A. 1. Philippine Daily Inquirer v. Magtibay Facts: Philippine Daily Inquirer, Inc.

(PDI) hired Leon Magtibay (Magtibay) as a contractual worker for 5 months. After the expiration of the said contract, PDI hired him again with a probationary period of 6 months. A week before the end of the second contract, PDI handed him his termination letter due to failure in meeting company standards. Magtibay then filed a complaint for illegal dismissal before the Labor Arbiter stating that he has now become a regular employee by working for more than 6 months. The PDI union supported him stating unfair labor practice. Saying that he did not know he was supposed to follow company standards and that he was not given due process in his termination. PDI explained that his 5-month contract should not be included with his 6-month contract allowing him to be considered a regular employee, and that he was in fact given an orientation on what the company standards were. The Labor Arbiter agreed with PDI and dismissed his complaint and acquitted PDI of illegal dismissal and unfair labor practice. When the case was brought to the NLRC, it reversed the Arbiters decision and charged PDI with illegal dismissal due to the fact that Magtibay was now considered a regular employee. Also, Magtibay was not told that he must abide by company standards. The Court of Appeals agreed with the NLRC. PDI filed a motion for reconsideration to no avail. Issue: Whether or not a probationary employees failure to follow company standards is ground for illegal dismissal. WON PDI is liable for violating procedural due process in terminating Magtibay. Ruling: The NLRC and CAs decisions were reversed and set aside thereby reinstating the Labor Arbiters decision to acquit PDI of illegal dismissal and unfair labor practice. The SC ruled that company standards are meant to be followed even if an employee is not made aware of them. It is inherent that company standards are always in effect and employees, probationary or regular, are expected to meet them.

Also, PDI is did not violate procedural process due to the fact the Magtibay was on a probationary period and was not up to company standards. Reason is that a probationary has the duty to prove his worth to the employer to become a permanent employee. The due process here is in the constant observance and evaluation of Magtibays performance, in which he failed by violating certain company rules and regulations.

2. LANDTEX VS.CA Landtex, a sole proprietorship owned by Alex Go and managed by William Go, is a business enterprise engaged in the manufacture of garments. Ayson worked in Landtex as a knitting operator. He was an officer of Landtex Industries Workers Union Federation of Free Workers (union) which had an existing (CBA) with Landtex. Ayson received a letter from Landtex which stated that Ayson committed acts contrary to company policies. The letter required Ayson to explain in writing within 24 hours from receipt why no disciplinary action should be taken against him for spreading damaging rumors about the personal life of an unspecified person, and for having an altercation with one of the companys owners when he was asked to submit an ID picture. Ayson replied in writing that he could not defend himself from the charge of spreading damaging rumors because Landtexs letter failed to state what rumors he was supposed to have spread. Ayson further explained that he merely replied in a loud voice to the company owners request because he was carrying textiles. Ayson then apologized for his actions. Landtex decided to conduct an investigation in view of Aysons denials. In the first meeting , Ayson was informed that there were witnesses who could testify that he spread rumors about the personal life of William Go and his family. Ayson denied that he spread rumors and requested for another meeting so that he could hear the alleged witnesses and defend himself. Ayson further requested that the next investigation be held at Landtexs Mauban office because he and the union officers accompanying him suffer salary deductions for their attendance of investigations during office hours. Another meeting was scheduled, but Ayson was unable to attend it and

went home early because he allegedly needed to look after his child. 2nd meeting took place. In a letter, Landtex terminated Aysons services effective 30 June 1996 because of Aysons lack of cooperation during the investigations. Despite this notice, Ayson still reported for work until 6 July 1996. The union president requested Landtex for a formal dialogue regarding Aysons case. Landtex reaffirmed its decision to terminate Ayson in meetings with the union. Landtex and the union agreed to refer the matter to a third party in accordance with the provisions of law and of the CBA. Landtex expected Ayson to refer the issue to the (NCMB) for the selection of a voluntary arbitrator. Ayson and the union, however, filed a complaint before the labor arbiter. LA ruled in favor of Ayson. NLRC reversed case falls under VA. Landtex merely imposed a disciplinary measure when it terminated Aysons employment. CA sustained the jurisdiction of the labor arbiter and modified the award in favor of Ayson

Held: Affirmed. The Labor Arbiters Jurisdiction Petitioner alleged that Aysons termination merely enforced Landtexs personnel policy against misconduct. They further claim that the unions request for a formal dialogue signified the initiation of the grievance procedure outlined in the CBA. Landtex and William Go even assert that because of Aysons failure to submit his claim before the NCMB, he is barred from seeking relief from a forum other than that provided in the CBA. We agree with Ayson and the union and affirm the rulings of the labor arbiter and the appellate court. Article 261 of the Labor Code provides that voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. On the other hand, a reading of Article 217 in conjunction with Article 262 shows that termination disputes fall under the jurisdiction of the labor arbiter unless the union and the company agree that termination disputes should be submitted to voluntary arbitration. Such agreement should be clear and unequivocal. Existing law is an intrinsic part of a valid contract without need for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction of the labor arbiter over unfair labor practices, termination disputes, and claims for damages cannot be arrogated into the powers of voluntary arbitrators in the absence of an express agreement between the union and the company. In the present case, the CBA between Landtex and the union does not clearly state that termination disputes, as opposed to mere disciplinary actions, are covered by the CBA. The CBA defined a grievance as one that arises from the interpretation or implementation of this Agreement, including disciplinary action imposed on any covered employee. The CBA did not explicitly state that termination disputes should be submitted to the grievance machinery. We find nothing in the records which shows that the meetings between the union and Landtex already constitute the grievance machinery as mandated by the CBA. The meetings happened only after the effectivity of Aysons termination. The meetings did not comply with the requisite number of participants. The CBA mandated that there should be three representatives each from the union and Landtex but there were seven union members and

The Issues Landtex and William Go raise the following issues before this Court: Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant case pertains exclusively to the voluntary arbitrator considering that the existing CBA provides that a grievance is one that arises from the interpretation or implementation of this agreement, including disciplinary action imposed on any covered employee; and the parties have undergone the grievance machinery of the collective bargaining agreement Whether the instant case concerns enforcement and implementation of company personnel policy and that the issue therein was timely raised Whether there is a valid ground for termination of the employment of Ayson Whether Ayson is entitled to backwages and separation pay Whether the appellate court committed grave and patent abuse of discretion and errors of law in setting aside the decision of the NLRC

two Landtex representatives who attended the meetings. More importantly, there was nothing in the minutes that shows that the attendees constituted a Management-Employee Committee. Finally, the appellate court is correct in stating that if Landtex really believed that the labor arbiter did not have jurisdiction over the present case, then Landtex should have filed a motion to dismiss. Instead of filing a motion to dismiss, Landtex participated in the proceedings before the labor arbiter. Had Landtex immediately filed a motion to dismiss, the labor arbiter would have determined the issue outright before proceeding with hearing the case. In the present case, Landtex raised the issue of jurisdiction only after the labor arbiter required the parties to submit their position papers. Validity of Aysons Dismissal The requisites for a valid dismissal are: (1) The dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and; (2) the opportunity to be heard and to defend oneself. Upon reading the records of the case, we cannot deduce any proof of Landtex and William Gos accusations againstAyson. Moreover, the NLRC did not make any pronouncement as to whether Ayson was dismissed for a just cause. The appellate court and the labor arbiter were one in ruling that there was no just cause in Aysonsdismissal. We quote the labor arbiters factual findings with approval:

decision to dismiss him. In the present case, Landtex more than complied with the twonotice rule. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In the present case, Landtex scheduled three meetings before terminating Ayson. However, Landtex failed to understand the laws purpose in requiring the opportunity to be heard. Landtex scheduled meetings with Ayson but these meetings were not free from arbitrariness. Ayson could not adequately defend himself from Landtexs and William Gos accusations. No witness was ever presented against Ayson, hence Ayson could not test the veracity of their claims. Unsubstantiated suspicions, accusations, and conclusions of the employer are not sufficient to justify an employees dismissal. The employer must prove by substantial evidence the facts and incidents upon which the accusations are made. We ruled that the mere conduct of an investigation and the statements of the companys security guard are not enough to establish the validity of the charge of wrongdoing against the dismissed employees. It is not enough for an employer who wishes to dismiss an employee to charge him with wrongdoing. The validity of the charge must be established in a manner consistent with due process. A suspicion or belief no matter how sincerely felt cannot substitute for factual findings carefully established through an orderly procedure.

3. We have painstakingly read the records of this case and, sadly, this Office finds no shred of evidence to show that indeed [Ayson] had been spreading news and gossips or that he ever shouted at Mr. Go and engaged Mr. Go in a heated argument. No affidavit of either the security guard who claimed to be one of the drinking group who heard the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of [Aysons] alleged shouting has been presented if only to substantiate [Landtex and William Gos] selfserving claims. Procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employers Peaflor vs. Outdoor Clothing Manufacturing Corp. G.R. No. 177114, April 13, 2010 Facts: Peaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13, 2000, more than six months from the time he was hired, Peaflor learned that Outdoor Clothings President, Nathaniel Syfu (Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and Accounting Manager. After enduring what he claimed as discriminatory treatment at work, Peaflor considered the appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective at the close of office hours on March 15, 2000. He thereafter filed an illegal dismissal complaint with the labor arbiter claiming that he had been constructively dismissed. The labor arbiter agreed with Peaflor and issued a decision in his favour.

On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiters ruling. When Peaflor questioned the NLRCs decision before the CA, the appellate court affirmed the NLRCs decision. Hence, Peaflor filed a petition for review on certiorari with the Court. Issue: Was Peaflor constructively dismissed? Ruling: Yes. While the letter states that Peaflors resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, Peaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employees position would feel compelled to give up his employment under the prevailing circumstances. With the appointment of Buenaobra to the position he then still occupied, Peaflor felt that he was being eased out and this perception made him decide to leave the company. The fact of filing a resignation letter alone does not shift the burden of proving that the employees dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. B. 1. a. Azcor Manufacturing vs. NLRC (303 SCRA 26) July 27, 2010 Facts: Capulso filed with the Labor Arbiter a complaint for constructive illegal dismissal. He alleged that he worked for Azcor as ceramics worker for more than 2 years. Then, due to asthma, he filed a leave of absence. Upon returning to work, he was not permitted to do so.

He later on amended his complaint and impleaded Filipinas Paso as additional respondent. On the other hand, Azcor contends that Capulso validly resigned from the company, as evidenced by a letter of resignation, for which Capulso then sought employment from Filipinas Paso, from which he also resigned. The Labor Arbiter dismissed the case. On appeal to the NLRC, it adjudged in favor of Capulso holding Filipinas Paso and Azcor solidarily liable. Hence, this petition with the SC. Issue: Whether or not Filipinas Paso may be held jointly and severally liable with Azcor for back wages of Capulso. Held: Yes. The doctrine that a corporation is a legal entity or a person in law distinct from the persons composing it is merely a legal fiction for purposes of convenience and to subserve the ends of justice. This fiction cannot be extended to a point beyond its reason and policy. Where, as in this case, the corporate fiction was used as a means to perpetrate a social injustice or as a vehicle to evade obligations or confuse the legitimate issues, it would be discarded and the 2 corporations would be merged as one, the first being merely considered as the instrumentality, agency, conduit, or adjunct of the other. In the case at bar, there was much confusion as to the identity of Capulsos employer, but, for sure, it was Filipinas Paso and Azcors own making. First, Capulso had no knowledge that he was already working under Filipinas Paso since he continued to retain his Azcor ID. Second, his pay slips contained the name of Azcor giving the impression that Azcor was paying his salary. Third, he was paid the same salary and he performed the same kind of job, in the same work area, in the same location, using the same tools and under the same supervisor. b. Talam vs. NLRC G. R. 1755040, April 6, 2010

Facts: The respondent, The Software Factory, Inc. (TSFI), is a domestic corporation engaged in providing information technology and computer consultancy to the public. In April 2001, it employed Talam as a full-time programmer. In the latter part of 2001 and in 2002, TSFI suffered financial reverses. Its external financial auditor advised that it cut on its payroll expenses which accounted for 41% of its total operating costs. TSFI heeded the advice and decided to retrench some of its employees, using as basis its employees' service income and contribution margins to the company. TSFI found that Talam was one of two employees with the least or with no income contribution for the year 2002. Consequently, respondents verbally informed Talam that his services with the company would be terminated thirty (30)

days after September 27, 2002. On November 29, 2002, Talam questioned the legality of his separation from the service through a complaint for illegal dismissal and illegal deduction, with claims for service incentive leave pay, damages and attorney's fees against TSFI. Talam alleged before the Labor Arbiter that his dismissal from employment was illegal because the company did not comply with the requisites under Article 283 of the Labor Code for a valid retrenchment action. On October 28, 2003, Executive Labor Arbiter rendered a decision declaring Talam's dismissal illegal. The Arbiter held that while it is TSFI's right to reduce its workforce to prevent losses, it failed to present evidence that the company adopted a retrenchment program and there was also no evidence showing clearly that Talam should be retrenched. TSFI appealed to the NLRC. In a Decision, the NLRC set aside the labor arbiter's ruling and dismissed Talam's complaint without prejudice, for improper venue. TSFI moved for reconsideration of the NLRC resolution which was partially granted. This time, the NLRC deleted the award of backwages and 13th month pay, but ordered the company to pay Talam P30,000.00 as nominal damages for violating his right to procedural due process, citing Jaka Food Processing Corp. v. Darwin Pacot, et al., where the Court held that although the complainant's dismissal was based on an authorized cause, nominal damages were awarded because of the respondent's failure to comply with the notice requirement. The NLRC ruled that the non-observance of the notice requirement will not invalidate Talam's separation on the ground of retrenchment; thus, the award of full backwages was not proper. Talam moved for reconsideration, but the NLRC denied the motion. Talam thereafter sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court, charging the NLRC with grave abuse of discretion for its resolutions of September 27, 2005 and January 31, 2006. In particular, Talam questioned the deletion of the award to him of backwages and 13th month pay. The CA denied the petition for lack of merit. It found Talam's separation from the service by reason of retrenchment to be valid. However, while it acknowledged that TSFI was suffering from financial losses as confirmed by the report of independent external auditor, it ruled that the company failed to give Talam the notice required by law. The CA opined that although the law mandated that the written notice of termination of employment for authorized causes should be served at least one month before the effective date of the termination, the employment contract should prevail because it does not violate the minimum requirement under Article 283 of the Labor Code. Even if Article 283 were to be followed, the CA added, TSFI still failed to comply with the notice requirement considering that the notices to Talam and to DOLE were for less than thirty (30) days. Although Talam's dismissal was due to a cause authorized by law, the CA deemed TSFI liable for nominal damages for violation of Talam's right to procedural due process. The appellate court affirmed with modification the assailed NLRC decision. It increased to P50,000.00 the nominal damages of P30,000.00 awarded by the NLRC. Talam moved for reconsideration of the decision, but the CA denied the motion. Hence, the present recourse

to the Court. Issue: Is the dismissal valid?

Ruling: Yes. Talam was not an unlettered employee; he was an information technology consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into executing the instrument; he received a valuable consideration for his less than two years of service with the company. Thus, from all indications, the release and quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the CA. While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims should be respected by the courts as the law between the parties. In the Courts view, Talams release and quitclaim fall into the category of legitimate waivers as defined by the Court. With Talams voluntary execution of the release and quitclaim, the Court found the filing of the illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to afford Talam procedural due process. The release and quitclaim, in the Courts mind, erased whatever infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after all, is merely a protective measure put in place by law and serves no useful purpose after protection has been assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process and should pay nominal damages. The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed on the ground of retrenchment. First. The decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of employees. The decision was upon the recommendation of the companys external auditor Leah A. Villanueva, as contained in her letter to the TSFI Board of Directors in October 2002. As the CA noted, the standard proof of a companys financial standing is its financial statements duly audited by credible external auditors. We see nothing in the records which impugns Villanueva's assessment of the financial condition of TSFI at the time material to the case. Second. The cost-cutting measure recommended involved reduction of TSFIs payroll

expense account which, as the auditor found, makes up 41% of the companys total operating expenses. 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. In the present case, we note that the auditor suggested that TSFI review the contribution margin per consultant and compensation packages of personnel in the executive and support group. Again, absent any showing of bad faith, we cannot fault the company for choosing the option of looking at the margins of contribution of the consultants to the income of the company as primary retrenchment standard. It is just unfortunate that based on this yardstick, Talam came out as one of two consultants with very high negative contribution margins and was therefore chosen for retrenchment. Third. Talam was dismissed due to a cause authorized by law retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financial condition, as found by the external auditor, showed that it was not just expecting losses, it already suffered a net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002. Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff; it reduced the salaries of its employees by as much as 30%. This submission by the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFIs operating expenses across the board. The schedule indicates a substantial decrease in the operating expenses. On the whole, we find that TSFI satisfied the requisites for a valid retrenchment. 2. a. i. Bibiana Farms and Mills v. Arturo Lado G.R. No. 157861, February 2, 2010

Respondent was a warehouseman for the Petitioner, acting as empty sacks controller among other functions. On one occasion, a customer transacted with the Petitioners cashier for the purchase of 3,000 pieces of empty sacks. The cashier gave a note to the customer and instructed the latter to show said note to the warehouseman. The note contained instructions as to how many sacks were to be loaded. After showing the note to the Respondent (the warehouseman), the latter loaded the said sacks for the customer, but despite the cashiers instruction, the Respondent loaded a total of 3,400 sacks instead of just 3,000; and if not for the cashiers timely inspection, the 400 sack excess would have been brought by the customer without payment. The next day, the Petitioners General Operations Manager issued two (2) memoranda directing Respondent to submit his written explanation on the release of sacks contrary to the cashiers instructions. After submitting his explanation, another memorandum was issued Manager informing him that he is being placed under preventive suspension pending investigation. Another notice was sent to his house informing him of the date of the investigation but Respondents house maid refused to accept it. On September 11, 1998, an investigation was conducted, but before a decision can be made on the investigation, Respondent filed, a complaint for illegal preventive suspension against the Petitioner. A few days after, Respondent received a Notice of Termination dismissing him from the service the grounds being "serious misconduct, dishonesty, willful breach of trust, fraud, loss of confidence and other grounds". Aggrieved, Respondent filed another case for illegal termination. Both cases were consolidated. Issue: Was the termination valid?

Ruling: Yes. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold: substantive and procedural. Not only must the dismissal be for a just or authorized cause, the basic requirements of procedural due process notice and hearing must likewise be observed. Without the concurrence of the two, the termination is illegal. On the just cause issue, Respondent was no ordinary rank-and-file employee. As warehouseman, his duties involved the handling of incoming and outgoing materials. He had, as the Arbiter noted, access to company property; tasked to closely monitor and handle company property, especially the outflow of sacks to avoid or minimize losses. In other words, Respondent held a position of trust and confidence. When he disregarded the cashiers note, Respondent violated company procedures, laying the company open to the possibility of loss. This is a serious misconduct for which he should be held accountable. On the issue of procedural due process, the essence of due process is the opportunity to be

Facts:

heard; it is the denial of this opportunity that constitutes violation of due process of law. The respondent was given the opportunity to be heard when a proper notice of investigation was sent to him, although the notice did not reach him for reasons outside the petitioners control. He was not also totally unheard on the matter as he was able to explain his side through the two (2) explanation letters he submitted. ii. Caltex vs. Agad G.R. 162017, APRIL 23, 2010

Ruling: 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 a Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did not observe Caltexs rules and regulations when he transferred the said cylinders to Millanes compound without the RMRD form as required under Caltexs Field Accounting Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltexs consent. Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company property. This act is akin to serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code. Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such grave and aggravated character. b. Talam vs. NLRC

Facts: Petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G. Agad (Agad) as Depot Superintendent-A on a probationary basis for six months. On 28 February 1984, Agad became a regular employee. After Agad had served for two years since 1990 as Superintendent of the Tacloban Bulk Depot (Depot) in Leyte, Caltex transferred Agad to Bauan Bulk Depot in Batangas effective 16 May 1992. To transfer his belongings from Leyte to Batangas, Agad secured the carpentry services of Alfredo Delda (Delda), the owner of A.A. Delda Engineering Services (Delda Services) for the construction of two crates. Agad paid Delda P15,500, evidenced by Official Receipt and submitted the receipt and Caltex reimbursed him the said amount. Caltex conducted its regular audit of employees account and expenses. The company auditor of Caltex verified the crating expense incurred by Agad with Delda. Delda alleged that he was forced by Agad to issue the official receipt in order to get a favorable recommendation from the incoming superintendent of the Depot. In another audit report, the company auditor declared that 190 pieces of 11 kg. liquefied petroleum gas (LPG) cylinders from the Depot were allegedly withdrawn when Agad was still depot superintendent In a Confidential Memorandum, Agad was informed of his dismissal on the grounds of serious misconduct and loss of trust and confidence. The LA held that there were no just causes for Agads termination of employment. The NLRC reversed the decision of the LA and held that there existed just causes which justified Agads dismissal. Agad filed a Motion for Reconsideration which was denied. He then filed a petition for certiorari under Rule 65 with the CA for the nullification of the decision of the NLRC. The CA modified the judgment of the NLRC and ruled in favor of Agad. Caltex filed a Motion for Reconsideration which was denied. Hence, the instant petition. Issue: Did Caltex legally terminate Agads employment on just causes?

G. R. 1755040, April 6, 2010

Facts: The respondent, The Software Factory, Inc. (TSFI), is a domestic corporation engaged in providing information technology and computer consultancy to the public. In April 2001, it employed Talam as a full-time programmer. In the latter part of 2001 and in 2002, TSFI suffered financial reverses. Its external financial auditor advised that it cut on its payroll expenses which accounted for 41% of its total operating costs. TSFI heeded the advice and decided to retrench some of its employees, using as basis its employees' service income and contribution margins to the company. TSFI found that Talam was one of two employees

with the least or with no income contribution for the year 2002. Consequently, respondents verbally informed Talam that his services with the company would be terminated thirty (30) days after September 27, 2002. On November 29, 2002, Talam questioned the legality of his separation from the service through a complaint for illegal dismissal and illegal deduction, with claims for service incentive leave pay, damages and attorney's fees against TSFI. Talam alleged before the Labor Arbiter that his dismissal from employment was illegal because the company did not comply with the requisites under Article 283 of the Labor Code for a valid retrenchment action. On October 28, 2003, Executive Labor Arbiter rendered a decision declaring Talam's dismissal illegal. The Arbiter held that while it is TSFI's right to reduce its workforce to prevent losses, it failed to present evidence that the company adopted a retrenchment program and there was also no evidence showing clearly that Talam should be retrenched. TSFI appealed to the NLRC. In a Decision, the NLRC set aside the labor arbiter's ruling and dismissed Talam's complaint without prejudice, for improper venue. TSFI moved for reconsideration of the NLRC resolution which was partially granted. This time, the NLRC deleted the award of backwages and 13th month pay, but ordered the company to pay Talam P30,000.00 as nominal damages for violating his right to procedural due process, citing Jaka Food Processing Corp. v. Darwin Pacot, et al., where the Court held that although the complainant's dismissal was based on an authorized cause, nominal damages were awarded because of the respondent's failure to comply with the notice requirement. The NLRC ruled that the non-observance of the notice requirement will not invalidate Talam's separation on the ground of retrenchment; thus, the award of full backwages was not proper. Talam moved for reconsideration, but the NLRC denied the motion. Talam thereafter sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court, charging the NLRC with grave abuse of discretion for its resolutions of September 27, 2005 and January 31, 2006. In particular, Talam questioned the deletion of the award to him of backwages and 13th month pay. The CA denied the petition for lack of merit. It found Talam's separation from the service by reason of retrenchment to be valid. However, while it acknowledged that TSFI was suffering from financial losses as confirmed by the report of independent external auditor, it ruled that the company failed to give Talam the notice required by law. The CA opined that although the law mandated that the written notice of termination of employment for authorized causes should be served at least one month before the effective date of the termination, the employment contract should prevail because it does not violate the minimum requirement under Article 283 of the Labor Code. Even if Article 283 were to be followed, the CA added, TSFI still failed to comply with the notice requirement considering that the notices to Talam and to DOLE were for less than thirty (30) days. Although Talam's dismissal was due to a cause authorized by law, the CA deemed TSFI liable for nominal damages for violation of Talam's right to procedural due process. The appellate court affirmed with modification the assailed NLRC decision. It increased to

P50,000.00 the nominal damages of P30,000.00 awarded by the NLRC. Talam moved for reconsideration of the decision, but the CA denied the motion. Hence, the present recourse to the Court. Issue: Is the dismissal valid?

Ruling: Yes. Talam was not an unlettered employee; he was an information technology consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into executing the instrument; he received a valuable consideration for his less than two years of service with the company. Thus, from all indications, the release and quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the CA. While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims should be respected by the courts as the law between the parties. In the Courts view, Talams release and quitclaim fall into the category of legitimate waivers as defined by the Court. With Talams voluntary execution of the release and quitclaim, the Court found the filing of the illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to afford Talam procedural due process. The release and quitclaim, in the Courts mind, erased whatever infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after all, is merely a protective measure put in place by law and serves no useful purpose after protection has been assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process and should pay nominal damages. The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed on the ground of retrenchment. First. The decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of employees. The decision was upon the recommendation of the companys external auditor Leah A. Villanueva, as contained in her letter to the TSFI Board of Directors in October 2002. As the CA noted, the standard proof of a companys financial standing is its financial statements duly audited by credible external auditors. We see nothing in the records which impugns Villanueva's assessment of the financial condition of TSFI at the time material to the case.

Second. The cost-cutting measure recommended involved reduction of TSFIs payroll expense account which, as the auditor found, makes up 41% of the companys total operating expenses. 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. In the present case, we note that the auditor suggested that TSFI review the contribution margin per consultant and compensation packages of personnel in the executive and support group. Again, absent any showing of bad faith, we cannot fault the company for choosing the option of looking at the margins of contribution of the consultants to the income of the company as primary retrenchment standard. It is just unfortunate that based on this yardstick, Talam came out as one of two consultants with very high negative contribution margins and was therefore chosen for retrenchment. Third. Talam was dismissed due to a cause authorized by law retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financial condition, as found by the external auditor, showed that it was not just expecting losses, it already suffered a net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002. Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff; it reduced the salaries of its employees by as much as 30%. This submission by the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFIs operating expenses across the board. The schedule indicates a substantial decrease in the operating expenses. On the whole, we find that TSFI satisfied the requisites for a valid retrenchment. C. AGABON VS. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 158693. November 17, 2004 Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioner Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal. The Labor Arbiter rendered a decision declaring the dismissal illegal. On appeal, the NLRC reversed the decision because it found that the

petitioners had abandoned their work and were not entitled to backwages and separation pay. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment. Issue: Whether or not petitioners were illegally dismissed. Held: The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process. When the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights. D. 1. Golden Ace Builders and Arnold Azul vs. Jose A. Talde G.R. No. 187200; 5 May 2010 Facts: In 1990, Golden Ace Builders hired Jose A. Talde (Talde) as a carpenter. In February 1999, the owner-manager, Arnold Azul, stopped giving Talde work assignment due allegedly to the unavailability of construction projects. Consequently, Talde filed a complaint for illegal dismissal. The Labor Arbiter ruled in Taldes favor and ordered his immediate reinstatement without loss of seniority rights, with payment of full backwages as well as premium pay for rest days, service incentive leave pay and 13th month pay. The company brought the case to the National Labor Relations Commission (NLRC) for review. Pending such appeal, the company advised Talde to report for work within 10 days from notice. Talde, however, manifested to the Labor Arbiter that due to actual animosity between him and the company and threats to his life and his familys safety, he opted for payment of separation pay. The company denied there was such an animosity. The NLRC later dismissed the companys appeal. The companys appeal to the Court of Appeals was likewise dismissed. The Court of Appeals decision attained finality. The monetary award, as recomputed by the NLRCs Fiscal Examiner, was approved by the Labor Arbiter who thereupon issued the writ of execution. The company questioned the recomputation before the NLRC, arguing that since Talde refused to report back to work as the company advised, he should be deemed to have abandoned the same, thus, the recomputation should not be beyond 15 May 2001, the day he manifested his refusal to be reinstated. The NLRC vacated the re-computation, holding that since Talde did not appeal the Labor Arbiters decision granting him only reinstatement and backwages, not separation pay in lieu of reinstatement, he may not be afforded affirmative relief, and since he refused to go back

to work, he may recover backwages only up to 20 May 2001, the day he was supposed to return to the job site. When Taldes motion for reconsideration was denied by the NLRC, he filed a petition for certiorari with the Court of Appeals. The Court of Appeals set aside the NLRC findings and held that Talde was entitled to both backwages and separation pay, even if separation pay was not granted by the Labor Arbiter, in view of the strained relations between the parties. Consequently, the company filed a petition for review on certiorari before the Supreme Court. Issue: (1) Whether or not Talde was entitled to separation pay in lieu of actual reinstatement on account of strained relations between him and the company; and (2) Up to what date should Taldes backwages be computed? Held: An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs are separate and distinct. When reinstatement is no longer feasible because of strained relations between the employee and the employer, 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. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is nolonger viable, and backwages. (Citing Macasero vs. Southern Industrial Gases Philippines, G.R. No. 178524; 30 January 2009) Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Strained relations must be demonstrated as a fact and must be supported by substantial evidence showing that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy. In this case, the Labor Arbiter found that actual animosity existed between the owner-manager Azul and Talde as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate court as in the case at bar, is binding upon the Supreme Court, consistent with the prevailing rules that the Supreme Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. Thus, Talde was entitled to backwages and separation pay as his reinstatement had been rendered impossible due to strained relations. His backwages must be computed from the time he was unjustly dismissed until his actual reinstatement, or from February 1999 until 30 June 2005 when his reinstatement was rendered impossible without fault on his part. The Court of Appeals erroneously computed his separation pay from 1990 (when he was hired) to 1999 (when he was unjustly dismissed), covering a period of 8 years. He must be considered to have been in the service of the company not only until 1999, but until 30 June 2005, the day he is deemed to have been actually separated (his reinstatement having been rendered impossible) from the company, or for a total of 15 years. Ponente: J. Conchita Carpio Morales Vote: 5-0 2. Daniel P. Javellana, Jr. vs. Albino Belen / Albino Belen vs. Daniel P. Javellana, Jr. and

Javellana farms G.R. No. 181913, G.R. No. 182158, March 5, 2010

Facts: Petitioner Albino Belen filed a complaint against respondents Javellana Farms, Inc. and Daniel Javellana, Jr. for illegal dismissal and underpayment or non-payment of salaries, overtime pay, holiday pay, service incentive leave pay (SILP), 13th month pay, premium pay for holiday, and rest day as well as for moral and exemplary damages and attorney's fees. Petitioner alleged that respondent Javellana hired him as company driver on January 31, 1994and assigned him the tasks of picking up and delivering live hogs, feeds, and lime stones used for cleaning the pigpens. On August 20, 1999, respondent Javellana suddenly fired petitioner, which prompted petitioner to file a complaint. Respondent Javellana on the other hand claimed that he hired petitioner not as a company driver but as a family driver.

The Labor Arbiter found petitioner Belen to be a company driver as evidenced by the pay slips that the farm issued to him and awarded him backwages, separation pay, 13th month pay, SILP, holiday pay, salary differential, and attorney's fees. On appeal, the National Labor Relations Commission (NLRC) declared Belen as a family driver. The NLRC also found Belen to have been illegally dismissed. But since he was but a family driver, the NLRC deleted the award of backwages and separation pay and instead ordered Javellana to pay him 15 days salary by way of indemnity pursuant to Article 149 of the Labor Code. Aggrieved, petitioner elevated the matter to the CA, the CA held Belen as a company driver since, aside from driving respondent Javellana and his family, he also did jobs that were needed in Javellana's business operations, such as hauling and delivering live hogs, feeds, and lime stones for the pig pens.The CA also said that Javellana's abrupt dismissal of Belen for an isolated case of neglect of duty was unjustified.

Issue: Should the monetary award in his favor run until the finality of the decision in his case?

Ruling: Yes. As provided in Art. 279 of the Labor Code, the law intends the award of backwages

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

The parties filed separate petitions before this Court. The petition in G.R. 181913, filed by respondent Javellana, questioned the CA's finding of illegality of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money claims awarded to him. The Court denied the first with finality in its resolution of September 22, 2008; the second is the subject of the present case. Consequently, Belen should be entitled to backwages from August 20, 1999, when he was dismissed, to September 22, 2008, when the judgment for unjust dismissal in G.R. 181913 became final.In his separation pay, technically the computation of separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September 22, 2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008, it is but fair that respondent Javellana be required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid.