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SALAMAT NA LANGGAMITIN ANG APP

Batch 3 Labor Cases

Batch 3 Labor Cases

SSS vs CA and Manila Cosmos Aerated Water Factory, INC

GR No. L-55764 February 16, 1982

Facts:

The SSS, along with individual petitioners (peddlers), filed with the Social Security Commission (SSC)
a petition seeking for a declaration that these peddlers be declared as the employees of Manila Cosmos
Aerated Water Factory (Cosmos) and not as independent contractors under agreement to peddle soft
drinks.

[Contents of the agreement showing their relationship, (which you may remove), is indicated below.]

The contents of the agreement to peddle soft drinks are the following:

The MANUFACTURER shall provide the PEDDLER with a delivery truck to be used by the latter, under his
own responsibility, exclusively in the sales of the products of the former purchased by the PEDDLER from
the MANUFACTURER;

The peddler himself shall carefully and in strict observance to traffic regulations, drive the truck
furnished him by the manufacturer or should he employ a driver or helpers, such driver or helpers shall
be his employees under his direction and responsibility, and not that of the manufacturer, and their
compensation including salaries, wages, overtime pay, separation pay, bonus or other remunerations and
privileges shall be for the peddlers own account;

The peddler shall be responsible for any damage to property, death or injuries to persons or damage to
the truck used by him caused by his own acts or that of his driver and helpers;

The peddler shall secure at his own expense all necessary license and permits required by law or
ordinance, and shall bear any and all expenses which may be incurred by him in the sale of the
manufacturer’s products, covered by this contract; …
 Such were sought by them for the reason that if they were employees of Cosmos the latter would
“pay the employer’s share of premium contributions (employer’s and employees’ share) for and in
behalf of the delivery helpers, as employees of Cosmos, plus the penalties for late remittance of such
premium contributions, covering the period of delinquency from their date of their coverage up to the
present.

SSC: The SSC later on rendered a resolution in favor of SSS and the peddlers; that an employer-
employee relationship was present between Cosmos and the peddlers.

CA: Cosmos appealed to the CA and the latter affirmed the decision of the SSC. However, upon
motion for reconsideration of Cosmos the previous decision of the CA was reversed.

The SSS alone, the peddlers have not been seen fit to appeal, brought this case to the Supreme
Court.

Issue: Whether there is an employer-employee relationship or the peddlers were independent

contractors.

Held:

The judgment of the Court of Appeals is affirmed, the Supreme Court is convinced that on the basis
of the peddling contract, no employer-employee relationship was created.

For employer-employee relationship to be present, the following elements must be present: (1) The
selection and engagement of the employee; (2) The payment of wages; (3) The power of dismissal; and
(4) The power to control employees’ conduct.

On the other hand, an independent contractor is “one who exercise independent employment and
contracts to do a piece of work according to his own methods and without being subject to control of his
employer except as to the result of the work.”

As held, in connection with the case of Mafinco Trading Corporation vs Ople, et al. GR L-37790
wherein it is shown in their contract the manner they would sell the products; that they are selling
products as independent businessmen, the instant petition makes the peddler an independent
contractor.

2. Bernard Tenazas v. Villegas Taxi Transport G.R. No. 192998 April 12, 2014

FACTS: Petitioners Bernard Tenazas, Jaime Francisco, and Isidro Endraca filed a complaint for illegal
dismissal against Respondents R. Villegas Taxi Transport, and Romualdo and Andy Villegas.

Tenazas alleged that the taxi unit he was driving was sideswiped by another vehicle damaging the taxi
amounting to P500.00. Upon reporting the incident to the company, he was scolded by respondents
Romualdo and Andy and was told to leave the garage for he is already fired and he was even threatened
with physical harm should he ever be seen in the company’s premises again.
Francisco, on the other hand, averred that he was dismissed because of the company’s unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit
of procedural due process.

Endraca, for his part, alleged that he was dismissed he fell short of the required boundary for his taxi
unit. He related that before he was dismissed, he spent P700 on his taxi unit for an urgent repair, thus,
he was not able to meet his boundary for the day.

For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to drive one of the company’s units at
any point in time.

The respondents further alleged that Tenazas was never terminated by the company and that he failed
to report back to work after being told to wait for the release of his taxi which was overhauled due to
mechanical defects. As regards Endraca, the respondents maintained that they could never have
terminated Endraca in March 2006 since he already stopped reporting for work as early as July 2003. The
company however, was willing to accommodate him again as he was never really dismissed from
employment anyway.

LA DECISION: In the case of Tenazas and Endraca, there was no illegal dismissal because no proof of an
overt act of dismissal committed by R. Villegas Taxi. In the case of Francisco, he failed to prove that he
was an employee of the respondent.

NLRC DECISION: Reversed LA’s decision, holding that the additional evidence sufficiently established the
existence of employer-employee relationship and the petitioner’s illegal dismissal and ordered the
respondent to pay the petitioners the following: (1) full backwages from the date of their dismissal up to
the date of the finality of this decision, (2) separation pay equivalent to one month for every year of
service and (3) attorney’s fees equivalent to ten percent (10%) of the total judgment awards.

CA DECISION: Tenazas and Endraca were indeed employees and were illegally dismissed, but Francisco
failed to establish his relationship with the company. It also deleted the award of separation pay and
ordered for reinstatement of Tenazas and Endraca.

ISSUES:

(1) WON there was an employer-employee relationship in the case of Francisco

(2) WON the CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation
pay, is proper.

RULING:

1. No. The burden of proof rests upon the party who asserts the affirmative of an issue. As Francisco
was claiming to be an employee of R. Villegas Taxi, it is incumbent upon him to proffer evidence to prove
the existence of the relationship.

In determining the presence or absence of an employer-employee relationship, the Court has

consistently looked for the following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control
the employee on the means and methods by which the work is accomplished. The last element, the so-
called control test, is the most important element."

In this case, Francisco failed to present substantial evidence to establish the relationship. No
documentary evidence submitted, like an attendance logbook, payroll, SSS record, or any personnel file
that depicts his status as an employee.

2. Yes. The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation
pay, is also well in accordance with prevailing jurisprudence.

In Macasero v. Southern Industrial Gases Philippines,40 the Court reiterated that an illegally dismissed
employee is entitled to two reliefs: backwages and reinstatement.1âwphi1 The two reliefs provided are
separate and distinct. In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages.

Strained relations must be demonstrated as a fact. In this case, no facts demonstrated that the relations
were so strained as to make reinstatement no longer a feasible option.

3.

4. South East International Rattan V Coming GR. NO. 18662 MARCH 12, 2014

FACTS: Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the
business of manufacturing and exporting furniture to various countries with principal place of business
at Paknaan, Mandaue City.
 Respondent Coming was hired by petitioner as Sizing Machine Operator whose work is
initially compensated on “pakiao basis” but sometime later it was fixed at P150.00 per day and a work
schedule of 8:00am to 5:00pm. Despite being an employee for many years with his work performance
never questioned by petitioners, respondent was dismissed on January 1, 2002 without lawful cause. He
was told that he will be terminated because the company is not doing well financially and that he would
be called back to work only if they need his services again. Respondent waited for almost a year but
petitioners did not call him back to work. So he finally filed the complaint before the regional arbitration
branch.

On their part, petitioners denied having hired respondent asserting that SEIRI was
incorporated only in 1986, and that respondent actually worked for SEIRI's furniture suppliers because
when the company started in 1987 it was engaged purely in buying and exporting furniture and its
business operations were suspended from the last quarter of 1989 to August 1992. They stressed that
respondent was not included in the list of employees submitted to the Social Security System (SSS).

With the denial of petitioners that respondent was their employee, the latter submitted an
affidavit signed by five former co-workers stating that respondent was one of the pioneer employees
who worked in SEIRI for almost twenty years.

LA: In his Decision dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is
a regular employee of SEIRI and that the termination of his employment was illegal.

NLRC: Petitioners appealed to the National Labor Relations Commission (NLRC)-Cebu City where they
submitted the following additional evidence: (1) copies of SEIRI's payrolls and individual pay records of
employees; (2) affidavit of SEIRI's Treasurer, Angelina Agbay; and (3) second affidavit of Vicente Coming
arguing that the Respondent was not in the employee list of SEIRI. NLRC then set aside the decision of
the Labor Arbiter and denied the motion for reconsideration.

CA: The respondent elevated the case to the CA via a petition for certiorari under Rule 65 where
the decision of the NLRC was reversed and set aside, reinstating the decision of the Labor Arbiter. Ca
ruled in favor of the Respondent and declared that employer-employee relation existed and that the
respondent was dismissed without just and valid cause. The petitioner then moved for motion for
reconsideration but was denied. Hence, the present review for certiorari.

ISSUE: Whether there exist an employer-employee between SEIRI and Coming.

Held: Yes, SC affirmed the decision of CA

To ascertain the existence of employer-employee relationship jurisprudence has invariably

adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-
called “control test.”

As to the “control test”, the following facts indubitably reveal that respondents wielded
control over the work performance of petitioner, to wit: (1) they required him to work within the
company premises; (2) they obliged petitioner to report every day of the week and tasked him to usually
perform the same job; (3) they enforced the observance of definite hours of work from 8 o’clock in the
morning to 5 o’clock in the afternoon; (4) the mode of payment of petitioner’s salary was under their
discretion, at first paying him on “pakiao basis” and thereafter, on daily basis; (5) they implemented
company rules and regulations; (6) Agbay directly paid petitioner’s salaries and controlled all aspects of
his employment and (7) petitioner rendered work necessary and desirable in the business of the
respondent company.

The Court in Tan v. Lagrama, 436 Phil. 190, held that the fact that a worker was not reported
as an employee to the SSS is not conclusive proof of the absence of employer-employee relationship.
Otherwise, an employer would be rewarded for his failure or even neglect to perform his obligation. Nor
does the fact that respondent name does not appear in the payrolls and pay envelope records submitted
by petitioners negate the existence of employer-employee relationship.

Since respondent’s dismissal was without valid cause, he is entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances and other
benefits of their monetary equivalent, computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

However, where reinstatement is no longer feasible as an option, back wages shall be

computed from the time of the illegal termination up to the finality of the decision. As an alternative to
this, separation pay equivalent to one month salary for every year of service should likewise be awarded
in case reinstatement is not possible.

5. SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs. Joy Cabiles

FACTS:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.

Respondent Joy Cabiles was hired thus signed a one-year employment contract for a monthly
salary of NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997. She alleged that in her employment contract, she agreed to work as quality control for one year. In
Taiwan, she was asked to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without
prior notice, that she was terminated and that “she should immediately report to their office to get her
salary and passport.” She was asked to “prepare for immediate repatriation.” Joy claims that she was told
that from June 26 to July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner
and Wacoal. LA dismissed the complaint. NLRC reversed LA’s decision. CA affirmed the ruling of the
National Labor Relations Commission finding respondent illegally dismissed and awarding her three
months’ worth of salary, the reimbursement of the cost of her repatriation, and attorney’s fees.

Labor Arbitration:

· Joy filed a complaint for illegal dismissal against petitioner and Wacoal.

· She asked for the return of her placement fee, the withheld amount for repatriation costs,
payment of her salary for 23 months as well as moral and exemplary damages.

· In 1998, the Labor Arbiter dismissed Joy’s complaint on the ground that a. her complaint was based
on mere allegations; (b) that there was no excess payment of placement fees, based on the official
receipt presented by petitioner; (c) there are unnecessary discussion on petitioner’s transfer of
obligations to Pacific and considered the matter immaterial in view of the dismissal of respondent’s
complaint.

NLRC:

· Joy appealed.

· The NLRC declared that Joy was illegally dismissed.It reiterated the doctrine that the burden of proof
to show that the dismissal was based on a just or valid cause belongs to the employer.It found that
petitioner failed to prove that there were just causes for termination. There was also no sufficient proof
to show that respondent was inefficient in her work and that she failed to comply with company
requirements. Furthermore, procedural due process was not observed in terminating respondent.

However, NLRC did not rule on the issue of reimbursement of placement fees for lack of jurisdiction.

The petitioner filed a motion for reconsideration which was denied by the NLRC.

COURT OF APPEALS:

· Petioner filed a petition for certiorari assailing the NLRC’s resolutions.

· It affirmed the decision of the NLRC with respect to the finding of illegal dismissal, Joy’s
entitlement to the equivalent of three months worth of salary, reimbursement of withheld repatriation
expense, and attorney’s fees. The reason are: that she was dismissed without due process and the
reimbursement of her fare is based on the law; as well as the award of attorney’s fees.

Hence, this petition.

ISSUES:

1. Whether petitioner failed to show that there was just cause for causing Joy’s dismissal.

2. Whether Joy Cabiles was entitled to the unexpired portion of her salary due to illegal dismissal.

3. Whether both Wacoal as principal and petitioner as the employment agency that facilitated
respondent’s overseas employment are liable.

RULING:

1.YES. The Court held that by our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process requirements. Petitioner’s
allegation that respondent was inefficient in her work and negligent in her duties may, therefore,
constitute a just cause for termination under Article 282(b), but only if petitioner was able to prove it.

The burden of proving that there is just cause for termination is on the employer. "The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause." Failure to
show that there was valid or just cause for termination would necessarily mean that the dismissal was
illegal.

To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the employer
has set standards of conduct and workmanship against which the employee will be judged; 2) the
standards of conduct and workmanship must have been communicated tothe employee; and 3) the
communication was made at a reasonable time prior to the employee’s performance assessment.

In this case, petitioner merely alleged that respondent failed to comply with her foreign employer’s work
requirements and was inefficient in her work.No evidence was shown to support such allegations.
Petitioner did not even bother to specify what requirements were not met, what efficiency standards
were violated, or what particular acts of respondent constituted inefficiency.

Hence, there is no proof that respondent was legally terminated.

2. YES. The Court held that the award of the three-month equivalent of respondent’s salary should be
increased to the amount equivalent to the unexpired term of the employment contract.
 In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled
that the clause “or for three (3) months for every year of the unexpired term, whichever is less” is
unconstitutional for violating the equal protection clause and substantive due process.

A statute or provision which was declared unconstitutional is not a law. It “confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been
passed at all.”

The Court said that they are aware that the clause “or for three (3) months for every year of the
unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon promulgation of
Republic Act No. 10022 in 2010.

Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance
with Section 10 of Republic Act No. 8042. The award of the three-month equivalence of respondent’s
salary must be modified accordingly. Since she started working on June 26, 1997 and was terminated on
July 14, 1997, respondent is entitled to her salary from July 15, 1997 to June 25, 1998. "To rule otherwise
would be iniquitous to petitioner and other OFWs, and would,in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which
an employment contract embodies and actually profit from such violation based on an unconstitutional
provision of law."

3. YES. Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims including
claims arising out of an employer-employee relationship and/or damages. This section also provides that
the performance bond filed by the local agency shall be answerable for such money claims or damages if
they were awarded to the employee. The said law ensures that overseas workers have recourse in law
despite the circumstances of their employment. By providing that the liability of the foreign employer
may be "enforced to the full extent" against the local agent, the overseas worker is assured of immediate
and sufficient payment of what is due them.

With the present state of the pleadings, it is not possible to determine whether there was indeed a
transfer of obligations from petitioner to Pacific. This should not be an obstacle for the respondent
overseas worker to proceed with the enforcement of this judgment.
6. ARRIOLA V. PILIPINO STAR NGAYON, INC. AND MIGUEL BELMONTE

SHORT VERSION:

NOTE:

A columnist whose column is removed by the newspaper from publication is NOT ipso facto terminated
from work by the newspaper company.

Money claims arising from employer-employee relationship: covered by Art. 291 of the Labor Code.

Money claims, such as backwages, consequent to an illegal dismissal case: covered by Art. 1146 of the
Civil Code.

FACTS: George Arriola was a column writer for the newspaper PSNI since 1986. His column thereat was
“Tinig ng Pamilyang OFWs”.

On November 15, 2002, he filed a case for illegal dismissal against PSNI as he alleged that on November
15, 1999, he was arbitrarily dismissed when his column was removed from publication by PSNI.

In its defense, PSNI argued that they never removed Arriola and that it was Arriola who abandoned his
work because he went on to write for a rival newspaper, Imbestigador.

The Labor Arbiter Fatima Franco ruled in favour of PSNI. The LA held that Arrio.a’s case was filed out of
time as it was filed 3 days and 1 day from the date he was illegally dismissed. The LA cited Art. 291 of the
Labor Code which states “All money claims arising from employer-employee relations accruing during
the effectivity of this Code shall be filed within 3 years from the time the cause of action accrued;
otherwise they shall be forever barred.”
ISSUE: W/N Arriola’s suit involves a money claim contemplated by Art. 291 of the Labor Code.

RULING: No. Art. 291 of the Labor Code only covers the following claims:

1. Overtime pay,

2. Holiday pay,

3. Service incentive leave pay,

4. Bonuses,

5. Salary differentials,

6. Illegal deductions by an employer, and

7. Money claims arising from seafarer contracts.

It does NOT cover “money claims” consequent to an illegal dismissal such as backwages. It also does NOT
cover claims for damages to illegal dismissal. These claims are governed by Art. 1146 of the Civil Code
which provides for a 4-year prescriptive period.

Moreover, in an illegal dismissal case, the claim for backwages, the money claim, is just but one of the
reliefs that an employee prays before the arbiter.

As such, Arriola’s claim fopr backwages is still filed WITHIN the prescriptive period of 4 years.

However, Arriola’s case must still be dismissed because it was established that he in fact abandoned his
work. In the first place, it is a newspaper’s prerogative whether or not to remove a particular column
from publication. The removal of a certain column does NOT ipso fact (automatically) mean the removal
of the columnist. In that situation, Arriola should have reported to work even if his column was removed.

LONG VERSION:
GEORGE A. ARRIOLA vs. PILIPINO STAR NGAYON, INC. and MIGUEL G. BELMONTE

G.R. No. 175689 August 13, 2014

PRINCIPLE: The prescriptive period for filing an illegal dismissal complaint is four years from the time the
cause of action accrued. This four-year prescriptive period, not the three-year period for filing money
claims under Article 291 of the Labor Code, applies to claims for backwages and damages due to illegal
dismissal.

PSNI = Pilipino Star Ngayon, Inc.

MR = Motion for Reconsideration

FACTS: PSNI employed Arriola as correspondent assigned in Olongapo City and Zambales. Arriola held
various positions in PSNI before becoming a section editor and writer of its newspaper. He wrote “Tinig
ng Pamilyang OFWs” until his column was removed from publication. Since then, Arriola never returned
for work.

NLRC:

Arriola’s Contentions: Arriola filed a complaint for illegal dismissal, non-payment of salaries, moral and
exemplary damages, actual damages, attorney’s fees, and full backwages with the NLRC. Arriola alleged
that PSNI “arbitrarily dismissed” him. Arguing that he was a regular employee, Arriola contended that his
rights to security of tenure and due process were violated when PSNI illegally dismissed him.

PSNI’s Contentions: PSNI and Miguel G. Belmonte denied Arriola’s allegations. They alleged that Arriola
suddenly absented himself from work and never returned despite Belmonte’s phone calls and beeper
messages. After a few months, they learned that Arriola transferred to a rival newspaper publisher –
Imbestigador – to write “Boses ng Pamilyang OFWs.”

Arriola’s Reply: Arriola denied that he abandoned his employment. He maintained that PSNI ordered him
to stop reporting for work and to claim his separation pay. To prove his allegation, Arriola presented a
statement of account allegedly faxed to him by PSNI’s accounting head. This statement of account
showed a computation of his separation pay.
LA’s Decision:

Labor Arbiter Fatima Franco decided the case. She ruled that laches had set in, emphasizing that Arriola
took 3 years and 1 day to file his complaint. According to the LA, this was “contrary to the immediate and
natural reaction of an aggrieved person.” If Arriola were indeed aggrieved, he would not have waited 3
years and one day to sue PSNI.

The LA found that Arriola abandoned his employment with PSNI to write for a rival newspaper publisher.
She also noted Arriola’s admission that he did not contemplate the filing of an illegal dismissal complaint
but nevertheless filed one upon his lawyer’s advice.

On Arriola’s money claims, the LA ruled that they have already prescribed. She cited Article 291 of the
Labor Code, which requires that all money claims arising from employer-employee relations be filed 3
years from the time the cause of action accrued. Since Arriola filed his complaint 3 years and 1 day from
his alleged illegal dismissal, the LA ruled that his money claims were already barred. Therefore, the LA
dismissed Arriola's complaint for lack of merit.

Arriola’s Appeal to NLRC:

On Arriola’s appeal, the NLRC sustained the LA’s findings and affirmed in toto the LA’s decision. The NLRC
also denied Arriola’s MR for lack of merit.

COURT OF APPEALS:

Arriola filed a petition for certiorari with the CA.

The CA noted that the petition questioned whether Arriola was illegally dismissed. According to the CA,
Arriola raised a factual issue “beyond the province of certiorari to resolve.” It added that the LA’s factual
findings, if affirmed by the NLRC bound the appellate court.

Yet, the CA resolved the factual issue “in the interest of substantial justice.”

The CA ruled that Arriola was NOT illegally dismissed. PSNI had the management prerogative to
determine which columns to maintain in its newspaper. Its removal of “Tinig ng Pamilyang OFWs” from
publication did NOT mean that it illegally dismissed Arriola. His employment, according to the appellate
court,did not depend on the existence of the column.

The CA enumerated the following factual findings denying Arriola’s claim of illegal dismissal:

a. In his complaint, Arriola alleged that he did not receive his salary for the period covering
November 1, 1999 to November 30, 1999. This implied that he had worked for the whole month of
November 1999. However, this was contrary to his claim that PSNI dismissed him on November 15, 1999.

b. Sometime in 1999, an Aurea Reyes charged Arriola with libel. PSNI’s counsel represented Arriola in
that case and filed a counter-affidavit 9 days after Arriola’s alleged illegal dismissal.

c. PSNI never sent Arriola any notice of dismissal or termination.

Similar to the ruling of the LA and the NLRC, the CA ruled that it was Arriola who abandoned his
employment. The CA also ruled that his money claims have all prescribed based on Article 291.

Thus, the CA found NO grave abuse of discretion on the part of the NLRC and dismissed Arriola's
petition.

Arriola filed MR, but the CA denied it.

SUPREME COURT:

In his petition for review on certiorari, Arriola maintains that he did not abandon his employment. He
insists that PSNI illegally dismissed him when it removed his column, “Tinig ng Pamilyang OFWs” from
publication. On the finding that he abandoned his work in PSNI to write “Boses ng Pamilyang OFWs” in
Imbestigador, Arriola presents a certification from Imbestigador’s Managing Editor, Almar Danguilan,
stating that Arriola started writing for Imbestigador only after he had filed his complaint for illegal
dismissal.
As to the finding that his money claims have prescribed, Arriola argues that the 3-year prescriptive
period under Article 291 should be counted from December 1, 1999, not November 15, 1999. According
to Arriola, PSNI computed his separation pay up to November 30, 1999, as evidenced by the faxed
statement of account. Consequently, he was deprived of his salary as a regular employee beginning
December 1, 1999. His cause of action for payment of backwages and damages accrued only on
December 1, 1999. Arriola argues that assuming that his cause of action accrued on November 15, 1999,
he pleads that his one-day-late filing of the complaint be excused.

SC ordered respondents (PSNI and Belmonte) to comment on Arriola’s petition for review on certiorari.

Respondent’s Comment:

In their comment, respondents argue that SC should not entertain Arriola’s petition for review on
certiorari. Arriola raised questions of fact not allowed in a Rule 45 petition. They highlight that the LA,
NLRC, and the CA all found that Arriola was NOT illegally dismissed and that he abandoned his
employment. These factual findings, respondents argue, bind the SC.

Respondents maintain that Arriola was not illegally dismissed and that it was Arriola who abandoned his
employment in PSNI. According to respondents, they “must not be faulted if they presumed that Arriola
was no longer interested in writing for PSNI considering that he did not report for work for more than 3
years. On Arriola’s money claims, respondents argue that these have all prescribed. According to
respondents, Arriola’s one-day late filing of the complaint CANNOT be excused because prescription is a
matter of substantive law, not technicality.

Arriola’s Reply: Arriola replied to respondents’ comment, reiterating his arguments in his petition for
review on certiorari.

ISSUES:

1. W/N Arriola’s money claims have prescribed

2. W/N PSNI illegally dismissed Arriola

SC’s RULING:

1. Arriola’s claims for backwages and damages have NOT yet prescribed when he filed his complaint
with the NLRC.

The LA, NLRC, AND CA all ruled that Arriola’s claims for unpaid salaries, backwages, damages, and
attorney’s fees have prescribed. They cited Article 291 which requires that money claims arising from
employer-employee relations be filed within 3 years from the time the cause of action accrued;
otherwise they shall be forever barred. HOWEVER, Article 291 covers claims for overtime pay, holiday
pay, service incentive leave pay, bonuses, salary differentials, and illegal deductions by an employer. It
also covers money claims arising from seafarer contracts BUT does not cover "money claims"
consequent to an illegal dismissal such as backwages. It also does not cover claims for damages due to
illegal dismissal. These claims are governed by Article 1146 of the Civil Code which provides for a 4-year
prescriptive period.

The SC rules in Callanta v. Carnation Philippines that when one is arbitrarily and unjustly deprived of his
job or means of livelihood, the action instituted to contest the legality of one's dismissal from
employment constitutes an action predicated “upon an injury to the rights of the plaintiff,” as
contemplated under Art. 1146 of the Civil Code, which must be brought within 4years. Actions for
damages due to illegal dismissal are likewise actions “upon an injury to the rights of the plaintiff.”

SC ruled that Arriola’s claims for unpaid salaries have prescribed. Arriola filed his complaint 3 years and 1
day from the time he was allegedly dismissed and deprived of his salaries. Since a claim for unpaid
salaries arises from employer-employee relations, Article 291 applies. Arriola’s claim for unpaid salaries
was filed beyond the 3-year prescriptive period.

However, SC found that Arriola’s claims for backwages, damages, and attorney’s fees arising from his
claim of illegal dismissal have NOT YET prescribed when he filed his complaint with the NLRC. As
discussed, the prescriptive period for filing an illegal dismissal complaint is 4 years from the time the
cause of action accrued. Since an award of backwages is merely consequent to a declaration of illegal
dismissal, a claim for backwages also prescribes in 4 years.

2. Arriola abandoned his employment with PSNI

In general, the SC does not entertain questions of fact in a petition for review on certiorari. The SC does
not try facts. Rule 45, Section 1 of the Rules of Court is clear that in a petition for review on certiorari
with the SC, only questions of law may be raised. The SC made exceptions to this rule. The SC may review
questions of fact in a petition for review on certiorari if:

1. the findings are grounded entirely on speculations, surmises, or conjectures;

2. the inference made is manifestly mistaken, absurd, or impossible;

3. there is a grave abuse of discretion;

4. the judgment is based on misappreciation of facts;

5. the findings of fact are conflicting;

6. in making its findings, the same are contrary to the admissions of both appellant and appellee;

7. the findings are contrary to those of the trial court;

8. the findings are conclusions without citation of specific evidence on which they are based;

9. the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not
disputed by the respondent; and

10. the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record

In his petition for review on certiorari, Arriola raises questions of fact. He invites SC to examine the
probative value of a faxed letter containing a computation of his separation pay, and a certification from
Imbestigador’s Managing Editor. These pieces of documentary evidence allegedly prove that PSNI
illegally dismissed Arriola and that he did NOT abandon his employment.

The SC ruled that the issues of illegal dismissal and abandonment of employment are factual issues
which cannot be raised in a petition for review on certiorari. Arriola also failed to persuade the SC why it
should make an exception in this case.

SC agreed that PSNI did NOT illegally dismiss Arriola. As the CA ruled, “the removal of Arriola’s column
from PSNI’s newspaper is not tantamount to a termination of his employment as his job is NOT
dependent on the existence of the column “Tinig ng Pamilyang OFWs.” When PSNI removed “Tinig ng
Pamilyang OFWs” from publication, Arriola remained as section editor. Moreover, a newspaper publisher
has the management prerogative to determine what columns to print in its newspaper. As the CA
held: . . .it is a management prerogative of private respondent PSNI to decide on what sections should
and would appear in the newspaper publication taking into consideration the business viability and
profitability of each section. PSNI decided to replace the "Pamilyang OFWs" section with another which
would better sell to the reading public. Every business enterprise endeavors to increase its profits. In the
process, it may adopt or devise means designed towards that goal. Even as the law is solicitous of the
welfare of the employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. . . . The free will of management to conduct its own business affairs to
achieve its purposes cannot be denied.

Arriola abandoned his employment with PSNI. Abandonment is the “clear, deliberate and unjustified
refusal of an employee to continue his employment, without any intention of returning.” It has 2
elements:

a. the failure to report for work or absence without valid or justifiable reason, and

b. a clear intention to sever employer-employee relations exists

The 2nd element is “the more determinative factor and is manifested by overt acts from which it may be
deduced that the employee has no more intention to work.” Arriola took 3 years and 1 day to remedy his
dismissal. This shows his clear intention to sever his employment with PSNI.

With respect to the computation of Arriola’s separation pay allegedly faxed by PSNI’s accounting head,
we agree with the CA that this does NOT prove that Arriola was illegally dismissed. The faxed
computation does not conclusively show that the salaries were withheld from Arriola. It could not also
be given probative value as the said document does not bear the signature of an unauthorized
representative of PSNI. It does NOT also bear the official seal of the company. Besides, the computation
for separation pay is NOT a conclusive proof of the existence of dismissal or termination from work. It is
just a mere computation which the authenticity thereof is being assailed.

SC sustained disturb the LA’s findings that Arriola was NOT illegally dismissed and that he abandoned his
employment.

7.

8.UNILEVER PHILIPPINES VS. MARIA RUBY M. RIVERA

G.R. No. 201701, June 3, 2013

FACTS:

Rivera was employed in Unilever and such company enforces a strict policy, that every trade
activity must be accompanied by a Trade Development Program (TDP) and that the allocated
budget for a specific activity must be used for such activity only, which was violated by Rivera.

Unilever’s internal auditor conducted a random audit and found out that there were fictitious
billings and fabricated receipts supposedly from Ventureslink amounting to ₱11,200,000.00. It was
also discovered that some funds were diverted from the original intended projects. Upon further
verification, Ventureslink reported that the fund deviations were upon the instruction of Rivera.

Unilever issued a show-cause notice to Rivera asking her to explain the following charges, to wit:
a) Conversion and Misappropriation of Resources; b) Breach of Fiduciary Trust; c) Policy Breaches;
and d) Integrity Issues.

Rivera admitted the fund diversions, but explained that such actions were mere resourceful
utilization of budget because of the difficulty of procuring funds from the head office and insisted
that the diverted funds were all utilized in the company’s promotional ventures in her area of
coverage.

Unilever found Rivera guilty of serious breach of the company’s Code of Business Principles
compelling it to sever their professional relations. Rivera asked for reconsideration and requested
Unilever to allow her to receive retirement benefits having served the company for fourteen (14)
years already but it was denied by Unilever, reasoning that the forfeiture of retirement benefits was
a legal consequence of her dismissal from work.

Labor Arbiter

Rivera filed a complaint for Illegal Dismissal and other monetary claims against Unilever. The Labor
Arbiter (LA) dismissed her complaint for lack of merit and denied her claim for retirement
benefits, but ordered Unilever to pay a proportionate 13th month pay and the corresponding
cash equivalent of her unused leave credits. All other money claims are dismissed for lack of basis.

NLRC

On appeal by Rivera, the NLRC held that although she was legally dismissed from the service for
a just cause, Unilever was guilty of violating the twin notice requirement in labor cases. Thus,
Unilever was ordered to pay her ₱30,000.00 as nominal damages, retirement benefits and
separation pay.

Unilever asked for a reconsideration and the NLRC modified its earlier ruling by deleting the
award of separation pay and reducing the nominal damages ₱20,000.00, but affirmed the
retirement benefits to Rivera.

CA
Unilever elevated the case to CA which affirmed with modification the NLRC resolution. It deleted
the award of retirement benefits and awarded separation pay as a measure of social justice.
Unilever filed a motion for partial reconsideration, but it was denied.

ISSUE:

1.WHETHER THE CA ERRED IN AWARDING SEPARATION PAY IN RIVERA’S FAVOR CONSIDERING THAT
SHE WAS VALIDLY DISMISSED FROM EMPLOYMENT BASED ON JUST CAUSES UNDER THE LAW.

2.WHETHER THE CA ERRED IN GRANTING AFFIRMATIVE RELIEFS IN FAVOR OF RIVERA EVEN IF SHE
DID NOT FILE ANY PETITION FOR CERTIORARI TO CHALLENGE THE NLRC RESOLUTIONS.

3.WHETHER THE CA ERRED IN RULING THAT THE COMPANY VIOLATED RIVERA’S RIGHT TO
PROCEDURAL DUE PROCESS BEFORE TERMINATING HER EMPLOYMENT, AND CONSEQUENTLY, IN
AWARDING NOMINAL DAMAGES.

HELD:

Separation Pay

As a general rule, an employee who has been dismissed for any of the just causes enumerated
under Article 282 of the Labor Code is not entitled to a separation pay.

In this case, Rivera was dismissed from work because she intentionally circumvented a strict
company policy, manipulated another entity to carry out her instructions without the company’s
knowledge and approval, and directed the diversion of funds, which she even admitted doing
under the guise of shortening the laborious process of securing funds for promotional activities
from the head office. These transgressions were serious offenses that warranted her dismissal
from employment and proved that her termination from work was for a just cause. Hence, she is
not entitled to a separation pay.

More importantly, Rivera did not appeal the ruling of the NLRC disallowing the award of
separation pay to her. It is axiomatic that a party who does not appeal is not entitled to any
affirmative relief. It was, therefore, erroneous for the CA to grant an affirmative relief to Rivera
who did not ask for it.

Nominal damages

Under Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code, it expressly states:
Section 2. Standard of due process: requirements of notice. — In all cases of termination of employment,
the following standards of due process shall be substantially observed. I. For termination of employment
based on just causes as defined in Article 282 of the Code: (a) A written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side; (b) A hearing or conference during which
the employee concerned, with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the evidence presented
against him; and (c) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstance, grounds have been established to justify his termination.

---

King of Kings Transport, Inc. v. Mamac detailed the steps on how procedural due process can be
satisfactorily

complied with. Thus:

To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to submit
their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least five (5) calendar
days from receipt of the notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will
raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are given
the chance to defend themselves personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to
an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees

have been considered; and (2) grounds have been established to justify the severance of their
employment.

---

In this case, Unilever was not direct and specific in its first notice to Rivera. The words it used
were couched in general terms and were in no way informative of the charges against her that
may result in her dismissal from employment. Evidently, there was a violation of her right to
statutory due process warranting the payment of indemnity in the form of nominal damages. The
Court deems it proper to increase the award of nominal damages from ₱20,000.00 to ₱30,000.00,
as initially awarded by the NLRC, in accordance with existing jurisprudence..

9 Aliling v. Feliciano, G.R. No. 185829, April 5, 2012

Facts:

Wide Wide World Express Corporation (WWWEC) offered to employ petitioner Armando Aliling (Aliling)
as “Account Executive (Seafreight Sales).” However, instead of a Seafreight Sale assignment, WWWEC
asked Aliling to handle Ground Express (GX), a new company product launched on June 18, 2004
involving domestic cargo forwarding service.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing Director,
emailed Aliling to express dissatisfaction with the latter’s performance and requiring him to meet the
expectations set regarding the operation of GX. Thereafter, Joseph R. Lariosa (Lariosa), Human Resources
Manager of WWWEC, reported Aliling for allegedly taking absence without leave from September 20,
2004. But Aliling denied the allegation and presented his timesheet showing that he worked from
September 20 to 24, 2004. On the other hand, Aliling questioned the withholding of his salary
corresponding to September 11 to 25, 2004.

On September 27, 2004, Aliling tendered his resignation letter effective October 15, 2004 but withdrew
it afterwards claiming that San Mateo had forced him to resign. On October 1, 2004, Lariosa informed
Aliling that his case was still in the process of being evaluated but eventually on October 6, 2004, he
advised Aliling of the termination of his services effective as of that date owing to his “non-satisfactory
performance” during his probationary period.

Earlier, however, or on October 4, 2004, Aliling filed a Complaint for illegal dismissal due to forced
resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended to
the complaint was Aliling’s Affidavit in which he stated: “5. At the time of my engagement, respondents
did not make known to me the standards under which I will qualify as a regular employee.”

WWWEC attached to its Position Paper a memo dated September 20, 2004 in which San Mateo asked
Aliling to explain why he should not be terminated for failure to meet the expected job performance,
considering that the load factor for the GX Shuttles for the period July to September was only 0.18% as
opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004. According to WWWEC,
Aliling, instead of explaining himself, simply submitted a resignation letter.

[Labor Arbiter] LA ruled on favor of Aliling declaring that his termination was unjustified. The LA
explained that Aliling cannot be validly terminated for non-compliance with the quota threshold absent
a prior advisory of the reasonable standards upon which his performance would be evaluated. LA ruled
that the grounds upon which complainant’s dismissal was based did not conform not only the standard
but also the compliance required under Article 281 of the Labor Code. LA ordered WWWEC to pay
salaries corresponding to the unexpired portion of the contract of employment and all other benefits.

[NLRC] Both parties appealed the LA’s decision to the NLRC, which affirmed the Decision in toto.

[CA] CA affirmed the NLRC’s decision but with modification on the payment of liabilities. The CA
anchored its assailed action on the strength of the following premises: (a) respondents failed to prove
that Aliling’s dismal performance constituted gross and habitual neglect necessary to justify his
dismissal; (b) not having been informed at the time of his engagement of the reasonable standards
under which he will qualify as a regular employee, Aliling was deemed to have been hired from day one
as a regular employee; and (c) the strained relationship existing between the parties argues against the
propriety of reinstatement.

Issues:

1. Whether Aliling is a regular employee

2. Whether Aliling was illegally dismissed

Ruling:

SC:

Section 6 of the Implementing Rules of Book VI, Rule VIII-A of the Code specifically requires the
employer to inform the probationary employee of such reasonable standards at the time of his
engagement, not at any time later; else, the latter shall be considered a regular employee. Thus,
pursuant to the explicit provision of Article 281 of the Labor Code, Section 6(d) of the Implementing
Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner Aliling is deemed a
regular employee as of June 11, 2004, the date of his employment contract.
An employee’s failure to meet sales or work quotas falls under the concept of gross inefficiency, which in
turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 282 of the Code.
However, in order for the quota imposed to be considered a valid productivity standard and thereby
validate a dismissal, management’s prerogative of fixing the quota must be exercised in good faith for
the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as part of its
burden to show that the dismissal was for a just cause. WWWEC must show that such quota was
imposed in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the matter
is that the alleged imposition of the quota was a desperate attempt to lend a semblance of validity to
Aliling’s illegal dismissal.

Employers must be reminded that while probationary employees do not enjoy permanent status, they
enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when
they otherwise fail to meet the reasonable standards made known to them by the employer at the time
of their engagement. Respondent WWWEC miserably failed to prove the termination of petitioner was
for a just cause nor was there substantial evidence to demonstrate the standards were made known to
the latter at the time of his engagement. Hence, petitioner’s right to security of tenure was breached.

10.

11.Wilgen Loon v. Power Master

FACTS:

Respondents Power Master, Inc. and Tri-C General Services employed and assigned the petitioners as
janitors and leadsmen in various Philippine Long Distance Telephone Company (PLDT) offices in Metro
Manila area. Subsequently, the petitioners filed a complaint for money claims against Power Master, Inc.,
Tri-C General Services and their officers, the spouses Homer and Carina Alumisin (collectively, the
respondents). The petitioners alleged in their complaint that they were not paid minimum wages,
overtime, holiday, premium, service incentive leave, and thirteenth month pays. They further averred
that the respondents made them sign blank payroll sheets. On June 11, 2001, the petitioners amended
their complaint and included illegal dismissal as their cause of action. They claimed that the respondents
relieved them from service in retaliation for the filing of their original complaint.

Notably, the respondents did not participate in the proceedings before the Labor Arbiter except on April
19, 2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the respondents' behalf. The
respondents' counsel also appeared in a preliminary mandatory conference on July 5, 2001. However,
the respondents neither filed any position paper nor proffered pieces of evidence in their defense
despite their knowledge of the pendency of the case.

The Labor Arbiter's Ruling

LA partially ruled in favor of the petitioners. The LA awarded the petitioners salary differential, service
incentive leave, and thirteenth month pays. In awarding these claims, the LA stated that the burden of
proving the payment of these money claims rests with the employer. The LA also awarded attorney's fees
in favor of the petitioners, pursuant to Article 111 of the Labor Code.

However, the LA denied the petitioners' claims for backwages, overtime, holiday, and premium pays. The
LA observed that the petitioners failed to show that they rendered overtime work and worked on
holidays and rest days without compensation. The LA further concluded that the petitioners cannot be
declared to have been dismissed from employment because they did not show any notice of termination
of employment. They were also not barred from entering the respondents' premises.

The Proceedings before the NLRC

Both parties appealed the LA's ruling with the NLRC. The petitioners disputed the LA's denial of their
claim for backwages, overtime, holiday and premium pays. Meanwhile, the respondents questioned the
LA's ruling on the ground that the LA did not acquire jurisdiction over their persons.

The respondents insisted that they were not personally served with summons and other processes. They
also claimed that they paid the petitioners minimum wages, service incentive leave and thirteenth
month pays. As proofs, they attached photocopied and computerized copies of payroll sheets to their
memorandum on appeal. They further maintained that the petitioners were validly dismissed. They
argued that the petitioners' repeated defiance to their transfer to different workplaces and their
violations of the company rules and regulations constituted serious misconduct and willful disobedience.

On January 3, 2003, the respondents filed an unverified supplemental appeal. They attached
photocopied and computerized copies of list of employees with automated teller machine (ATM) cards
to the supplemental appeal. This list also showed the amounts allegedly deposited in the employees'
ATM cards. They also attached documentary evidence showing that the petitioners were dismissed for
cause and had been accorded due process.

The NLRC Ruling

the NLRC partially ruled in favor of the respondents.[16] The NLRC affirmed the LA's awards of holiday
pay and attorney's fees. It also maintained that the LA acquired jurisdiction over the persons of the
respondents through their voluntary appearance.

However, it allowed the respondents to submit pieces of evidence for the first time on appeal on the
ground that they had been deprived of due process. It found that the respondents did not actually
receive the LA's processes. It also admitted the respondents' unverified supplemental appeal on the
ground that technicalities may be disregarded to serve the greater interest of substantial due process.
Furthermore, the Rules of Court do not require the verification of a supplemental pleading.

The NLRC also vacated the LA's awards of salary differential, thirteenth month and service incentive
leave pays. In so ruling, it gave weight to the pieces of evidence attached to the memorandum on appeal
and the supplemental appeal. It maintained that the absence of the petitioners' signatures in the
payrolls was not an indispensable factor for their authenticity. It pointed out that the payment of money
claims was further evidenced by the list of employees with ATM cards. It also found that the petitioners'
signatures were not forged. It took judicial notice that many people use at least two or more different
signatures.

The NLRC further ruled that the petitioners were lawfully dismissed on grounds of serious misconduct
and willful disobedience. It found that the petitioners failed to comply with various memoranda directing
them to transfer to other workplaces and to attend training seminars for the intended reorganization
and reshuffling.

The CA Ruling

The CA affirmed the NLRC's ruling. The CA held that the petitioners were afforded substantive and
procedural due process. Accordingly, the petitioners deliberately did not explain their side. Instead, they
continuously resisted their transfer to other PLDT offices and violated company rules and regulations. It
also upheld the NLRC's findings on the petitioners' monetary claims.

The Issues
1) Whether the CA erred when it did not find that the NLRC committed grave abuse of discretion in
giving due course to the respondents' appeal;

a) Whether the respondents perfected their appeal before the NLRC; and

b) Whether the NLRC properly allowed the respondents' supplemental appeal

2) Whether the respondents were estopped from submitting pieces of evidence for the first time on
appeal;

3) Whether the petitioners were illegally dismissed and are thus entitled to backwages;

4) Whether the petitioners are entitled to salary differential, overtime, holiday, premium, service
incentive leave, and thirteenth month pays; and

5) Whether the petitioners are entitled to attorney's fees.

The Court's Ruling

The respondents perfected their appeal with the NLRC because the revocation of the bonding company's
authority has a prospective application

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment involving a monetary
award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from."
Contrary to the respondents' claim, the issue of the appeal bond's validity may be raised for the first
time on appeal since its proper filing is a jurisdictional requirement. The requirement that the appeal
bond should be issued by an accredited bonding company is mandatory and jurisdictional. The rationale
of requiring an appeal bond is to discourage the employers from using an appeal to delay or evade the
employees' just and lawful claims. It is intended to assure the workers that they will receive the money
judgment in their favor upon the dismissal of the employer's appeal.

The CA correctly ruled that the NLRC properly gave due course to the respondents' supplemental appeal

The CA also correctly ruled that the NLRC properly gave due course to the respondents' supplemental
appeal. Neither the laws nor the rules require the verification of the supplemental appeal. Furthermore,
verification is a formal, not a jurisdictional, requirement. It is mainly intended for the assurance that the
matters alleged in the pleading are true and correct and not of mere speculation.Also, a supplemental
appeal is merely an addendum to the verified memorandum on appeal that was earlier filed in the
present case; hence, the requirement for verification has substantially been complied with.

The respondents also timely filed their supplemental appeal on January 3, 2003. The records of the case
show that the petitioners themselves agreed that the pleading shall be filed until December 18, 2002.
The NLRC further extended the filing of the supplemental pleading until January 3, 2003 upon the
respondents' motion for extension.

A party may only adduce evidence for the first time on appeal if he adequately explains his delay in the
submission of evidence and he sufficiently proves the allegations sought to be proven

In labor cases, strict adherence to the technical rules of procedure is not required. Time and again, we
have allowed evidence to be submitted for the first time on appeal with the NLRC in the interest of
substantial justice. Thus, we have consistently supported the rule that labor officials should use all
reasonable means to ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, in the interest of due process.

However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of
procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the
submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven.[30]
The reason for these requirements is that the liberal application of the rules before quasi-judicial
agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither is
the rule on liberal construction a license to disregard the rules of procedure.

Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit grave abuse of
discretion in arbitrarily admitting and giving weight to the respondents' pieces of evidence for the first
time on appeal.

A. The respondents failed to adequately explain their delay in the submission of evidence

We cannot accept the respondents' cavalier attitude in blatantly disregarding the NLRC Rules of
Procedure. The CA gravely erred when it overlooked that the NLRC blindly admitted and arbitrarily gave
probative value to the respondents' evidence despite their failure to adequately explain their delay in
the submission of evidence. Notably, the respondents' delay was anchored on their assertion that they
were oblivious of the proceedings before the LA. However, the respondents did not dispute the LA's
finding that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001 and May 21, 2001. The
respondents also failed to contest the petitioners' assertion that the respondents' counsel appeared in a
preliminary mandatory conference on July 5, 2001.

Indeed, the NLRC capriciously and whimsically admitted and gave weight to the respondents' evidence
despite its finding that they voluntarily appeared in the compulsory arbitration proceedings. The NLRC
blatantly disregarded the fact that the respondents voluntarily opted not to participate, to adduce
evidence in their defense and to file a position paper despite their knowledge of the pendency of the
proceedings before the LA. The respondents were also grossly negligent in not informing the LA of the
specific building unit where the respondents were conducting their business and their counsel's address
despite their knowledge of their non-receipt of the processes.

B. The respondents failed to sufficiently prove the allegations sought to be proven

the respondents' photocopied and computerized copies of documentary evidence were not presented at
the earliest opportunity is a serious question that lends credence to the petitioners' claim that the
respondents fabricated the evidence for purposes of appeal. While we generally admit in evidence and
give probative value to photocopied documents in administrative proceedings, allegations of forgery and
fabrication should prompt the adverse party to present the original documents for inspection. It was
incumbent upon the respondents to present the originals, especially in this case where the petitioners
had submitted their specimen signatures. Instead, the respondents effectively deprived the petitioners
of the opportunity to examine and controvert the alleged spurious evidence by not adducing the
originals. This Court is thus left with no option but to rule that the respondents' failure to present the
originals raises the presumption that evidence willfully suppressed would be adverse if produced.

It was also gross error for the CA to affirm the NLRC's proposition that "[i]t is of common knowledge that
there are many people who use at least two or more different signatures." The NLRC cannot take judicial
notice that many people use at least two signatures, especially in this case where the petitioners
themselves disown the signatures in the respondents' assailed documentary evidence. The NLRC's
position is unwarranted and is patently unsupported by the law and jurisprudence.

Viewed in these lights, the scales of justice must tilt in favor of the employees. This conclusion is
consistent with the rule that the employer's cause can only succeed on the strength of its own evidence
and not on the weakness of the employee's evidence.

The petitioners are entitled to backwages

Based on the above considerations, we reverse the NLRC and the CA's finding that the petitioners were
terminated for just cause and were afforded procedural due process. In termination cases, the burden of
proving just and valid cause for dismissing an employee from his employment rests upon the employer.
The employer's failure to discharge this burden results in the finding that the dismissal is unjustified. This
is exactly what happened in the present case.

The petitioners are entitled to salary differential, service incentive, holiday, and thirteenth month pays

We also reverse the NLRC and the CA's finding that the petitioners are not entitled to salary differential,
service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the general rule is that
the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment
of these money claims. The rationale for this rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents which will show that differentials, service incentive leave and
other claims of workers have been paid are not in the possession of the worker but are in the custody
and control of the employer.
The petitioners are not entitled to overtime and premium pays

However, the CA was correct in its finding that the petitioners failed to provide sufficient factual basis for
the award of overtime, and premium pays for holidays and rest days. The burden of proving entitlement
to overtime pay and premium pay for holidays and rest days rests on the employee because these are
not incurred in the normal course of business. In the present case, the petitioners failed to adduce any
evidence that would show that they actually rendered service in excess of the regular eight working
hours a day, and that they in fact worked on holidays and rest days.

The petitioners are entitled to attorney's fees

The award of attorney's fees is also warranted under the circumstances of this case. An employee is
entitled to an award of attorney's fees equivalent to ten percent (10%) of the amount of the wages in
actions for unlawful withholding of wages.

All told, we find that the NLRC committed grave abuse of discretion in admitting and giving probative
value to the respondents' evidence on appeal, which errors the CA replicated when it upheld the NLRC
rulings.

This case is REMANDED to the Labor Arbiter for the sole purpose of computing petitioners' full
backwages (computed from the date of their respective dismissals up to the finality of this decision) and
their salary differential, service incentive leave, holiday, thirteenth month pays, and attorney's fees
equivalent to ten percent (10%) of the withheld wages.

12.

13.

14. VIOLETA VS NLRC

FACTS OF THE CASE:

Petitoners Isabelo Violeta and Jovito Baltazar were former employees of private respondent Dasmarias
Industrial and Steelworks Corporation (DISC). Beginning his service in 1982, Violeta served in the employ
of DISC up to 1992. In the case of Baltazar, he worked for DISC from 1981 to 1991. DISC repeatedly
appointed petitioners to new projects after the completion of every project or item of work in which
they were previously employed, each over a span of about 10 years and both of their services were
terminated due to the completion of the particular item of work they were assigned to. Baltazar and
Violeta filed two separate complaints for illegal dismissal against DISC, with a prayer for reinstatement
and back wages plus damages.

Petitioner’s contention: They are already regular employees who cannot be dismissed on the ground of
completion of the particular project where they are engaged.

Respondent’s contention: DISC is engaged in the development and construction of infrastructure

projects. Violeta was for 3 years hired as Handyman while Baltazar was hired as Leadman II for about 2
years. They are project employees based on their declaration in their Appointments for Project
Employment that they are employed only for the period and specific works stated in their respective
appointments, in addition to their admission that they are project employees who are subject to the
provisions of Policy Instruction No. 20.

Labor Arbiter’s Ruling: Labor Arbiter Siao dismissed the claims of Violeta and Baltazar for lack of merit
but ordered DISC to grant them separation pay. He concluded that petitioners are project employees
based on their admission that they are regular project employees. Thus, their employment was
coterminous with the project for which DISC engaged them. Their separation was declared valid and
their claims for reinstatement and back wages were denied. The award of separation pay was based on
the findings of the labor arbiter that it is the policy of DISC to pay employees who have rendered at least
one year of continuous service.

Violeta, Baltazar and DISC duly appealed the ruling of Labor Arbiter Siao to NLRC.

NLRC’s Ruling: The NLRC reversed the decision of the labor arbiter finding Violeta and Baltazar as non-
project employees declaring their dismissal as illegal. DISC was ordered to reinstate Violeta and Baltazar
to their former positions without loss of seniority rights and to pay them back wages operative from the
date of their dismissal. Since reinstatement can no longer be made, DISC was ordered to further give
petitioners the corresponding separation pay plus payment of Attorney’s fees.

Although the appointment contracts of petitioners specified fixed terms or periods of employment, the
fact that they were hired and transferred from one project to another made both petitioners non-project
employees. They were hired not only for one particular project but different projects, one after the
other.

Upon motion of DISC, the NLRC reversed and set aside its earlier resolution stating that the employment
of petitioners in one project was allegedly for a specific or fixed period thus making them project
employees and that since the termination of their employment was due to the completion of the
project, they are therefore not entitled to separation pay.

Petitioners filed a petition for certiorari contending that the NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it granted the MFR of DISC. The services of project employees are
coterminous with the project and may be terminated upon the end or completion of that project for
which they were hired. Regular employees are legally entitled to remain in the service of their employer
until their services are terminated by one or another of the recognized modes of termination of service
under the Labor Code.

ISSUE:

Whether petitioners Violeta and Baltazar are regular employees or project employees

SUPREME COURT’S RULING:

The petitioners are regular employees of DISC, and not project employees. Violeta and Baltazar’s
dismissal, therefore, could not be justified by the completion of their items of work.

The principal test for determining whether particular employees are properly characterized as project
employees, as distinguished from regular employees, is whether or not the project employees were
assigned to carry out a specific project or undertaking, the duration (and scope) of which were specified
at the time the employees were engaged for that project. Project employees are those workers hired (1)
for a specific project or undertaking, and (2) the completion or termination of such project or
undertaking has been determined at the time of engagement of the employee.

The following badges of project employment are lacking in this particular case, viz.: (1) the duration of
the specific/identified undertaking for which the worker is engaged is reasonably determinable, and (2)
such duration, as well as the specific work/service to be performed, is defined in an employment
agreement and made clear to the employee at the time of hiring.

The completion or termination of the project for which petitioners were hired was not determined at the
start of their employment. In fact, the lines for DATE OF COVERAGE in the appointments (referring to the
particular items of work for which petitioners are engaged) are left blank.

The respective employments of the present petitioners are not subject to a term but rather to a
condition, that is, progress accomplishment. It cannot be said that their employment had been pre-
determined because, firstly, the duration of their work is contingent upon the progress accomplishment
and, secondly, the contract gives DISC the liberty to determine the personnel and the number as the
work progresses.

Moreover, the failure of an employer to report to the nearest Public Employment Office the termination
of its workers services every time a project or a phase thereof is completed indicates that said workers
are not project employees. In the case at bar, only the last and final termination of petitioners was
reported to the aforementioned labor office.

In the first place, Article 280 of the Labor Code contemplates both continuous and broken services. In
the second place, there is absolutely no evidence of petitioners having applied for or accepted such
other or outside employment during the brief intervals in the continuity of their work with DISC. Their
undertaking in the Employment Terms and Conditions of their service to private respondent bound them
to work in such place of work or project as DISC may assign or transfer them, with the further agreement
that they would so work during rest day, holidays, night time and night shift or during emergencies
rendering them not mere employees engaged for a single or particular project. They were thus removed
from the scope of project employment and considered as regular employees since their employment as
so-called project employees was extended long after the termination of different projects.

15. FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX), FULGENCIO RANA and MONINA R. BURGOS

vs.

JOVERT SEV A, JOSUEL V. V ALENCERINA, JANET ALCAZAR, ANGELITO AMPARO, BENJAMIN ANAEN, JR.,
JOHN HILBERT BARBA, BONIFACIO BATANG, JR., VALERIANO BINGCO,JR., RONALD CASTRO, MARLON
CONSORTE, ROLANDO CORNELIO, EDITO CULDORA, RUEL DUNCIL, MERVIN FLORES, LORD GALISIM,
SOTERO GARCIA, JR., REY GONZALES, DANTE ISIP, RYAN ISMEN, JOEL JUNIO, CARLITO LATOJA, ZALDY
MARRA, MICHAEL PANTANO, GLENN PILOTON, NORELDO QUIRANTE, ROEL RANCE, RENANTE ROSARIO
and LEONARDA TANAEL

G.R. No. 200857 October 22, 2014

FACTS: 28 respondents were employees of SKILLEX. SKILLEX is an independent contractor engaged in the
business of providing janitorial and other manpower services to its clients. As early as 1998, some of the
respondents had already been under the SKILLEX employ.

On April 21, 2008, SKILLEX entered into a Contract of Janitorial Service (service contract) with Robinsons
Land Corporation (Robinsons). Both agreed that the SKILLEX shall supply janitorial, manpower and
sanitation services to Robinsons Place Ermita Mall for a period of 1 year - from January 1, 2008 to
December 31, 2008. Pursuant to this, the respondents were deployed to Robinsons.

Halfway through the service contract, the SKILLEX asked the respondents to execute individual contracts
which stipulated that their respective employments shall end on December 31, 2008, unless earlier
terminated.

The SKILLEX and Robinsons no longer extended their contract of janitorial services. Consequently, the
SKILLEX dismissed the respondents as they were project employees whose duration of employment was
dependent on the SKILLEX’s service contract with Robinsons.
NLRC:

Respondents’ Contentions: The respondents responded to the termination of their employment by filing
a complaint for illegal dismissal with the NLRC. They argued that they were not project employees; they
were regular employees who may only be dismissed for just or authorized causes. The respondents also
asked for payment of their unpaid wage differential, 13th month pay differential, service incentive leave
pay, holiday pay and separation pay.

Labor Arbitration Ruling:

The LA ruled in the SKILLEX’s favor. He held that the respondents were NOT regular employees. They
were project employees whose employment was dependent on the SKILLEX’s service contract with
Robinsons. Since this contract was not renewed, the respondents’ employment contracts must also be
terminated.

Also, in light of the SKILLEX’s admission during the clarificatory hearing that the respondents were
entitled to their wage differential pay, 13th month differential pay and holiday pay, the LA granted the
respondents’ money claims in the amount of ₱103,501.01.

Respondents’ Appeal to the NLRC:

The respondents disagreed with the LA and appealed to the NLRC.

NLRC’s Ruling: NLRC reversed the LA’s ruling and held that the respondents were regular employees. The
NLRC considered that the respondents had been under the SKILLEX’s employ for more than 1 year
already.

Thus, as regular employees, the respondents may only be dismissed for just or authorized causes, which
the SKILLEX failed to show. The NLRC also awarded the respondents their separation pay of 1 month for
every year of service as well as their full backwages from the date of their illegal dismissal, until the
finality of the decision.

CA's Ruling
The CA dismissed the SKILLEX’s certiorari petition and affirmed the NLRC’s decision.

The CA noted that the SKILLEX individually hired the respondents on various dates to work as janitors,
service crews and sanitation aides. These jobs were necessary or desirable to the SKILLEX’s business of
providing janitorial, manpower and sanitation services to its clients. The continuing need for the
respondents’ services, which lasted for more than 1 year, validated that the respondents were regular
and NOT project employees.

The CA also ruled that the fixed term employment contracts signed by the respondents had no binding
effect. The SKILLEX only used these contracts to justify the respondents’ illegal dismissal; the SKILLEX
never asked the respondents to execute any contract since their initial hiring. Only after it became
apparent that the SKILLEX’s service contract with Robinsons would not be renewed, did the SKILLEX ask
the respondents to sign their employment contracts. This circumstance, coupled with the threat that the
respondents would NOT be given their salaries if they would not sign the contracts, showed the SKILLEX’s
intent to use the contracts to prevent the respondents from attaining regular status.

Lastly, the CA held that petitioners Rana and Burgos, the president and general manager of SKILLEX,
respectively, are solidarily liable with the corporation for the payment of the respondents’ monetary
awards. As corporate officers, they acted in bad faith when they intimidated the respondents in the
course of asking them to sign their individual employment contracts.

The Petition:

SKILLEX’s Contentions:

The SKILLEX now submits that the CA erred in ruling that the respondents were regular employees and
that they had been illegally dismissed.

The respondents’ contracts of employments did not only provide for a fixed term, but were also
dependent on the continued existence of the Robinsons’ service contract. Since this main contract had
not been renewed, the respondents’ respective employment contracts were properly terminated. Based
on this reasoning, no illegal dismissal took place, only the expiration of the respondents’ fixed term
contracts.
In the absence of any illegal dismissal, the CA also erred in affirming the NLRC's award of separation pay
to the respondents.

Lastly, the SKILLEX asserts that Rana and Burgos should not be held solidarily liable with the corporation
for respondents’ monetary claims; they have personalities separate and distinct from the corporation.

Respondents’ Contentions:

The respondents reiterate that even before the execution of the SKILLEX’s service contract with
Robinsons, they had already been working for the SKILLEX between the years 1998 to 2007. Since their
hiring, they had been performing janitorial and other manpower activities that were necessary or
desirable to the SKILLEX’s business.

They further argue that the employment contracts they executed were void since these were signed
under duress; the SKILLEX threatened not to release their salaries if they would refuse to sign.

Lastly, the respondents assert that the CA did not err in holding Rana and Burgos solidarily liable with the
corporation. These officers acted in bad faith when they obliged the respondents to execute the
employment contracts under threat.

SC’s Ruling: SKILLEX’s petition is DENIED.

The respondents are regular employees, NOT project employees.

Article 294 of the Labor Code governs the determination of whether an employee is a regular or a
project employee. Under this provision, there are 2 kinds of regular employees, namely:

1. those who were engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and

2. those casual employees who became regular after one year of service, whether continuous or
broken, but only with respect to the activity for which they have been hired
On the other hand, a project employee is one whose employment was fixed for a specific project or
undertaking, whose completion or termination had been determined at the time of engagement.

The primary standard in determining regular employment is the reasonable connection between the
particular activity performed by the employee and the employer’s business or trade. This connection can
be ascertained by considering the nature of the work performed and its relation to the scheme of the
particular business, or the trade in its entirety.

Guided by this test, SC concluded that the respondents’ work as janitors, service crews and sanitation
aides, are necessary or desirable to the SKILLEX's business of providing janitorial and manpower services
to its clients as an independent contractor.

Also, the respondents had already been working for the SKILLEX as early as 1998. Even before the service
contract with Robinsons, the respondents were already under the SKILLEX’s employ. They had been
doing the same type of work and occupying the same positions from the time they were hired and until
they were dismissed. The SKILLEX did not present any evidence to refute the respondents’ claim that
from the time of their hiring until the time of their dismissal, there was no gap in between the projects
where they were assigned to. The SKILLEX continuously availed of their services by constantly deploying
them to its clients.

Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the SKILLEX’s case, the
contractor or subcontractor is considered as the employer of the contractual employee for purposes of
enforcing the provisions of the Labor Code and other social legislation.

DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including
the following:

a. safe and healthful working conditions;

b. labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month
pay and separation pay;

c. social security and welfare benefits;

d. self-organization, collective bargaining and peaceful concerted action; and

e. security of tenure
In this light, SC concluded that although the respondents were assigned as contractual employees to the
SKILLEX's various clients, under the law, they remain to be the SKILLEX's regular employees, who are
entitled to all the rights and benefits of regular employment.

The respondents’ employment contracts, which were belatedly signed, are voidable. The records show
that at the time of the respondents’ dismissal, they had already been continuously working for the
SKILLEX for more than 1 year. Despite this, they never signed any employment contracts with the
SKILLEX, except the contracts they belatedly signed when the SKILLEX’s own contract of janitorial services
with Robinsons neared expiration.

As already discussed, for an employee to be validly categorized as a project employee, it is necessary

that the specific project or undertaking had been identified and its period and completion date
determined and made known to the employee at the time of his engagement. This provision ensures
that the employee is completely apprised of the terms of his hiring and the corresponding rights and
obligations arising from his undertaking.

Notably, the SKILLEX’s service contract with Robinsons was from January 1 to December 31, 2008. The
respondents were only asked to sign their employment contracts for their deployment with Robinsons
halfway through 2008, when the SKILLEX’s service contract was about to expire. SC found the timing of
the execution of the respondents’ respective employment contracts to be indicative of the SKILLEX’s
calculated plan to evade the respondents’ right to security of tenure, to ensure their easy dismissal as
soon as the Robinsons' contract expired. The attendant circumstances cannot but raise doubts as to
SKILLEX's good faith.

If SKILLEX really intended the respondents to be project employees, then the contracts should have been
executed right from the time of hiring, or when the respondents were first assigned to Robinsons, not
when the SKILLEX's service contract was winding up.

The terms and conditions of the respondents’ engagement should have been disclosed and explained to
them from the commencement of their employment. The SKILLEX’s failure to do so supports the
conclusion that it had been in bad faith in evading the respondents’ right to security of tenure.
Also, under Article 1390 of the Civil Code, contracts where the consent of a party was vitiated by
mistake, violence, intimidation, undue influence or fraud, are voidable. The SKILLEX’s threat of non-
payment of the respondents’ salaries clearly amounted to intimidation. Under this situation, and the
suspect timing when these contracts were executed, SC ruled that these employment contracts were
voidable and were effectively questioned when the respondents filed their illegal dismissal complaint.

The respondents were illegally dismissed.

To be valid, an employee’s dismissal must comply with the substantive and procedural requirements of
due process.

• Substantively, a dismissal should be supported by a just or authorized cause.

• Procedurally, the employer must observe the twin notice and hearing requirements in carrying out
an employee’s dismissal.

The SKILLEX argues that these substantive and procedural requisites do not apply to the respondents’
case since they were employed under fixed term contracts. According to the SKILLEX, the respondents’
employment contracts lapsed by operation of law as the necessary consequence of the termination and
non-renewal of its service contract with Robinsons. Because of this, there was no illegal dismissal to
speak of, only contract expiration.

SC does not agree with the SKILLEX.

Having already determined that the respondents are regular employees and not project employees, and
that the respondents’ belated employment contracts could not be given any binding effect for being
signed under duress, we hold that illegal dismissal took place when the SKILLEX failed to comply with the
substantive and procedural due process requirements of the law.

The SKILLEX also asserts that the respondents’ subsequent absorption by Robinsons’ new contractors
Fieldmen Janitorial Service Corporation and Altaserv negates their illegal dismissal. This reasoning is
patently erroneous. The charge of illegal dismissal was made only against the SKILLEX which is a separate
juridical entity from Robinsons’ new contractors; it cannot escape liability by riding on the goodwill of
others.
By law, the SKILLEX must bear the legal consequences of its violation of the respondents’ right to security
of tenure. The facts of this case show that since the respondents’ hiring, they had been under the
SKILLEX’s employ as janitors, service crews and sanitation aides. Their services had been continuously
provided to the SKILEX without any gap. Notably, the SKILLEX never refuted this allegation of the
respondents. Further, there was no allegation that the SKILLEX went out of business after the non-
renewal of the Robinsons' service contract. Thus, had it not been for the respondents’ dismissal, they
would have been deployed to the SKILLEX’s other existing clients.

SC also ruled that the respondents are entitled to their full backwages, inclusive of their allowances and
other benefits from the time of their dismissal up to their actual reinstatement.

With regard to the award of separation pay, the SC agreed with the CA’s finding that this litigation
resulted to strained relations between the SKILLEX and the respondents. Thus, SC also affirmed the CA’s
ruling that instead of reinstatement, the respondents should be paid their respective separation pays
equivalent to 1 month pay for every year of service.

The SC modified the CA’s ruling that Rana and Burgos, should be held solidarily liable with the
corporation for its monetary liabilities with the respondents. A corporation is a juridical entity with legal
personality separate and distinct from those acting for and in its behalf and, in general, from the people
comprising it. The general rule is that, obligations incurred by the corporation, acting through its
directors, officers and employees, are its sole liabilities.

A director or officer shall only be personally liable for the obligations of the corporation, if the following
conditions concur:

1. the complainant alleged in the complaint that the director or officer assented to patently unlawful
acts of the corporation, or that the officer was guilty of gross negligence or bad faith; and

2. the complainant clearly and convincingly proved such unlawful acts, negligence or bad faith

In this case, the respondents failed to show the existence of the 1st requisite. They did not specifically
allege in their complaint that Rana and Burgos willfully and knowingly assented to the SKILLEX’s patently
unlawful act of forcing the respondents to sign the dubious employment contracts in exchange for their
salaries. The respondents also failed to prove that Rana and Burgos had been guilty of gross negligence
or bad faith in directing the affairs of the corporation.

To hold an officer personally liable for the debts of the corporation, and thus pierce the veil of corporate
fiction, it is necessary to clearly and convincingly establish the bad faith or wrongdoing of such officer,
since bad faith is never presumed. Because the respondents were not able to clearly show the definite
participation of Burgos and Rana in their illegal dismissal, SC upheld the general rule that corporate
officers are NOT personally liable for the money claims of the discharged employees, unless they acted
with evident malice and bad faith in terminating their employment.