist the [stock] clerk only. Kulas

Ideas & Creations, et al. vs. Juliet Alcoseba, et al., G.R. No. 180123, February 18, 2010.

Dismissal; loss of trust and confidence. InFungo v. Lourdes School of Mandaluyong, we restated theguidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee fromthe service, thus: a) loss of confidence should not be simulated; b) it should not be used as subterfuge forcauses 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 earlieraction taken in bad faith. In the present case, the employee, who was a warehouseman, held a position of trustand confidence and was given access to and authority over company property with clear tasks and guidelineslaid down very early in his employment. Like any business entity, the company has every right to protect itselffrom actual threats to the viability of its operations. The employee, caught red-handed in a scheme to spirit offunpaid company sacks, not only violated his fiduciary duty as custodian of company property resulting in thecompanys loss of trust and confidence in him; he had also become a threat to the viability of companyoperations. To rule that he should be reinstated would be oppressive to the company. The law, in protecting therights of the employee, authorizes neither the oppression nor the self-destruction of the employer.BibianaFarms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010.

Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the concurrence of thefollowing: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causeswhich are improper, illegal, or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming

evidence to the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action taken in badfaith; and (5) the employee involved holds a position of trust and confidence. Loss of confidence, as a justcause for termination of employment, is premised on the fact that the employee concerned holds a position ofresponsibility, trust and confidence. He must be invested with confidence on delicate matters, such as thecustody, handling, care, and protection of the employers property and/or funds. In order to constitute a justcause for dismissal, the act complained of must be work-related such as would show the employeeconcerned to be unfit to continue working for the employer.The subject employee in this case is a managerial employee holding a highly sensitive position. Being theHead of the Marketing Group of the company, he was in charge, among others, of the over-all production
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and sales performance of the company. Thus, as aptly pointed out by the CA, his performance was practicallythe lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which heused to head. The position held by the employee required the highest degree of trust and confidence of hisemployer in the formers exercise of managerial discretion insofar as the conduct of the latters business wasconcerned. The employees inability to perform the functions of his office to the satisfaction of his employerand the formers poor judgment as marketing head caused the company huge financial losses. If these were not

timely addressed and corrected, the company could have collapsed, to the detriment of its policy holders,stockholders, employees, and the public in general.Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and

Arsenio Bartolome, G.R. No. 179702, February 16, 2010

Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of concealmentand dishonesty marred the purchase of paper materials for the Womens Journals special project, with theemployee playing the principal and most active role. There is no question that the employee failed to make areasonable canvass of the prices of the paper materials required by a companys special project, resulting insubstantial losses to the company. That a rush job was involved, is no excuse as canvassing could be doneeven in a days time as shown by the audit departments canvass. That the employee was responsible forconcealment and omissions also appears clear to us; he failed, under dubious circumstances, to seasonablydisclose to his employer material information with financial impact on the purchase transaction.Thus, the Court cannot but conclude that substantial evidence exists justifying the employees dismissal for a

just cause loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law

requires only that there be at least some basis to justify the dismissal. The fact that the employee had been withthe company for 25 years cannot change the conclusion that he had become a liability to the company whoseinterests he miserably failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal,G.R. No.187120, February 16, 2010.

Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for termination ofemployment, is premised on the fact that the employee concerned holds a position of responsibility or of trustand confidence. As such, he must be invested with confidence on delicate matters, such as custody, handlingor care and protection of the property and assets of the employer. And, in order to constitute a just cause fordismissal, the act complained of must be work-related and must show that the employee is unfit to continue towork for the employer. In the instant case, the petitioners-employees of Promm-Gem have not been shown tobe occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that

they are unfit to continue to work as merchandisers for Promm-Gem. Joeb Aliviado, et al. vs. Procter &Gamble Philippines, Inc., et al.,G.R. No. 160506, March 9, 2010.Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong conduct; thetransgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful incharacter implying wrongful intent and not mere error of judgment. The misconduct to be serious must be ofsuch grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal,such misconduct (a) must be serious; (b) must relate to the performance of the employees duties; and (c) mustshow that the employee has become unfit to continue working for the employer. In other words, in order toconstitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some establishedrules or policies. It is equally important and required that the act or conduct must have been performed withwrongful intent. In the instant case, petitioners-employees of Promm-Gem may have committed an error of

judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful

intent in doing so. As such, the Court found them guilty of simple misconduct only, for assailing the integrityof Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave,as that existing in the instant case, cannot be a valid basis for dismissing an employee. Joeb Aliviado, et al. vs.Procter & Gamble Philippines, Inc., et al.,G.R. No. 160506, March 9, 2010.

Dismissal; just cause; union security clause. In terminating the employment of an employee by enforcing theunion security clause, the employer is required only to determine and prove that: (1) the union security clauseis 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.
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These requisites constitute just cause for terminating an employee based on the union security provision of theCBA.It is the third requisite that appears to be lacking in this case. It is apparent from the identical terminationletters that GMC terminated Casio, et al., by relying upon the resolutions of the union, which made no mentionat all of the evidence supporting the decision of the union to expel Casio, et al. from the union. GMC neveralleged nor attempted to prove that the company actually looked into the evidence of the union for expelling

Casio, et al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannotclaim that it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make adetermination of the sufficiency of evidence supporting the decision of the union constitutes non-observanceby GMC of procedural due process in the dismissal of employees. General Milling Corporation vs. ErnestoCasio, et al. and Virgilio Pino, et al.,G.R. No. 149552, March 10, 2010.

Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an employee aretwo-fold, consisting of substantive and procedural aspects. Not only must the dismissal be for a just orauthorized cause; the basic requirements of procedural due process notice and hearing must likewise beobserved before an employee may be dismissed. The burden of proof rests on the employer to show that theemployees dismissal has met these due process requirements. The case of the employer must stand or fall onits own merits and not on the weakness of the employees defense. Bibiana Farms and Mills, Inc. vs. Arturo

Lado, G.R. No. 157861, February 2, 2010.

Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee shall beentitled 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 hiscompensation was withheld from him up to the time of his actual reinstatement. In addition to fullbackwages, the Court has also repeatedly ruled that in cases where reinstatement is no longer feasible due tostrained relations, then separation pay may be awarded instead of reinstatement. InMt. Carmel College v.

Resuena,the Court reiterated that the separation pay, as an alternative to reinstatement, should be equivalent toone (1) month salary for every year of service. Sargasso Construction and Development Corporation vs.

National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9,

2010.

Dismissal; serious misconduct. Misconduct has been defined as improper or wrong conduct. It is thetransgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in

character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must beof such grave and aggravated character and not merely trivial and unimportant. Such misconduct, howeverserious, must nevertheless be in connection with the employees work to constitute just cause for hisseparation.In the present case, the Court found substantial evidence to prove that a serious misconduct has beencommitted to justify termination from employment. The Certified Public Accountant and Corporate FinanceManager of the company submitted a report dated February 19, 2000 stating that in spite of managementsmemorandum, the keys to the office and filing cabinets were not surrendered. It was likewise stated in thereport that petitioner Wilfredo Baron pulled out some records without allowing a representative from theinternal audit team to inspect them. He noticed Wilfredo Baron deleting some files from the computer, whichcould no longer be retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner)carrying some documents, including a Daily Collection Report. When asked to present the documents forinspection, Junatas refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty ThousandTwo Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that Wilfredo Baron, theoperations manager, in conspiracy with the other petitioners, orchestrated massive irregularities and grandscale fraud, which could no longer be documented because of theft of company documents and deletion ofcomputer files. Unmistakably, the unauthorized taking of company documents and files, failure to payunremitted collections, failure to surrender keys to the filing cabinets despite earlier instructions, concealmentof shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts of grave
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misconduct, which are sufficient causes for dismissal from employment. Wilfredo M. Baron, et al. vs. NationalLabor Relations Commission, et al., G.R. No. 182299, February 22, 2010.

Dismissal; fraud and serious misconduct.In this case, the Court found that Pastoril was as actively involved asEscoto and Omela in the sale of the Toyota Town Ace that resulted in a loss to the company. All threeparticipated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00 when in

fact, Aquino paid P200,000.00 for the vehicle. Thus, Pastoril acted in concert with Escoto and Omela in thetransaction that defrauded their employer in the amount of P10,000.00. Pastoril prepared and issued the deedof sale indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was beingcharged P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price difference andtried to silence Rodriguez (who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00price difference off as the approved discount Aquino asked for. The Court held that there was a conspiracybetween and among the three employees, where every participant had made significant contributoryacts. White Diamond Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, etal., G.R. No. 186019. March 29, 2010.

Dismissal; backwages. Article 279 of the Labor Code provides that an employee who is unjustly dismissedfrom work shall be entitled to reinstatement without loss of seniority rights and other privileges and to hisfull backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from

the time his compensation was withheld from him up to the time of his actual reinstatement.Thus, a number of cases holds that an illegally dismissed employee is entitled to two reliefs: backwages andreinstatement. The two reliefs are separate and distinct. In instances where reinstatement is no longer feasiblebecause of strained relations between the employee and the employer, separation pay is granted. In effect, anillegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement isno longer viable, and backwages.

The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniorityrights, and payment of backwages computed from the time compensation was withheld up to the date of actualreinstatement. 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 isin addition to the payment of backwages.

Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu ofreinstatement is in order. Petitioners prayer for the award of backwages is meritorious, it, and the award ofseparation pay not being mutually exclusive. Ferdinand A. Pangilinan vs. Wellmade ManufacturingCorporation, G.R. No. 187005, April 7, 2010.Dismissal; backwages. Reprimand being the appropriate imposable penalty for respondents actuations fromthe very beginning, the Court finds that respondent was unfairly denied from reporting for work and earninghis keep, thus, entitling him to the payment of backwages.The Court is not unmindful of our previous pronouncements in similar cases involving suspension or dismissalfrom service, wherein the penalty imposed was reduced, but the award of backwages was denied.

Given the circumstances of the case, however, where the proper penalty should only be a reprimand, the Court

finds the aforementioned cases to be inapplicable herein. On this note, the Court deems it proper to distinguishbetween the penalties of dismissal or suspension and reprimand and their respective effects on the grant oraward of backwages. When an employee is dismissed or suspended it is but logical that since he is barred fromreporting to work the same negates his right to be paid backwages. He has no opportunity to work during theperiod he was dismissed or suspended and, therefore, he has no salary to expect. However, the same does nothold true for an employee who is reprimanded. A reprimand usually carries a warning that a repetition of thesame or similar act will be dealt with more severely. Under normal circumstances, an employee who isreprimanded is never prevented from reporting to work. He continues to work despite the warning. Thus, in the
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case at bar, since respondents penalty should only be a reprimand, the Court deems it proper and equitable toaffirm the Court of Appeals (CAs) award of backwages.

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

InJacinto v. Court of Appeals[G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court awardedpetitioner Jacinto backwages after finding that she was only culpable of violating reasonable office rules andregulations for not having asked permission from school authorities to leave the school premises and seekmedical attention and for not filing an application for sick leave for approval by the school authorities.Also, inBangalisan v. Court of Appeals[G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after affirming thefindings that one of the petitioners, Rodolfo Mariano, is only liable for his violation of reasonable office rulesand regulations for attending the wake and internment of his grandmother without the benefit of an approvedleave of absence and the imposition of the penalty of reprimand, the Court still granted him backwages.Consistent with the Courts rulings inBangalisanandJacinto, the grant of backwages to respondent is butproper. It is to be stressed that when imposing penalties, it must not only be made within the parameters of thelaw, but it should also satisfy the basic tenets of equity, justice, and fairplay.National Power Corporation vs.

Alan Olandesca, G.R. No. 171434, April 23, 2010.Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza[G.R. No. 141141, June25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack ofintegrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; dispositionto defraud, deceive or betray.It is not disputed that respondent took several materials and supplies from petitioners warehouse without theapproved WRS. However, this should not be construed as dishonesty on the part of respondent that wouldwarrant his dismissal from the service for the following reasons: First, the withdrawals of the supplies wereduly recorded in the security guards logbook. If respondent intended to defraud petitioner, he could haveeasily taken items from the warehouse without having them recorded as he was then the Supervising PropertyOfficer who had free access to the supplies. Second, right after withdrawing the items, respondent replacedthem on his own initiative, without anyone instructing him to do so. This act negates his intent to defraudpetitioner. Third, there is no clear showing that respondent misappropriated or converted the items for his ownpersonal use or benefit. Fourth, the Graft Investigation Officer of the Office of the Ombudsman, in itsResolution dated February 5, 1999, in OMB-1-98-2011, dismissed a complaint for qualified theft filedby Teodulo V. Largo, Section Chief, Power Generation Group of petitioner against respondent as there was nocompetent and sufficient evidence on record to show that there was intent to gain on the part of the respondent,considering that the materials and supplies taken by him were used in fencing the watershed and reservationarea of petitioner company. Likewise, there was no basis to charge him for malversation of public property asthere was no misappropriation of the supplies for his personal use and that the same were for general purposeand not for any specific use.

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

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

The Machiavellian principle that the end justifies the means has no place in government service, whichthrives on the rule of law, consistency and stability. Respondent, by taking the said properties without the
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approved WRS, violated reasonable office rules and regulations as provided in Section 52 (C), (3), Rule IV ofCivil Service Commission Memorandum Circular No. 19, series of 1999 (Uniform Rules on AdministrativeCases in the Civil Service). Since this is respondents first offense in his more than 16 years of service, theappropriate penalty to be imposed against him is reprimand.National Power Corporation vs.

Alan Olandesca, G.R. No. 171434, April 23, 2010.

Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust and

confidence, two requisites must concur: (1) the employee concerned must be holding a position of trust andconfidence and (2) there must be an act that would justify the loss of trust and confidence.In the present case, respondent failed to justify its loss of trust and confidence on Consolacion even as itimputed to him, via Notice of Formal Investigation of April 14, 2003, non-compliance with (a) establishednon-written procedures and standards; (b) established written procedures and standards, and (c) verbal ordersand/or instructions. These alleged acts of non-compliance are too general and can encompass just about anymalfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that wouldserve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orderswere. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.Dismissal; management prerogative. Respondents right of management prerogative was exercised in goodfaith. Respondent presented evidence of the low volume of sales and orders for the production of industrialpaper in 1999, which inevitably resulted to the companys decision to streamline its operations. This fact wascorroborated by respondents VP-Tissue Manufacturing Director and was not disputed by petitioner.

Exercising its management prerogative and sound business judgment, respondent decided to cut down onoperational costs by shutting down one of its paper mill. As held inInternational Harvester Macleod, Inc. v.

Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to phase out aparticular department and consequent reduction of personnel and reorganization as a labor and cost savingdevice is a recognized management prerogative which the courts will not generally interfere with.In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of thelow demand for the production of industrial paper at the time. Despite an apparent reason to implement aretrenchment program as a cost-cutting measure, respondent, did not dismiss the workers affected by theclosure of Paper Mill No. 4 outright but gave them an option to be transferred to posts of equal rank and pay.Retrenchment was given only as an option in case the affected employee did not want to be transferred. TheCourt viewed this as an indication of good faith on respondents part since it exhausted other possible measuresbefore retrenchment. Besides, the employers prerogative to bring down labor costs by retrenchment must be

exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting.Giving the workers an option to be transferred without any diminution in rank and pay belie petitionersallegation that the streamlining scheme was implemented as a ploy to ease out employees. Apparently,respondent implemented its streamlining or reorganization plan in good faith, not in an arbitrary manner andwithout violating the tenurial rights of its employees.Dannie M. Pantoja vs. SCA Hygiene ProductsCorporation, G.R. No. 163554, April 23, 2010.

Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling that Talam wasvalidly dismissed on the ground of retrenchment. The Supreme Court came to this conclusion based on thefollowing considerations:First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid ofemployees. The decision was upon the recommendation of the companys external auditor. Second, the cost-cutting measure recommended involved reduction of TSFIs payroll expense account which, as the auditorfound, makes up 41% of the companys total operating expenses. Third, Talam was dismissed due to a cause

authorized by law retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financialcondition, as found by the external auditor, showed that it was not just expecting losses, it already suffered anet income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period endingDecember 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It claimed that during thecrises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff in thepersons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%. This submissionby the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFIs operatingexpenses across the board. The schedule indicates a substantial decrease in operating expenses, from
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P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis Ray Talam vs.National Labor Relations Commission, 4th Division, Cebu City, et al.,G.R. No. 175040, April 6, 2010.Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission (NLRC)establish the following: (1) Agads request for withdrawal of the 190 cylinders of LPG as stated in aMemorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to thereplacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not

to the subject LPG cylinders; (2) Agad did not observe Caltexs rules and regulations when he transferred thesaid cylinders to Millanes compound without the RMRD form as required under Caltexs Field AccountingManual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties inviolation of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to theaccounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even ifconsidered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate forhimself without Caltexs consent.Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of companyproperty. This act is akin to serious misconduct or willful disobedience by the employee of the lawful ordersof his employer in connection with his work, a just cause for termination of employment recognized underArticle 282(a) of the Labor Code.

Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act,a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To beserious, the misconduct must be of such grave and aggravated character. Caltex (Philippines), Inc., et. al. vs.

Hermie G. Abad, et. al.,G.R. No. 163554, April 23, 2010.

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

Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy must beproved by clear, direct and convincing evidence. In Fernandez v. National Labor Relations Commission, TheCourt expounded on the degree of evidence required to establish the existence of a conspiracy in thiswise: While it is true that in conspiracy, direct proof is not essential, it must however, be shown that it existsas clearly as the commission of the offense itself. There must at least be adequate proof that the malefactorshad come to an agreement concerning the commission of a felony and decided to commit it. x x x Forconspiracy to exist, it is essential that there must be conscious design to commit an offense. Conspiracy is notthe product of negligence but of intentionality on the part of the cohorts.Verily, there was a dearth of evidence directly linking the employee to the commission of the crime of theft, ashis mere act of loading the dump truck with aggregates did not show that he knew of the other persons plan todeliver the load to a place other than the companys construction site. The only conclusion, therefore, is thatthe company had illegally dismissed the employee in the present case. Sargasso Construction and

Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio

Mongcal,G.R. No. 164118, February 9, 2010.

Employer-employee relationship; control test. This Court still employs the control test to determine theexistence of an employer-employee relationship between hospital and doctor. In Calamba Medical Center, Inc.v. National Labor Relations Commission, et al.,the Court held that: Under the control test, an employmentrelationship exists between a physician and a hospital if the hospital controls both the means and the details ofthe process by which the physician is to accomplish his task. x x x That petitioner exercised control overrespondents gains light from the undisputed fact that in the emergency room, the operating room, or any
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department or ward for that matter, the doctors work is monitored through the hospitals nursing supervisors,charge nurses and orderlies. Without the approval or consent of the hospital or its medical director, nooperations can be undertaken in those areas. For the control test to apply, it is not essential for the employer toactually supervise the performance by the employee of his duties, it being enough that it has the right to wieldthe power. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children

Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and

Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and EnriqueAgana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.

Employer employee relationship.The elements to determine the existence of an employment relationship are:(1) selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)the employers power to control the employees conduct. In filing a complaint for illegal dismissal, it isincumbent upon Abueva to prove the relationship by substantial evidence.In this regard, Abueva claims that he has worked with respondent hacienda for more than a year already andthat he was allowed to stay inside the hacienda. As such, he is a regular employee entitled to monetary claims.However, petitioners have not presented competent proof that respondents engaged the services of Abueva;that respondents paid his wages or that respondents could dictate what his conduct should be while at work. Inother words, Abuevas allegations did not establish that his relationship with respondents had the attributes of

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

April 19, 2010.

Employee benefits; permanent disability benefits. In accordance with the avowed policy of the State to givemaximum aid and full protection to labor, the Court applied the Labor Code concept of permanent totaldisability to Filipino seafarers. The Court held that the notion of disability is intimately related to the workerscapacity to earn. What is compensated is not the employees injury or illness but his inability to work resultingin the impairment of his earning capacity; hence, disability should be understood less on its medicalsignificance but more on the loss of earning capacity.

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

That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiters finding thathis illness would possibly recur once he resumes his sea duties. This could very well be the reason whypetitioner was not re-deployed by respondents. Petitioners disability being then permanent and total, he isentitled to 100% compensation, i.e., US$80,000 for officers, as stipulated in par. 20.1.7 of the partiesCBA. Rizaldy M. Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management

A/S, G.R. No. 179868, January 21, 2010.

Employee benefit; bonus. By definition, a bonus is a gratuity or act of liberality of the giver. It is somethinggiven in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid toan employee for his industry and loyalty which contributed to the success of the employers business and madepossible the realization of profits. A bonus is also granted by an enlightened employer to spur the employee togreater efforts for the success of the business and realization of bigger profits.Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must havebeen promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case isintegrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its
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incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just anact of generosity on the part of the petitioner but a contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The ruleis settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the

constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor fullprotection. Hence, absent any proof that the employers consent was vitiated by fraud, mistake or duress, it ispresumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and wasaware of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees

Association,G.R. No. 180866, March 2, 2010.

Employee; monetary award. The law and the rules are consistent in stating that the employment permit mustbe acquired prior to employment. The Labor Code states: Any alien seeking admission to the Philippines foremployment purposes and any domestic or foreign employer who desires to engage an alien for employment inthe Philippines shall obtain an employment permit from the Department of Labor. Section 4, Rule XIV, Book1 of the Implementing Rules and Regulations provides: No alien seeking employment, whether as a residentor non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If

an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only beallowed to be employed upon presentation of a duly approved employment permit.Galera worked in the Philippines without a proper work permit but now wants to claim employees benefitsunder Philippine labor laws. She cannot come to this Court with unclean hands. To grant Galeras prayer is tosanction the violation of the Philippine labor laws requiring aliens to secure work permits before theiremployment. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP

Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.

Employee; recovery of personal contributions. May a government employee, dismissed from the service forcause, be allowed to recover the personal contributions he paid to the Government Service Insurance System(GSIS)? The answer is yes.Section 11(d) of Commonwealth Act No. 186, as amended, provides: Upon dismissal for cause or onvoluntary separation, he shall be entitled only to his own premiums and voluntary deposits, if any, plus interest

of three per centum per annum, compounded monthly. This provision continues to govern cases of employeesdismissed for cause and their claims for the return of their personal contributions.

Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be liberallyconstrued in favor of the government employees. The money, subject of the employees request, consists ofpersonal contributions made by him, premiums paid in anticipation of benefits expected upon retirement. Theoccurrence of a contingency, i.e., his dismissal from the service prior to reaching retirement age, should notdeprive him of the money that belongs to him from the outset. To allow forfeiture of these personalcontributions in favor of the GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo,

Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City,A.M. No. P-95-1167, February 9, 2010.

Employee expenses; in-service training.

In the present case, Article XXI, Section 6 of the CBA provides that All expenses of security guards insecuring /renewing their licenses shall be for their personal account. A reading of the provision would revealthat it encompasses all possible expenses a security guard would pay or incur in order to secure or renew hislicense. In-service training being a requirement for the renewal of a security guards license, expenses incurredtherefore are claimed to be for the security guards personal account. However, the 1994 Revised Rules andRegulations Implementing the Private Security Agency Law (Republic Act No. 5487) provides that it shall bethe primary responsibility of the operators of private security agency and company security forces to maintainand upgrade the standards of efficiency, discipline, performance and competence of their personnel. It further
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provides that [T]o maintain and/or upgrade the standard of efficiency, discipline and competence of securityguards and detectives, company security force and private security agencies upon prior authority shall conduct-in-service training The cost of training shall be pro-rated among the participating agencies/privatecompanies.Since it is the primary responsibility of operators of company security forces to maintain and upgrade thestandards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses

to be incurred therein shall be for the account of the company. Further, the intent of the law to impose upon theemployer the obligation to pay for the cost of its employees training is manifested in the aforementionedprovision of law. While the law mandates pro-rating of expenses because it would be impracticable and unfairto impose the burden of expenses suffered by all participants on only one participating agency or company, ifthere is no centralization, there can be no pro-rating, and therefore, the company that has its own securityforces must shoulder the entire cost for such training. If the intent of the law were to impose upon individualemployees the cost of training, the provision on the pro-rating of expenses would not have found print in thelaw. Prior to the signing of the CBA, it was the company providing for the in-service training of the guards.Thus, implicit from the companys actuations was its acknowledgment of its legally mandated responsibility toshoulder the expenses for in-service training. PNCC Skyway Traffic Management and Security DivisionWorkers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway

Corporation),G.R. No. 171231, February 17, 2010

Employee vs. corporate officer. Corporate officers are given such character either by the Corporation Code orby the corporations by-laws. Under Section 25 of the Corporation Code, the corporate officers are thepresident, secretary, treasurer and such other officers as may be provided in the by-laws. Other officers aresometimes created by the charter or by-laws of a corporation, or the board of directors may be empoweredunder the by-laws of a corporation to create additional offices as may be necessary.An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare) during a special meeting of WPPsBoard of Directors is an appointment to a non-existent corporate office. WPPs by-laws provided for only oneVice-President. At the time of Galeras appointment on 31 December 1999, WPP already had one Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because all fivedirectorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its AmendedBy-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws provided for more

than one Vice-President and for two additional directors. Even though WPPs stockholders voted for theamendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera wasdismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence thatGaleras dismissal took effect with the action of WPPs Board of Directors.

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

Illegal dismissal; backwages. The basis for the payment of backwages is different from that for the award ofseparation pay. Separation pay is granted where reinstatement is no longer advisable because of strainedrelations between the employee and the employer. Backwages represent compensation that should have been
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earned but were not collected because of the unjust dismissal. The basis for computing backwages is usuallythe length of the employees service while that for separation pay is the actual period when the employee wasunlawfully prevented from working.As to how both awards should be computed,Macasero v. Southern Industrial Gases Philippines [G.R. No.178524, January 30, 2009] instructs that the award of separation pay is inconsistent with a finding that therewas no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee

who is dismissed without just cause and without due process is entitled to backwages and reinstatement orpayment of separation pay in lieu thereof. Thus, an illegally dismissed employee is entitled to two reliefs:backwages and reinstatement. The two reliefs provided are separate and distinct. Golden Ace Buildersand ArnoldU. Azur vs. Jose A. Talde,G.R. No. 187200, May 5, 2010.Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the payment ofseparation pay is considered an acceptable alternative to reinstatement when the latter option is no longerdesirable or viable. On one hand, such payment liberates the employee from what could be a highlyoppressive work environment. On the other hand, it releases the employer from the grossly unpalatableobligation of maintaining in its employ a worker it could no longer trust.Strained relations must be demonstrated as a fact, however, to be adequately supported by evidencesubstantial evidence to show that the relationship between the employer and the employee is indeed strained asa necessary consequence of the judicial controversy.In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and

respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by theappellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that theCourt will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, evenfinality. Golden Ace Builders and ArnoldU. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.Illegal dismissal; separation pay. In instances where reinstatement is no longer feasible because of strainedrelations between the employee and the employer, separation pay is granted. In effect, an illegally dismissedemployee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, andbackwages. The normal consequences of respondents illegal dismissal, then, are reinstatement without loss ofseniority rights, and payment of backwages computed from the time compensation was withheld up to the dateof actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to on

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