1.

Star Paper Corporation et al. v. Simbol, April 12, 2006

Star Paper Corporation vs. Simbol

Facts:
Petitioner is a company engaged in trading paper products. Respondents
were regular employees of the company. Based on the evidence presented
by the petitioner, respondent met Alma Dayrit, whom he later married. Prior
to the marriage, Josephine Ongsitco informed them of the company policy
which required that one of them should resign from work if they decided to
get married. Respondent resigned pursuant to the policy. However, the
version of the respondents stated that they did not resign voluntarily; they
were compelled to resign in view of an illegal company policy. They later filed
a complaint for unfair labor practice and constructive dismissal and alleged
that the company policy is illegal and violative of the Labor Code. The
complaint was dismissed by the Labor Arbiter for lack of merit, ruling that the
company policy is an exercise of management prerogative. The NLRC
affirmed the decision of the Labor Arbiter. The Court of Appeals reversed the
decision of the NLRC and declared the said company policy as illegal and
ordered the reinstatement of the respondents.
Issue:
Whether or not the company policy is a valid cause for the dismissal of its
employees?
Held:
No. There must be a compelling business necessity for which no alternative
exists other than the discriminatory practice. To justify a bona fide
occupational qualification, the employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of
the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to
properly perform the duties of the job.
Petitioners sole contention that the company did not just want to have two
or more of its employees related between the third degree by affinity or
consanguinity is lame. That the second paragraph was meant to give teeth
to the first paragraph of the questioned rule is evidently not the valid
reasonable business necessity required by law.

Petitioners failed to show how the marriage of the respondents could be

detrimental to its business operations. The policy is premised on the mere
fear that employees married to each other will be less efficient. The absence
of a statute expressly prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. That protection given to labor in our
jurisdiction is vast and extensive that we cannot prudently draw inferences
from the legislatures silence. For failure to present undisputed proof of
reasonable business necessity, we rule that the questioned policy is an
invalid exercise of management prerogative.
2.

Ace Promotion and Marketing Corp. v. Ursabia, September 22, 2006

Ace Promotion and Marketing Corporation v. Ursabia

Facts:
Sometime in August 1994, petitioner Ace Promotion and Marketing
Corporation hired respondent Reynaldo Ursabia as a company driver. On
July 6, 2001, respondent failed to report for work. Gerry Garcia, area
manager, issued a Memorandum dated July 9, 2001 asking the respondent
to explain why there should be no disciplinary measure will be taken upon
his alleged abandonment of work on July 6, 2001.The said memorandum
was personally served to respondent but refused to acknowledge the same,
hence, petitioner sent it through registered mail to respondents last known
address. The next day, Garcia noticed some damage on the vehicle
assigned to respondent, hence, he issued another memorandum asking
again the respondent to explain and why he should not be terminated for his
actions. Service of the said memorandum was done through registered mail
to respondents last known address. Sometime in July 2001, an anonymous
note with threat was discovered among the stocks of petitioner. The said
note was examined by the PNP Crime Laboratory and allegedly showed that
the handwriting of respondent has significant similarities with the said hand
written note. On July 6, 2001, respondent went to petitioners office was
served with a termination letter but this again was refused to receive the
same prompting petitioner serve it by registered mail to respondents last
known address. Displeased with his termination, respondent filed a
complaint for illegal dismissal and non-payment of other monetary benefits
Labor arbiter held that respondent was dismissed by petitioner for
the following misdemeanors: (1) abandonment, (2) destruction of company
property, and (3) leaving a note which petitioner interpreted to be a threat. It

ruled that the dismissal was illegal because no hearing was conducted to
allow the respondent to confront petitioners witnesses. The NLRC, on the
other hand ruled that the dismissal was valid because respondent is guilty of
abandonment but this was reversed by the Court of Appeals. The latter held
that the termination of respondent is not valid because his failure to report
for work for a single day did not constitute abandonment and that the
criminal case for grave threats and malicious mischief filed against
respondent was dismissed.
Issue:
Whether or not there exists a just cause to dismiss respondent?
Held:

functions, and increasing the capital stock; and that such amendments could
not mean that Zeta had been thereby dissolved. Petitioner countered that
San Miguels termination from Zeta had been for a cause authorized by
the Labor Code; that its non-acceptance of him had not been by any means
irregular or discriminatory; that its predecessor-in-interest had complied with
the requirements for termination due to the cessation of business operations
and that it had no obligation to employ San Miguel in the exercise of its valid
management prerogative.
NLRC and CA rendered its decision holding San Miguel to have been
illegally dismissed ordering Zuellig to pay San Miguel his back wages and
Attorneys fees equivalent to ten percent (10%) of the total award.
Issue: Whether or not the awarding of attorneys fees had basis in fact and
in law.

The court ruled that the respondent should be dismissed for willful
disobedience of the memoranda issued by the petitioner. To be validly
dismissed on the ground of willful disobedience requires the occurrence of at
least two requisites: (1) the employees assailed conduct must have been
willful or intentional, the willfulness being characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he
had been engaged to discharge. In the instant case, the failure of
respondent to answer the July 9 and 10, 2001 memoranda of petitioner is
clearly intentional. He reported to and loitered outside petitioners premises
but never made any oral or written reply to the said memoranda. This shows
respondents wrongful and perverse attitude to defy the reasonable orders
which undoubtedly pertain to his duties as an employee of petitioner.

Ruling: Yes, the court upheld the CA, NLRC and Labor Arbiter unanimous
decision, where the amendments of the articles of incorporation of Zeta to
change the corporate name to Zuellig Freight and Cargo Systems, Inc. did
not produce the dissolution of the former as a corporation, therefore not
giving them the license to terminate employees without just or authorized
cause and considering that that San Miguel had been compelled to litigate
and to incur expenses to protect his rights and interest entitles him to
recover attorneys fees.

Zuellig Freight and Cargo Systems, vs. National Labor Relations

Commission and Ronaldo V. San Miguel
G.R. No. 157900; July 22, 2013

JENNY F. PECKSON, Petitioner,

vs.
ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA
SARTE, and RUBY ALEX, Respondents.

Facts: This is a petition appealing the decision of CA, whereby it dismissed

its petition for certiorari and upheld the adverse decision of the NLRC finding
San Miguel to have been illegally dismissed. San Miguel, employed as
checker/custom representative, brought a complaint for unfair labor practice,
illegal dismissal, non-payment of salaries and moral damages against
petitioner, formerly known as Zeta Brokerage Corporation (Zeta). He
contended that amendments of the articles of incorporation of Zeta were for
the purpose of changing the corporate name, broadening the primary

In Producers Bank of the Philippines v. Court of Appeals, the Court ruled that
attorneys fees could be awarded to a party whom an unjustified act of the
other party compelled to litigate or to incur expenses to protect his interest.

Facts
Petitioner first joined the Robinsons Supermarket Corporation (RSC) as a
Sales Clerk, and was later promoted to Category Buyer. Later, she was
reassigned to the position of Provincial Coordinator. Claiming that her new
assignment was a demotion because it was non-supervisory and clerical in

nature, the petitioner refused to turn over her responsibilities to the new
Category Buyer, or to accept her new responsibilities as Provincial
Coordinator.
She was sent a Memorandum to explain such behavior, but she refused to
comply. A second memo was sent, to which she responded that she could
not accept the position of Provincial Coordinator since she saw it as a
demotion. Other subsequent instructions were disobeyed.
Meanwhile, she had already filed a case for illegal dismissal, alleging that
the position of Category Buyer was one level above that of the Provincial
Coordinator, and that moreover, the job description of a Provincial
Coordinator was largely clerical.
Respondents maintain that her transfer was not a demotion since the
Provincial Coordinator occupied a "Level 5" position like the Category Buyer,
with the same work conditions, salary and benefits. However, the position of
Category Buyer demanded the traits of punctuality, diligence and
attentiveness because it is a frontline position in the day-to-day business
operations of RSC which the petitioner, unfortunately, did not possess. The
respondents also raised the petitioners record of habitual tardiness as far
back as 1999, as well as poor performance rating in 2005.
The Labor Arbiter dismissed the petition and was sustained by the NLRC,
reiterating that management may transfer an employee from one office to
another within the business establishment, provided there is no demotion in
rank or diminution of salary, benefits, and other privileges, and the action is
not motivated by discrimination or bad faith or effected as a form of
punishment without sufficient cause.

No. Concerning the transfer of employees, these are the following

jurisprudential guidelines: (a) a transfer is a movement from one position to
another of equivalent rank, level or salary without break in the service or a
lateral movement from one position to another of equivalent rank or salary;
(b) the employer has the inherent right to transfer or reassign an employee
for legitimate business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form of
punishment or is a demotion without sufficient cause; (d) the employer must
be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee.
It is the employers prerogative, based on its assessment and perception of
its employees qualifications, aptitudes, and competence, to move them
around in the various areas of its business operations in order to ascertain
where they will function with maximum benefit to the company.
We agree with the appellate court that the respondents are justified in
moving the petitioner to another equivalent position, which presumably
would be less affected by her habitual tardiness or inconsistent attendance
than if she continued as a Category Buyer, a "frontline position" in the dayto-day business operations of a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or
prejudicial to him, and it does not involve a demotion in rank or a diminution
of his salaries, benefits and other privileges, the employee may not complain
that it amounts to a constructive dismissal.

The CA did not deviate from lower courts findings.

Issue
Whether or not transfer was a demotion
Ruling

22. Century Canning Corp. v. Ramil, August 8, 2010 (Loss of trust and
Confidence) (PASAJOL)
Century Canning Corp. v. Ramil, August 8, 2010 (Loss of trust and
Confidence)

FACTS:
Petitioner Century Canning Corporation, a company engaged in canned food
manufacturing,employed respondent Vicente Randy Ramil in August 1993
as technical specialist. Prior to his dismissal, his job included the preparation
of the purchase requisition (PR) forms and capital expenditure (CAPEX)
forms, as well as the coordination with the purchasing department regarding
technical inquiries on needed products and services of petitioner's different
departments. On March 3, 1999, respondent prepared a CAPEX form for
external fax modems and terminal server, per order of Technical Operations
Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary
of Executive Vice-President Ricardo T. Po, for the latter's signature. The
CAPEX form, however, did not have the complete details and some required
signatures. The following day, with the form apparently signed by Po,
respondent transmitted it to Purchasing Officer Lorena Paz in Taguig Main
Office. Paz processed the paper and found that some details in the CAPEX
form were left blank. She also doubted the genuineness of the signature of
Po, as appearing in the form. Paz then transmitted the CAPEX form to
Purchasing Manager Virgie Garcia and informed her of the questionable
signature of Po. Consequently, the request for the equipment was put on
hold due to Po's forged signature. However, due to the urgency of
purchasing badly needed equipment, respondent was ordered to make
another CAPEX form, which was immediately transmitted to the Purchasing
Department. Suspecting him to have committed forgery, respondent was
asked to explain in writing the events surrounding the incident. He
vehemently denied the alleged forgery. Respondent was, thereafter,
suspended on April 21, 1999. Subsequently, he received a Notice of
Termination on May 20, 1999,for loss of trust and confidence. Respondent
filed a Complaint for illegal dismissal, non-payment of overtime pay,
separation pay,moral and exemplary damages and attorney's fees against
petitioner and its officers before the Labor Arbiter.
LAs Decision: LA Potenciano S. Canizares rendered a Decision dismissing
the complaint for lack of merit.

NLRCs Decision: The NLRC First Division set aside the ruling of LA
Canizares. The NLRC declared respondent's dismissal to be illegal and
directed petitioner to reinstate respondent with full backwages and seniority
rights and privileges. It found that petitioner failed to show clear and
convincing evidence that respondent was responsible for the forgery of the
signature of Po in the CAPEX form. NLRC reversed itself and upheld LA
Canizares' dismissal of his complaint.
CAs Decision: The CA affirmed the decision of NLRC
ISSUE:
W.O.N. MERE EXISTENCE OF A BASIS FOR BELIEVING THAT SUCH
EMPLOYEE HASBREACHED THE TRUST AND CONFIDENCE OF HIS
EMPLOYER SUFFICES FOR HISDISMISSAL.
RULING:
The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary
burden would necessarily mean that the dismissal was not justified and,
therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions
of employers do not provide for legal justification for dismissing employees.
In case of doubt, such cases should be resolved in favor of labor, pursuant
to the social justice policy of labor laws and the Constitution.

24. School of Holy Spirit of Quezon City v. Taguiam, July 14, 2008
(gross and habitual neglect) (RAMOS)
School of Holy Spirit Quezon City vs. Taguiam
[G.R. No. 165565. July 14, 2008]
Doctrine: Gross negligence implies a want or absence of or a failure to
exercise slight care or diligence, or the entire absence of care. Habitual

neglect implies repeated failure to perform ones duties for a period of time,
depending upon the circumstances.
Facts: Respondent Taguiam was the class adviser of a Grade 5 class of
petitioner school. After obtaining permission from the principal, they were
allowed to use the school swimming pool for their year-end activity. With this,
respondent Taguiam distributed the parents/guardians permit forms to the
students.
The permit form of student Chiara Mae was unsigned. But because the
mother personally brought her to the school with her packed lunch and
swimsuit, Taguiam concluded that the mother allowed her to join. Before the
activity started, respondent warned the pupils who did not know how to swim
to avoid the deeper area. However, while the pupils were swimming, two of
them sneaked out. Respondent went after them to verify where they were
going. Unfortunately, while respondent was away, Chiara Mae drowned.
When respondent returned, the maintenance man was already administering
cardiopulmonary resuscitation on Chiara Mae. She was still alive when
respondent rushed her to the General Malvar Hospital where she was
pronounced dead on arrival.
The petitioner school conducted a clarificatory hearing to which respondent
attended and submitted her Affidavit of Explanation. A month later, petitioner
school dismissed respondent on the ground of gross negligence resulting to
loss of trust and confidence.
Issue: Whether or not respondents dismissal on the ground of gross
negligence resulting to loss of trust and confidence was valid
Held:

consequences without exerting any effort to avoid them. Habitual neglect

implies repeated failure to perform ones duties for a period of time,
depending upon the circumstances.
The SC concluded that respondent had been grossly negligent. First, it is
undisputed that Chiara Maes permit form was unsigned. Yet, respondent
allowed her to join the activity because she assumed that Chiara Maes
mother has allowed her to join it by personally bringing her to the school with
her packed lunch and swimsuit. Second, it was respondents responsibility
as Class Adviser to supervise her class in all activities sanctioned by the
school. Thus, she should have coordinated with the school to ensure that
proper safeguards, such as adequate first aid and sufficient adult personnel,
were present during their activity. She should have been mindful of the fact
that with the number of pupils involved, it would be impossible for her by
herself alone to keep an eye on each one of them.
Notably, respondents negligence, although gross,was not habitual. In view
of the considerable resultant damage, however, the SC agreed that the
cause is sufficient to dismiss respondent. Indeed, the sufficiency of the
evidence as well as the resultant damage to the employer should be
considered in the dismissal of the employee. In this case,the damage went
as far as claiming the life of a child.

26. John Hancock Life Insurance Co. v. Davis, September 3, 2008

(Analogous Causes) (ROLDAN)
JOHN HANCOCK LIFE INSURACE CORPORATION and/or MICHAEL
PLAXTON vs. JOANNA CANTRE DAVIS
GR No. 169549

Yes. Under Article 282 of the Labor Code, gross and habitual neglect of
duties is a valid ground for an employer to terminate an employee. Gross
negligence implies a want or absence of or a failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of

September 3, 2008

DOCTRINE: For an employee to be validly dismissed for a cause analogous

to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee

CA: granted the petition for certiorari filed by Davis because it found that the
LA and NLRC merely adopted the findings of the NBI regarding Davis
culpability

FACTS: Joanna Davis was an employee of John Hancock Life Insurance

Corp. (petitioner). Patricia Yuseco, petitioners corporate affairs manager
discovered that her wallet was missing and immediately reported the loss of
her credit cards was informed that Patricia Yuseco had just made
substantial purchases using her credit cards. Due to the loss of personal
property among its employees being rampant, petitioner sought the
assistance of NBI. In the course of investigation a security video was
obtained showing the person who used the credit cards and Yuseco and
other witnesses positively identified the person in the video as Davis. NBI
and Yuseco filed a complaint for qualified theft against Davis, but was
dismissed by the city prosecutor due to insufficiency of evidence. Petitioner
placed Davis under preventive suspension and instructed her to cooperate in
the investigation. However, Davis filed a complaint for illegal dismissal
alleging she was terminated without just cause.

ISSUE: Whether or not Davis was validly dismissed

LABOR ARBITER: Found Davis committed serious misconduct, since she

was the principal suspect for qualified theft committed inside petitioners
workplace. There was a valid cause for her dismissal. Complaint was
dismissed for lack of merit

NLRC: affirmed the decision of the LA and subsequently dismissed Davis

motion for reconsideration

HELD: Yes.

Art. 282 of the Labor Code provides:

Art. 282. Termination by Employer. An employer may
terminated an employment for any of the following causes:
a)

serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or
his representatives in connection with his work
xxx
e)

other causes analogous to the foregoing.

In this case, petitioner dismissed respondent based on the NBIs

finding that the latter stole and used Yusecos credit cards. But since the
theft was not committed against petitioner itself but against one of its
employees, respondents misconduct was not work- related and therefore,
she could not be dismissed for serious misconduct. Nonetheless, Article
282(e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an
employee to be validly dismissed for a cause analogous to those
enumerated in Article 282, the cause must involve a voluntary and/or willful
act or omission of the employee.

A cause analogous to serious misconduct is a voluntary and/or

willful act or omission attesting to an employees moral depravity. Theft
committed by an employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous to serious misconduct.
Liability of corporate officers
1.

Carag

v.

NLRC,

April

2,

2007

(YATCO)

Carag v NLRC, G.R. No. 147590, April 2, 2007

ISSUE: whether or not the Carag and David, in their capacities as corporate
officers, may be held jointly and severally liable with MAC for the money
claims of the employees
Held: The rule is that a director is not personally liable for the debts of the
corporation, which has a separate legal personality of its own. Section 31 of
the Corporation Code lays down the exceptions to the rule.Section 31 makes
a director personally liable for corporate debts if he wilfully and knowingly
votes for or assents to patently unlawful acts of the corporation. Section 31
also makes a director personally liable if he is guilty of gross negligence or
bad faith in directing the affairs of the corporation.

Facts: Complainants, on behalf of all of MAC's rank and file employees, filed
a complaint against MAC for illegal dismissal brought about by its illegal
closure of business. The complainants moved to implead both Carag and
David, Chairman of the Board and President respectively, invoking A.C.
Ransom Labor Union CCLU vs. NLRC where it was held that a corporate
officer can be held liable for acting on behalf of the corporation when the
latter is no longer in existence and there are valid claims of workers that
must be satisfied.

Complainants did not allege in their complaint that Carag wilfully and
knowingly voted for or assented to any patently unlawful act of MAC or that
Carag is guilty of negligence or bad faith in directing the affairs of MAC.
Neither did complainants present any evidence to that effect.

The Labor Arbiter ruled in favor of petitioners and declared petitioners jointly
and severally guilty for illegal closure.

For a wrongdoing to make a director personally liable for debts of the

corporation, the wrongdoing approved or assented to by the director must be
a patently unlawful act. Mere failure to comply with the notice requirement of
labor laws on company closure or dismissal of employees does not amount
to a patently unlawful act. Patently unlawful acts are those declared unlawful
by law which imposes penalties for commission of such unlawful acts. There
must be a law declaring the act unlawful and penalizing the act.

The issue on whether or not the LA properly held Carag and David, in their
capacities as corporate officers, jointly and severally liable with MAC for the
money claims of the employees was elevated to the CA. The appellate court
found that Carag and David, as the most ranking officers of MAC, had a
direct hand at the time in the illegal dismissal of MAC's employees. The
failure of Carag and David to observe the notice requirement in closing the
company shows malice and bad faith, which justifies their solidary liability
with MAC.
The motions for reconsideration were denied. Hence, this petition.

To hold a director personally liable for debts of the corporation, and thus
pierce the veil of corporate fiction, the bad faith or wrongdoing of the director
must be established clearly and convincingly. Bad faith is never presumed.

Therefore, both Carag and David cannot be held liable with MAC for the
money claims of the employees.

Effect of company merger on union shop clause

1. BPI v. BPI Employees Union Davao Chapter, August 10, 2010
(TAMAYAO)

Voluntary Arbitrator = the former FEBTC employees could not be

compelled to join the Union, as it was their constitutional right to join or not to
join any organization.

BPI v BPI EMPLOYEES UNION DAVAO

Union Shop: There is union shop when all new regular employees
are required to join the union within a certain period for their continued
employment. In a merger of corporations, absorbed employees are
covered by the Union Shop Clause found in the existing CBA between
the surviving Corporation and its Union.

On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of
Merger
between BPI and Far East Bank and Trust Company (FEBTC). Pursuant to
the Article and Plan of Merger, all the assets and liabilities of FEBTC were
transferred to and absorbed by BPI as the surviving corporation. FEBTC
employees, including those in its different branches across the country, were
hired by petitioner as its own employees, with their status and tenure
recognized and salaries and benefits maintained. The former FEBTC rankand-file employees in Davao City did not belong to any labor union at the
time of the merger. Respondent Union invited said FEBTC employees to a
meeting regarding the Union Shop Clause of the existing CBA between
petitioner BPI and respondent Union. Some of the former FEBTC employees
joined the Union, while others refused. Later, however, some of those who
initially joined retracted their membership. The president of the Union
requested BPI to implement the Union Shop Clause of the CBA and to
terminate their employment pursuant thereto.

CA = reversed and set aside the Decision of the Voluntary Arbitrator.

Absorbed employees should be considered as "new" employees for
purposes of applying the provisions of the CBA regarding the "union-shop"
clause.

ISSUE: Whether or not the former FEBTC employees that were absorbed by
petitioner upon the merger between FEBTC and BPI should be covered by
the Union Shop Clause found in the existing CBA between petitioner and
respondent Union.

RULING: YES. Article 248 (e) states that , ". . . Nothing in this Code or in
any other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for employment,
except those employees who are already members of another union at the
time of the signing of the collective bargaining agreement." In legal parlance,
human beings are never embraced in the term "assets and liabilities." BPI's
absorption of former FEBTC employees was neither by operation of law nor
by legal consequence of contract. In fact, the Corporation Code does not
also mandate the absorption of the employees of the non-surviving
corporation by the surviving corporation in the case of a merger. Even
if it is so, it does not follow that the absorbed employees should not be
subject to the terms and conditions of employment obtaining in the
surviving corporation. In any event, it is of no moment that the former
FEBTC employees retained the regular status that they possessed while
working for their former employer upon their absorption by petitioner. This
fact would not remove them from the scope of the phrase "new employees"
as contemplated in the Union Shop Clause of the CBA, contrary to

petitioner's insistence that the term "new employees" only refers to those
who are initially hired as non-regular employees for possible regular
employment. There is nothing in the said clause that limits its application to
only new employees who possess nonregular status, meaning
probationary status, at the start of their employment.

However, under law and jurisprudence, the following kinds of

employees are exempted from its coverage, namely, employees who at
the time the union shop agreement takes effect are bona fide members of a
religious organization which prohibits its members from joining labor unions
on religious grounds; employees already in the service and already
members of a union other than the majority at the time the union shop
agreement took effect; confidential employees who are excluded from the
rank and file bargaining unit; and employees excluded from the union
shop by express terms of the agreement. Indeed, the situation of the
former FEBTC employees in this case clearly does not fall within the
exceptions to the application of the Union Shop Clause discussed earlier.

Corporate Liabilities
1. Fernandez et. al. v. NewfieldStaff Solution, July 10, 2013. (TAMAYAO)
FERNANDEZ v NEWFIELD STAFF SOLUTIONS

"A corporation, being a juridical entity, may act only through its
directors, officers and employees. Obligations incurred by them, acting
as such corporate agents, are not theirs but the direct accountabilities
of the corporation they represent. True, solidary liability may at times
be incurred but only when exceptional circumstances warrant such as
when directors and trustees or, in appropriate cases, the officers of a
corporation xxx act in bad faith or with gross negligence in directing
the corporate affairs.

Newfield Staff Solutions, Inc. (Newfield) hired Gilda Fernandez as

Recruitment while Bernadette Beltran was hired as probationary Recruitment
Specialist. Arnold "Jay" Lopez, Jr., Newfield's General

Manager, asked petitioners to come to his office and terminated their

employment
on the ground that they failed to perform satisfactorily. A week later,
petitioners received Lopez, Jr.'s return-to-work letters stating that they did
not report without resigning, in violation of their employment agreements.
They were directed to report and explain their failure to file resignation
letters. Petitioners sent a demand letter for unpaid salaries. Respondents
claimed that no evidence shows or even hints that petitioners were forced
not to report for work. Petitioners simply no longer showed up for work.
Petitioners insisted that Lopez, Jr. terminated their employment while
respondents claimed that petitioners abandoned their jobs.

LA = ruled that petitioners' dismissal was illegal ruling that petitioners cannot
be said to have abandoned their work since they took steps to protest their
layoff. Their complaint is proof of their desire to return to work and negates
any suggestion of abandonment. The Labor Arbiter also believed petitioners
that Lopez, Jr. dismissed them.

NLRC = affirmed the Labor Arbiter's decision. But since petitioners signed
fixed-term employment agreements, the NLRC limited the award of back
wages to six months.

terminating the employee. But here, the Labor Arbiter and NLRC have not
found Lopez, Jr. guilty of malice or bad faith. Thus, there is no basis to hold
Lopez, Jr. solidarily liable with Newfield.

CA = ruled that petitioners abandoned their jobs and pre-terminated their sixmonth employment agreements. The CA held that the meeting with Lopez,
Jr. did not prove that they were dismissed. However, it seems that they
cannot accept constructive criticism and opted to discontinue working.

Change of Equity composition of corp.

1. SME Bank v. Peregrin, October 8, 2013 (IGNACIO)

SME BANK INC. VS. DE GUZMAN

ISSUE: 1. Whether or not the petitioners were illegally dismissed.
2. Whether or not Lopez, Jr. is solidarily liable with the Corporation.

RULING: 1. YES. Petitioners were terminated by Lopez, Jr. during the

meeting in his office. The petitioners did not abandon their jobs. For
abandonment to exist, two factors must be present: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a clear
intention to sever the employer-employee relationship, with the second
element as the more determinative factor being manifested by some overt
acts. Both factors are not present.

2. NO. In labor cases, for instance, the Court has held corporate
directors and officers solidarily liable with the corporation for the termination
of employment of employees done with malice or in bad faith. Bad faith
does not connote bad judgment or negligence; it imports dishonest purpose
or some moral obliquity and conscious doing of wrong; it means breach of a
known duty through some motive or interest or ill will; it partakes of the
nature of fraud. To sustain such a finding, there should be evidence on
record that an officer or director acted maliciously or in bad faith in

G.R. No. 184517

October 8, 2013

CJ. SERENO
FACTS: Respondents were employees of SME Bank.Originally, the principal
shareholders and corporate directors of the bank were Agustin, Jr. and de
Guzman, Jr. In June 2001, SME Bank experienced financial difficulties. To
remedy the situation, the bank officials proposed its sale to Samson. As it
turned out, some of respondent employees were not rehired. Respondentemployees demanded the payment of their respective separation pays, but
their requests were denied. Aggrieved by the loss of their jobs, respondent
employees filed a Complaint before the NLRC and sued SME Bank for unfair
labor practice; illegal dismissal; illegal deductions; underpayment; and
nonpayment of allowances, separation pay and 13th month pay.
ISSUE: whether respondent employees were illegally dismissed
HELD:
Respondent employees were illegally dismissed. In contrast with
asset sales, in which the assets of the selling corporation are transferred to
another entity, the transaction in stock sales takes place at the shareholder
level. Because the corporation possesses a personality separate and distinct

from that of its shareholders, a shift in the composition of its shareholders

will not affect its existence and continuity. Thus, notwithstanding the stock
sale, the corporation continues to be the employer of its people and
continues to be liable for the payment of their just claims. Furthermore, the
corporation or its new majority share holders are not entitled to lawfully
dismiss corporate employees absent a just or authorized cause.
In the case at bar, the Letter Agreements show that their main
object is the acquisition by the Samson Group of 86.365% of the shares of
stock of SME Bank.66 Hence, this case involves a stock sale, whereby the
transferee acquires the controlling shares of stock of the corporation. Thus,
following the rule in stock sales, respondent employees may not be
dismissed except for just or authorized causes under the Labor Code.

Security of tenure is a constitutionally guaranteed right.1 Employees

may not be terminated from their regular employment except for just or
authorized causes under the Labor Code2 and other pertinent laws. A mere
change in the equity composition of a corporation is neither a just nor an
authorized cause that would legally permit the dismissal of the corporations
employees en masse.