SAN MIGUEL BREWERY V.

OPLE
Facts: In 1979, A CBA was entered into by petitioner and private respondent San Miguel Corporation. The
company introduced a new marketing scheme known as Complementary Distribution System (CDS) whereby
its beer products were offered for sale directly to wholesalers through San Miguels sales offices. The labor
union filed a complaint for ULP on the ground that the CDS is contrary to the existing marketing scheme
whereby the wholesalers had to buy beer products from the route salesmen, not from the company and thus
violates
the
CBA
thereby
reducing
the
take
home
pay
of
the
salesmen.
The
Minister
of
Labor
dismissed
the
unions
notice
of
strike.
Issue:

Whether

or

not

the

CDS

is

valid

exercise

of

management

prerogative

Held: Yes. Except as limited by special laws, an ER is free to regulate, according to his own discretion and
judgment, all aspects of employment. Every business enterprise endeavors to increase its profits. In the process,
it may adopt or devise means designed towards that goal. So long as the companys management prerogatives
are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws and under valid agreements, the Court will
uphold them.
Gaa vs. CA
FACTS: Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at
T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator. On December
12, 1973, Europhil Industries commenced an action (Civil Case No. 92744) in the Court of First Instance of
Manila for damages against petitioner "for having perpetrated certain acts that Europhil Industries considered a
trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and
gate passes of its officials and employees." On June 28, 1974, said court rendered judgment in favor of
respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages,
P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. A Notice of Garnishment
was issued upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission
and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment on the ground that her "salaries, commission and, or remuneration are exempted from execution
under Article 1708 of the New Civil Code. Petitioner filed with the Court of Appeals a petition for certiorari
against filed with the Court of Appeals a petition for certiorari against said order. The Court of Appeals
dismissed the petition for certiorari.
ISSUE: WON the petitioner is not a mere laborer as contemplated under Article 1708.
HELD: YES. It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly
place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel" so as to ensure the cleanliness, maintenance and orderliness of all
guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of
petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that
of a managerial or supervisory position. Article 1708 used the word "wages" and not "salary" in relation to
"laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as
distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated
times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment,
or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates
considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a
larger and more important service. The legislature did not intend the exemption in Article 1708 of the New Civil
Code to operate in favor of any but those who are laboring men or women in the sense that their work is
manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present
support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is
definitely not within that class

Title of the Case: WILTSHIRE FILE CO., INC., v. NLRC and VICENTE T. ONG
G.R. No: 82249 ;February 7, 1991
Facts:
Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc.
("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary of P14,375.00
excluding commissions from sales which averaged P5,000.00 a month. He also enjoyed vacation leave with pay
equivalent to P7,187,50 per year, as well as hospitalization privileges to the extent of P10,000.00 per year.
Contentions of the respondent Ong:
Private respondent Ong filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal
dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the
company was then performing the same duties. Private respondent further contended that retrenching him could
not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the
Company had an unprecedented increase in domestic market share the preceding year. For that accomplishment,
he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales
Executives five (5) months prior to his termination.
Contentions of the petitioner:
In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting
measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it
was in fact forced to rotate its employees in order to save the company. Despite the rotation of employees,
petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager
of the company, became redundant.
In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not
illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled
to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination
does not necessarily mean duplication of work but a "situation where the services of an employee are in excess
of what is demanded by the needs of an undertaking . . ."
Decision of the NLRC:
In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's
services illegal and ordered petitioner to pay private respondent backwages in the amount of P299,000.00,
unpaid salaries in the amount of P22,352.11, accumulated sick and vacation leaves in the amount of P12,543.91,
hospitalization benefit package in the amount of P10,000.00, unpaid commission in the amount of P57,500,00,
moral damages in the amount of P100,000.00 and attorney's fees in the amount of P51,639.60.
Issues:
1. Whether or not the petitioner had serious financial difficulties?
2. Whether or not the dismissal of the private respondent Ong is valid on the ground retrenchment.
Held:
1. Yes, petitioner had serious financial difficulties. Having reviewed the record of this case, the Court has satisfied
itself that indeed petitioner had serious financial difficulties before, during and after the termination of the

services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year
ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of
P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00.
In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00,
it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire
finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years
after the termination of private respondent's employment. We consider that finally shutting down business
operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it
very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its
operations in the Philippines simply for the sole purpose of easing out a particular officer or employee, such as
the private respondent.
2. Yes, the dismissal of the private respondent Ong is valid on the ground of retrenchment. We note that while the
letter informing private respondent of the termination of his services used the word "redundant", that letter also
referred to the company having "incurred financial losses which in fact has compelled it to resort to
retrenchment to prevent further losses".
We do not believe that redundancy in an employer's personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding the same position that private respondent held prior to
the termination of his services, does not show that his position had not become redundant. Indeed, in any wellorganized business enterprise, it would be surprising to find duplication of work and two (2) or more people
doing the work of one person. We believe that redundancy, for purposes of our Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously manufactured or undertaken by
the enterprise.
The employer has no legal obligation to keep in its payroll more employees than are necessarily for the
operation of its business.
It is of no legal moment that the financial troubles of the company were not of private respondent's making.
Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to
the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary
or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner
company. The wisdom or soundness of such characterization or decision was not subject to discretionary review
on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and
malicious action is not shown.
The determination of the continuing necessity of a particular officer or position in a business corporation is
management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of
discretion or merely arbitrary or malicious action on the part of management is shown.
ROYAL PLANT WORKERS UNION VS. COCA-COLA BOTTLERS PHILS.
Facts: The bottling operators of then Bottling Line 2 were provided with chairs upon their request. The bottling
operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request was
likewise granted. Subsequently, the chairs provided for the operators were removed pursuant to a national
directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner for
bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of bottling operators to constantly
move about in the performance of their duties and responsibilities. With this task of moving constantly to check
on the machinery and equipment assigned to him, a bottling operator does not need a chair anymore, hence,
petitioners directive to remove them. Furthermore, CCBPI rationalized that the removal of the chairs is
implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their persons.

The bottling operators took issue with the removal of the chairs. Through the representation of herein
respondent, they initiated the grievance machinery of the Collective Bargaining Agreement (CBA). Even after
exhausting the remedies contained in the grievance machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and respondent still against such measure. As such,
respondent sent a Notice to Arbitrate to petitioner stating its position to submit the issue on the removal of the
chairs for arbitration. Nevertheless, before submitting to arbitration the issue, both parties availed of the
conciliation/mediation proceedings before the NCMB. They failed to arrive at an amicable settlement.
Thus, the process of arbitration continued and the parties appointed the chairperson and members of the
Arbitration Committee as outlined in the CBA. The Arbitration Committee rendered a decision in favor of the
Royal Plant Workers Union (the Union) and against CCBPI. Not contented with the Arbitration Committees
decision, CCBPI filed a petition for review under Rule 43 before the CA. The CA rendered a contrasting
decision which nullified and set aside the decision of the Arbitration Committee.
Issue: Was the removal of the bottling operators chairs from CCBPIs production/manufacturing lines a valid
exercise of a management prerogative?
Ruling: The Court has held that management is free to regulate, according to its own discretion and judgment,
all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of
labor.
In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform
their duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were
carefully studied with due regard to the welfare of the members of the Union. The removal of the chairs was
compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 )hour rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the break period from
15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid
instances of operators sleeping on the job while in the performance of their duties and responsibilities and
because of the fact that the chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPIs
exercise of its management prerogative was made in good faith without doing any harm to the workers rights.
The rights of the Union under any labor law were not violated. There is no law that requires employers to
provide chairs for bottling operators. The CA correctly ruled that the Labor Code, specifically Article 132
thereof, only requires employers to provide seats for women. No similar requirement is mandated for men or
male workers. It must be stressed that all concerned bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of the
Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive did not expose the bottling
operators to safety and health hazards.
The operators chairs cannot be considered as one of the employee benefits covered in Article 100 of the Labor
Code. In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to monetary benefits
or privileges given to the employee with monetary equivalents. Such benefits or privileges form part of the
employees wage, salary or compensation making them enforceable obligations.

ERNESTO G. YMBONG vs. ABS-CBN BROADCASTING CORPORATION, VENERANDA SY

AND DANTE LUZON
FACTS: Petitioner Ernesto G. Ymbong started working for ABS-CBN in 1993 at its regional station in
Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later
extended to radio when ABS-CBN Cebu launched its AM station in 1995.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as
talent, director and scriptwriter for various radio programs aired.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy on Employees Seeking Public
Office. The pertinent portions read:
1. Any employee who intends to run for any public office position, must file his/her letter of
resignation, at least thirty (30) days prior to the official filing of the certificate of candidacy either for national
or local election.
xxxx
3. Further, any employee who intends to join a political group/party or even with no political affiliation
but who intends to openly and aggressively campaign for a candidate or group of candidates (e.g. publicly
speaking/endorsing candidate, recruiting campaign workers, etc.) must file a request for leave of absence
subject to managements approval. For this particular reason, the employee should file the leave request at
least thirty (30) days prior to the start of the planned leave period.
Luzon, however, admitted that upon double-checking of the exact text of the policy he saw that the policy
actually required suspension for those who intend to campaign for a political party or candidate and resignation
for those who will actually run in the elections.
After the issuance of the Memorandum, Ymbong got in touch with Luzon. Luzon claims that
Ymbong approached him and told him that he would leave radio for a couple of months because he will
campaign for the administration ticket. It was only after the elections that they found out that Ymbong actually
ran for public office himself at the eleventh hour. Ymbong, on the other hand, claims that in accordance with
the Memorandum, he informed Luzon through a letter that he would take a few months leave of absence
because he was running for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for
Naga. According to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on leave
once he files a certificate of candidacy. Thus, Patalinghug wrote Luzon his resignation letter.
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections. Later, Ymbong and
Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they
cannot work there anymore because of company policy.
ABS-CBN, however, agreed out of pure liberality to give them a chance to wind up their participation in the
radio drama since it was rating well and to avoid an abrupt ending. The agreed winding-up, however,
dragged on for so long prompting Luzon to issue to Ymbong a memorandum stating that his
involvement as narrator of the drama continues until its director wraps it up one week upon receipt of a separate
memo.
Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to
work as a regular talent and in fact continued to receive his salary. On he received a memorandum
stating that his services are being terminated immediately, much to his surprise. Thus, he filed an illegal
dismissal. He argued that the ground cited by ABS-CBN for his dismissal was not among those
enumerated in the Labor Code. And even granting without admitting the existence of the company policy
supposed to have been violated, Ymbong averred that it was necessary that the company policy meet certain
requirements before willful disobedience of the policy may constitute a just cause for termination. Ymbong

further argued that the company policy violates his constitutional right to suffrage. Patalinghug likewise filed
an illegal dismissal complaint against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug.
ISSUES: 1) Whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed
by ABS-CBN; 2) Whether such policy is valid
RULING: We have consistently held that so long as a companys management prerogatives are exercised in
good faith for the advancement of the employers interest and not for the purpose of defeating or circum
circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold
them. It is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from
any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any
way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.
It is worth noting that such exercise of management prerogative has earned a stamp of approval from no less
than our Congress itself when on February 12, 2001, it enacted Republic Act No. 9006, otherwise known as the
Fair Election Act. Section 6.6 thereof reads:
6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or
personality who is a candidate for any elective public office or is a campaign volunteer for or employed or
retained in any capacity by any candidate or political party shall be deemed resigned, if so required by
their employer, or shall take a leave of absence from his/her work as such during the campaign
period: Provided, That any media practitioner who is an official of a political party or a member of the
campaign staff of a candidate or political party shall not use his/her time or space to favor any candidate or
political party.
We find no merit in Ymbongs argument that his automatic termination x x x was a blatant [disregard] of
[his] right to due process as he was never asked to explain why he did not tender his resignation before he ran
for public office as mandated by [the subject company policy]. Ymbongs overt act of running for councilor
of Lapu-Lapu City is tantamount to resignation on his part. He was separated from ABS-CBN not because he
was dismissed but because he resigned. Since there was no termination to speak of, the requirement of due
process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to
explain why he did not tender his resignation before he ran for public office as mandated by the subject
company policy.

G.R. No. 181881

October 18, 2011

BRICCIO "Ricky" A. POLLO, Petitioner,

vs.
CHAIRPERSON KARINA CONSTANTINO-DAVID, DIRECTOR IV RACQUEL DE GUZMAN
BUENSALIDA, DIRECTOR IV LYDIA A. CASTILLO, DIRECTOR III ENGELBERT ANTHONY D.
UNITE AND THE CIVIL SERVICE COMMISSION, Respondents.
Pollo is a former Supervising Personnel Specialist of the CSC Regional Office No. IV and also the OIC
of the Public Assistance and Liaison Division (PALD) under the "Mamamayan Muna Hindi Mamaya Na"
program of the CSC.
On January 3, 2007, an unsigned letter-complaint was received by CSC Chairperson Karina
Constantino. The letter provides that one of the employees of CSC is lawyering for many who have pending
cases in the CSC. Chairperson David immediately formed a team of four personnel with background in IT and
directed them to conduct an investigation and specifically "to back up all the files in the computers found in the

Mamamayan Muna (PALD) and Legal divisions." The team proceeded at once to the CSC-ROIV office at
Panay Avenue, Quezon City. Upon their arrival thereat, the team informed the officials of the CSC-ROIV,
respondents Director IV Lydia Castillo and Director III Engelbert Unite of Chairperson Davids directive.
The backing-up of all files in the hard disk of computers at the PALD and Legal Services Division (LSD) was
witnessed by several employees, together with Directors Castillo and Unite who closely monitored said activity.
The next day, all the computers in the PALD were sealed and secured for the purpose of preserving all the files
stored therein. Several diskettes containing the back-up files sourced from the hard disk of PALD and LSD
computers were turned over to Chairperson David. The contents of the diskettes were examined by the CSCs
Office for Legal Affairs (OLA). It was found that most of the files in the 17 diskettes containing files copied
from the computer assigned to and being used by the petitioner, numbering about 40 to 42 documents, were
draft pleadings or letters in connection with administrative cases in the CSC and other tribunals. On the basis of
this finding, Chairperson David issued the Show-Cause Order requiring the petitioner, who had gone on
extended leave, to submit his explanation or counter-affidavit within five days from notice.
Petitioner denied that he is the person referred to in the anonymous letter-complaint which had no
attachments to it, because he is not a lawyer and neither is he "lawyering" for people with cases in the CSC. He
pointed out that though government property, the temporary use and ownership of the computer issued under a
Memorandum of Receipt (MR) is ceded to the employee who may exercise all attributes of ownership,
including its use for personal purposes. In view of the illegal search, the files/documents copied from his
computer without his consent is thus inadmissible as evidence, being "fruits of a poisonous tree."
CSC issued a resolution charging him with Dishonesty, Grave Misconduct, Conduct Prejudicial to the
Best Interest of the Service and Violation of R.A. No. 6713. Since the charges fall under Section 19 of the
URACC, petitioner was likewise placed under 90 days preventive suspension effective immediately upon
receipt of the resolution.
Petitioner assailed the formal charge as without basis having proceeded from an illegal search which is
beyond the authority of the CSC Chairman, such power pertaining solely to the court.
On April 17, 2007, petitioner received a notice of hearing from the CSC setting the formal investigation.
However, in view of the absence of petitioner and his counsel, petitioner was deemed to have waived his right
to the formal investigation which then proceeded ex parte. CSC issued a resolution dismissing the petitioner
from service.
On appeal, the CA dismissed the petition for certiorari after finding no grave abuse of discretion committed by
respondents CSC officials.
ISSUE:

Whether or not the search conducted in the office computer and copying of personal files are
valid exercise of management prerogative.

RULING: YES.
Even when employers conduct an investigation, they have an interest substantially different from "the
normal need for law enforcement." x x x Public employers have an interest in ensuring that their agencies
operate in an effective and efficient manner, and the work of these agencies inevitably suffers from the
inefficiency, incompetence, mismanagement, or other work-related misfeasance of its employees. Indeed, in
many cases, public employees are entrusted with tremendous responsibility, and the consequences of their
misconduct or incompetence to both the agency and the public interest can be severe. In contrast to law
enforcement officials, therefore, public employers are not enforcers of the criminal law; instead, public
employers have a direct and overriding interest in ensuring that the work of the agency is conducted in a proper
and efficient manner. In our view, therefore, a probable cause requirement for searches of the type at issue
here would impose intolerable burdens on public employers. The delay in correcting the employee
misconduct caused by the need for probable cause rather than reasonable suspicion will be translated

into tangible and often irreparable damage to the agencys work, and ultimately to the public interest. x x
x
In sum, we conclude that the "special needs, beyond the normal need for law enforcement make the
probable-cause requirement impracticable," x x x for legitimate, work-related noninvestigatory
intrusions as well as investigations of work-related misconduct. A standard of reasonableness will neither
unduly burden the efforts of government employers to ensure the efficient and proper operation of the
workplace, nor authorize arbitrary intrusions upon the privacy of public employees. We hold, therefore,
that public employer intrusions on the constitutionally protected privacy interests of government
employees for noninvestigatory, work-related purposes, as well as for investigations of work-related
misconduct,should be judged by the standard of reasonableness under all the circumstances. Under this
reasonableness standard, both the inception and the scope of the intrusion must be reasonable:
"Determining the reasonableness of any search involves a twofold inquiry: first, one must consider whether
theaction was justified at its inception, x x x ; second, one must determine whether the search as actually
conducted was reasonably related in scope to the circumstances which justified the interference in the first
place," x x x
Ordinarily, a search of an employees office by a supervisor will be "justified at its inception" when there
are reasonable grounds for suspecting that the search will turn up evidence that the employee is guilty of
work-related misconduct, or that the search is necessary for a noninvestigatory work-related
purpose such as to retrieve a needed file. x x x The search will be permissible in its scope when "the
measures adopted are reasonably related to the objectives of the search and not excessively intrusive in
light of the nature of the [misconduct]."
The CSC in this case had implemented a policy that put its employees on notice that they have no expectation of
privacy in anything they create, store, send or receive on the office computers, and that the CSC may monitor
the use of the computer resources using both automated and human means. This implies that on-the-spot
inspections may be done to ensure that the computer resources were used only for such legitimate business
purposes.
The search of petitioners computer files was conducted in connection with investigation of work-related
misconduct prompted by an anonymous letter-complaint addressed to Chairperson David regarding anomalies
in the CSC-ROIV where the head of the Mamamayan Muna Hindi Mamaya Na division is supposedly
"lawyering" for individuals with pending cases in the CSC.
A search by a government employer of an employees office is justified at inception when there are reasonable
grounds for suspecting that it will turn up evidence that the employee is guilty of work-related misconduct.
Even conceding for a moment that there is no such administrative policy, there is no doubt in the mind of the
Commission that the search of Pollos computer has successfully passed the test of reasonableness for
warrantless searches in the workplace as enunciated in the above-discussed American authorities. It bears
emphasis that the Commission pursued the search in its capacity as a government employer and that it
was undertaken in connection with an investigation involving a work-related misconduct, one of the
circumstances exempted from the warrant requirement. At the inception of the search, a complaint was received
recounting that a certain division chief in the CSCRO No. IV was "lawyering" for parties having pending cases
with the said regional office or in the Commission. The nature of the imputation was serious, as it was
grievously disturbing. If, indeed, a CSC employee was found to be furtively engaged in the practice of
"lawyering" for parties with pending cases before the Commission would be a highly repugnant scenario, then
such a case would have shattering repercussions. It would undeniably cast clouds of doubt upon the institutional
integrity of the Commission as a quasi-judicial agency, and in the process, render it less effective in fulfilling its
mandate as an impartial and objective dispenser of administrative justice. It is settled that a court or an
administrative tribunal must not only be actually impartial but must be seen to be so, otherwise the general
public would not have any trust and confidence in it.

Considering the damaging nature of the accusation, the Commission had to act fast, if only to arrest or
limit any possible adverse consequence or fall-out. Thus, on the same date that the complaint was received, a
search was forthwith conducted involving the computer resources in the concerned regional office. That it was
the computers that were subjected to the search was justified since these furnished the easiest means for
an employee to encode and store documents. Indeed, the computers would be a likely starting point in
ferreting out incriminating evidence. Concomitantly, the ephemeral nature of computer files, that is, they
could easily be destroyed at a click of a button, necessitated drastic and immediate action. Pointedly, to
impose the need to comply with the probable cause requirement would invariably defeat the purpose of the
wok-related investigation.

Manila Pavilion vs Henry Delada

Facts:
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH originally assigned as
Head Waiter of Rotisserie then reassigned him as Head Waiter of Seasons Coffee Shop but respondent declined
the inter-outlet transfer and instead asked for a grievance meeting on the matter, pursuant to their Collective
Bargaining Agreement (CBA). He also requested his retention as Head Waiter of Rotisserie while the grievance
procedure was ongoing. The Mgt. denied the request and he kept on reporting to Rotisserie.
MPH sent him several memoranda requiring him to explain in writing why he should not be penalized for the
following offenses gross insubordination etc. Delada persistently rebuffed orders for him to report to his new
assignment.
While respondents Complaint is pending MPH citing security and safety reasons, placed respondent on a 30day preventive suspension. Thereafter found Delada guilty imposing the penalty of 90-day suspension.
Issue:
W/N MP retained the authority to continue with the administrative case against Delada for insubordination and
willful disobedience of the transfer order.
Held:
We rule that petitioner Manila Pavilion Hotel had the authority to continue with the administrative proceedings
for insubordination and willful disobedience against Delada and to impose on him the penalty of suspension.
Consequently, petitioner is not liable to pay back wages and other benefits for the period corresponding to the
penalty of 90-day suspension.
First, it must be pointed out that the basis of the 30-day preventive suspension imposed on Delada was different
from that of the 90-day penalty of suspension. The 30-day preventive suspension was imposed by MPH on the
assertion that Delada might sabotage hotel operations if preventive suspension would not be imposed on him.
On the other hand,
the penalty of 90-day suspension was imposed on respondent as a form of disciplinary action. It was the
outcome of the administrative proceedings conducted against him.
Preventive suspension is a disciplinary measure resorted to by the employer pending investigation of an alleged
malfeasance or misfeasance committed by an employee.[7] The employer temporarily bars the employee from
working if his continued employment poses a serious and imminent threat to the life or property of the employer
or of his co-workers.
the penalty of suspension refers to the disciplinary action imposed on the employee after an official
investigation or administrative hearing is conducted.[9] The employer exercises its right to discipline erring
employees pursuant to company rules and regulations.[10] Thus, a finding of validity of the penalty of 90-day
suspension will not embrace the issue of the validity of the 30-day preventive suspension. In any event,
petitioner no longer assails the ruling of the CA on the illegality of the 30-day preventive suspension.
St. Luke's Medical Center v. NLRC
Facts:
1. The private respondent Maribel Santos worked as an X-Ray technician at the petitioner hospital (SLMC) but
she does not possess a certificate of registration as required under the newly passed Radiologic Act or RA 7431.
Due to her non-compliance and her failure to pass the exams, she was separated.
2. The private respondent filed a complaint for illegal dismissal and non-payment of salaries and other monetary
benefits. The Labor Arbiter ordered the petitioner to pay respondent separation pay and this was affirmed by
both NLRC and the Court of Appeals, hence this petition. The petitioner contended that respondent dismissal
was valid.
Issue: Whether or not an employer can validly dismiss an employee based on her inability to secure a
certification as required by the Board
RULING: Yes, The petitioner is merely exercising its management prerogative and these rights are entitled
respect and enforcement in the interest of fair play. There was no malice imputed upon an employer where the
separation of an employee is undertaken in conformance with an existing law as in this case.
Management prerogatives include the right of the employer to determine the place or station where an employee

is best qualified to serve the interests of the company on the basis of the qualifications, training and
performance.

STAR PAPER CORPORATION vs. SIMBOL

G.R. No. 164774

April 12, 2006

PUNO, J.:

FACTS: Petitioner Star Paper (the company) is a corporation engaged in trading principally of paper
products. The company has a policy which reads as follows:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.

2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly
relationship during the course of their employment and then decided to get married, one of them should resign
to preserve the policy stated above.

Simbol, Comia and Estrella were hired by the company on different dates. While working they met their
respective significant other who also working in the company and later on got married. All of them were
reminded that pursuant to a company policy of one them should resign. They filed later on a dismissal case and
averred that the a company policy is illegal and contravenes Article 136 of the Labor Code.

HELD:

Petitioners sole contention that "the company did not just want to have two (2) or more of its employees
related between the third degree by affinity and/or consanguinity" is lame. That the second paragraph was meant
to give teeth to the first paragraph of the questioned rule is evidently not the valid reasonable business necessity
required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job,
but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of
Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could
be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the
case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married Howard Comia,
then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create
policies based on an unproven presumption of a perceived danger at the expense of an employees right to
security of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are
free to marry persons other than co-employees. The questioned policy may not facially violate Article 136 of the

Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could
pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot
prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit
the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently
draw inferences from the legislatures silence41 that married persons are not protected under our Constitution
and declare valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of
management prerogative.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.

FACTS:
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as
medical representative.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and
abide by existing company rules; to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug companies and should
management find that such relationship poses a possible conflict of interest, to resign from the company.
Company's Code of Employee Conduct provides the same with stipulation that management may transfer the
employee to another department in a non-counterchecking position or preparation for employment outside of
the company after 6 months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales
area.Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She
supervised the district managers and medical representatives of her company and prepared marketing strategies
for Astra in that area. Before getting married, Tecson's District Manager reminded him several times of the
conflict of interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of
conflict of intrest. Tecson asked for time to comply with the condition (that either he or Betsy resign from their
respective positions). Unable to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao CityAgusan del Sur sales area. After his request against transfer was denied, Tecson brought the matter to Glaxo's
Grievance Committee and while pending, he continued to act as medical representative in the Camarines SurCamarines Norte sales area. On Nov. 15, 2000, the National Conciliation and Mediation Board ruled that
Glaxo's policy was valid.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision. The
Court of Appeals denied the Petition for Review. Motion for reconsideration was also denied.
ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company is valid.

RULING: YES.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos
employees is reasonable under the circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests
against the possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional
policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in
favor of the workers. The law also recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play.
The challenged company policy does not violate the equal protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only
to the state or those acting under color of its authority. Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal protection clause erects no shield against merely private conduct,
however, discriminatory or wrongful. The only exception occurs when the state in any of its manifestations or
actions has been found to have become entwined or involved in the wrongful private conduct. Obviously,
however, the exception is not present in this case. Significantly, the company actually enforced the policy after
repeated requests to the employee to comply with the policy. Indeed, the application of the policy was made in
an impartial and even-handed manner, with due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear
that Glaxo does not impose an absolute prohibition against relationships between its employees and those of
competitor companies. Its employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the
company that may arise out of such relationships.
The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents
Employee Code of Conduct and of its contracts with its employees, such as that signed by Tescon, was made
known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his
employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law
between them and, thus, should be complied with in good faith." He is therefore estopped from questioning said
policy.

DATOR VS. UNIVERSITY OF SANTO TOMAS

Facts:
Petitioner Roque D.A. Dator was hired by respondent University of Santo Tomas (UST) in June 1983 as
Instructor I of the Institute of Religion with a maximum teaching load of 24 units. On December 15, 1995,
petitioner was also hired as Graft Investigation Officer II with the Office of the Ombudsman but he failed to
disclose such other employment to respondents, who discovered the same only during the first semester of
School Year 2000-2001.
Thus, on 2000, petitioner was informed that his teaching load would be reduced to 12 hours per week,
pursuant to Section 5, Article III of the UST Faculty Code which states that faculty members who have a full
time outside employment other than teaching may not be given a teaching load in excess of 12 hours per week.
Petitioner asked for reconsideration of the reduction in his teaching load which was granted. He was given an
additional load of three teaching hours. Petitioner again requested for an additional load of three units but his
request was denied by respondent Rev. Fr. Aligan.
Petitioner filed a Complaint-Affidavit to the Chairperson of the Grievance Committee, Dr. Gil Gamila,
President of the University of Sto. Tomas Faculty Union, but the complaint was dismissed. Petitioner appealed
to respondent Rev. Fr. Tamerlane Lana, Rector of respondent UST but the appeal was denied.
Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal Change of
Employment Status, Damages, Unpaid Benefits and Attorneys Fees and illegal constructive dismissal before the
Labor Arbiter.
Petitioner claimed that his arbitrary demotion from full-time to part-time faculty member violated the provisions
of the CBA, as well as his right to security of tenure. Likewise, he argued that the UST Faculty Code which
respondents relied upon to reduce his teaching load has been superseded by the CBA.
The Labor Arbiter ruled in favor of respondents holding that the situation contemplated in Section 5,
Article III of the Faculty Code, when evaluated together with the provisions of the CBA, constitutes a ground
for teaching load reduction. On appeal, the NLRC ordered the restoration of petitioners faculty member status
to full-time. Respondents motion for reconsideration was denied. Petitioners partial motion for reconsideration
with regard to the award for backwages and damages was likewise denied. Respondents filed a petition for
certiorari before the Court of Appeals which reversed the NLRC decision and sustained the findings of the
Labor Arbiter.
Issue:
1. Whether or not the reduction of petitioners teaching load is justified
2. whether petitioner was denied due process
Ruling:
1. We agree with the Court of Appeals ruling that while the CBA provides grounds for reduction of teaching load,
the question of whether a faculty member is considered full-time or part-time is addressed by the Faculty Code
which provides that where the full-time faculty member is at the same time working as a full-time employee
elsewhere, the faculty member is considered part-time and a 12-hour teaching load limitation is imposed.
There is no dispute that petitioner was holding a full-time position with the Office of the Ombudsman while
working as a faculty member in UST. Accordingly, Section 5, Article III of the Faculty Code applies.
While the NLRC correctly viewed the CBA as the primary instrument that governs the
relationship between UST and its unionized faculty members, it disregarded Article XX of this CBA
which reconciles the CBA with the Faculty Code. Article XX states:
ARTICLE XX
FACULTY CODE
The provisions of the Faculty Code of 1981, as amended, which are not otherwise
incorporated in the CBA and which are not in conflict with any provisions of the latter shall
remain in full force and effect.

In the event of conflict between a faculty code provision and the CBA, the provision of
the latter shall prevail. (Emphasis supplied)
Thus, contrary to the NLRCs conclusion, the UST Faculty Code continues to exist and to apply
to UST faculty members, but must give way if its terms are in conflict with what the CBA provides. The
standard in determining the applicable rule and the one that the NLRC completely missed is whether a
conflict exists between the provisions the parties cited.
2. Moreover, we find that petitioner was not denied due process. It is settled that due process is simply an
opportunity to be heard. In this case, respondents informed petitioner that his teaching load would be reduced as
he was working full-time with the Office of the Ombudsman. Petitioner asked for reconsideration twice. His
first request was granted and he was given an additional load of three units for School Year 2000-2001. For
School Year 2001-2002, petitioner again requested an additional load of three units but was denied.
Upon denial of his second request, petitioner availed of the grievance procedure provided in the CBA. Yet
again, after his complaint was dismissed, petitioner appealed directly to respondent Fr. Lana. As observed by
the Court of Appeals, petitioner exhausted the internal mechanism of seeking redress within USTs
administrative machinery. Contrary to petitioners claims, he was accorded due process.

Moreno vs San Sebastian College

Facts:
SSC-R employed Moreno as a teaching fellow. In 2000, Moreno was appointed as a full-time college faculty
member. Later on, she became a permanent faculty member. She was also offered the chairmanship of the
Business Finance and Accountancy Department of her college. However, it was later on discovered that Moreno
had unauthorized teaching assignments at the CEU during the 1st sem of SY 2002-2003 and at the College of
the Holy Spirit, Manila during SY 2000-2001 and SY 2001-2002 as well as during the 1st sem of SY 20022003. Said activities were violative of SSC-Rs Faculty Manual and were punishable by suspension or
dismissal.
Moreno received a memorandum from the Dean. In reply, she admitted her failure to secure any written
permission before she taught in other schools. Moreno further stated that it was never her intention to jeopardize
her work in SSC-R and that she merely wanted to improve her familys poor financial conditions. A Special
Grievance Committee was then formed which unanimously found that Moreno violated the prohibition against a
full-time faculty having an unauthorized external teaching load. The majority of the grievance committee
members recommended Morenos dismissal from employment in accordance with the school manual, but Dean
Espejo dissented and called only for a suspension for one semester. SSC-R adopted the findings and
recommendations of the grievance committee and so, her employment was terminated.
Moreno thus instituted with the NLRC a complaint for illegal termination. LA dismissed Morenos complaint.
NLRC reversed the rulings of the LA. However, the CA annulled the decision of the NLRC and reinstated the
decision of the LA.
Issue: WON Morenos termination is proper by strictly applying the provision of the Faculty Manual.
Ruling:
Even if dismissal for cause is the prescribed penalty for the misconduct herein committed, in accordance with
the SSC-R Faculty Manual and Morenos employment contract, the Court finds the same to be disproportionate
to the offense. Time and again, we have ruled that while an employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on work-related activities of the employees, those directives,
however, must always be fair and reasonable, and the corresponding penalties, when prescribed, must be
commensurate to the offense involved and to the degree of the infraction.
Special circumstances were present in the case at bar which should have been properly taken into account in the
imposition of the appropriate penalty. Moreno, in this case, had readily admitted her misconduct, which was
undisputedly the first she has ever committed against the school. Her teaching abilities and administrative skills
remained apparently unaffected by her external teaching engagements, as she was found by the grievance
committee to be one of the better professors in the Accounting Department and she was even offered the
Chairmanship of her college. Also, the fact that Moreno merely wanted to alleviate her familys poor financial
conditions is a justification that SSC-R failed to refute. SSC-R likewise failed to prove any resulting material
damage or prejudice on its part as a consequence of Morenos misconduct. The claim by SSC-R that the
imposition of a lesser penalty would set a bad precedent for the other faculty members who comply with the
school policies is too speculative for this Court to even consider. Finally, the Court notes that in Morenos
contract of employment, one of the provisions therein categorically stated that should a violation of any of the
terms and conditions thereof be committed, the penalty that will be imposed would either be suspension or
dismissal from employment. Thus, contrary to its position from the beginning, SSC-R clearly had the discretion
to impose a lighter penalty of suspension and was not at all compelled to dismiss Moreno under the
circumstances, just because the Faculty Manual said so.

AVON v. LUNA
G.R. No. 153674, December 20, 2006
FACTS:

A complaint dated 1 December 1988 was filed by herein respondent Luna alleging, inter alia that she
began working for Beautifont, Inc. in 1972, first as a franchise dealer and then a year later, as a Supervisor.
Sometime in 1978, Avon Cosmetics, Inc. (Avon), herein petitioner, acquired and took over the management and
operations of Beautifont, Inc. Nonetheless, respondent Luna continued working for said successor company.
In 1985, petitioner Avon and respondent Luna entered into an agreement, entitled Supervisors Agreement,
whereby said parties contracted in the manner quoted below:
The Company and the Supervisor mutually agree:
xxxx
5) That the Supervisor shall sell or offer to sell, display or promote only and exclusively products sold
by the Company.
6) Either party may terminate this agreement at will, with or without cause, at any time upon notice to
the other.
x x x x.
By virtue of the execution of the aforequoted Supervisors Agreement, respondent Luna became part of the
independent sales force of petitioner Avon.
Sometime in the latter part of 1988, respondent Luna was invited by a former Avon employee who was then
currently a Sales Manager of Sandr Philippines, Inc., a domestic corporation engaged in direct selling of
vitamins and other food supplements, to sell said products. Respondent Luna apparently accepted the invitation
as she then became a Group Franchise Director of Sandr Philippines, Inc. concurrently with being a Group
Supervisor of petitioner Avon
In a letter dated 11 October 1988, petitioner Avon, through its President and General Manager, Jose Mari
Franco, notified respondent Luna of the termination or cancellation of her Supervisors Agreement with
petitioner Avon (Allegedly because of violation of paragraph 5 pursuant to paragraph 6 of the same Agreement).
Aggrieved, respondent Luna filed a complaint for damages before the RTC which rendered judgment in favor of
respondent Luna.
The Court of Appeals promulgated the assailed Decision which AFFIRMED RTCs decision in toto
ISSUE:
a) Whether or not paragraph 5 of the Supervisors Agreement is void for being violative of law and public
policy; and
b) Whether or not paragraph 6 of the Supervisors Agreement which authorizes petitioner Avon to terminate or
cancel the agreement at will is void for being contrary to law and public policy.
HELD:
a

This exclusivity clause is more often the subject of critical scrutiny when it is perceived to collide with the
Constitutional proscription against "reasonable restraint of trade or occupation."
Thus, restrictions upon trade may be upheld when not contrary to public welfare and not greater than is
necessary to afford a fair and reasonable protection to the party in whose favor it is imposed. Even contracts
which prohibit an employee from engaging in business in competition with the employer are not necessarily
void for being in restraint of trade.
In sum, contracts requiring exclusivity are not per se void. Each contract must be viewed vis--vis all the
circumstances surrounding such agreement in deciding whether a restrictive practice should be prohibited as
imposing an unreasonable restraint on competition.
Authorities are one in declaring that a restraint in trade is unreasonable when it is contrary to public policy or
public welfare.
Plainly put, public policy is that principle of the law which holds that no subject or citizen can lawfully do that
which has a tendency to be injurious to the public or against the public good.
Applying the preceding principles to the case at bar, there is nothing invalid or contrary to public policy either
in the objectives sought to be attained by paragraph 5, i.e., the exclusivity clause, in prohibiting respondent
Luna, and all other Avon supervisors, from selling products other than those manufactured by petitioner Avon.
Such prohibition is neither directed to eliminate the competition like Sandr Phils., Inc. nor foreclose new
entrants to the market.

It was not by chance that Sandr Philippines, Inc. made respondent Luna one of its Group Franchise Directors.
It doesnt take a genius to realize that by making her an important part of its distribution arm, Sandr
Philippines, Inc., a newly formed direct-selling business, would be saving time, effort and money as it will no
longer have to recruit, train and motivate supervisors and dealers.
The exclusivity clause does not in any way limit its selling opportunities, just the undue use of the resources of
petitioner Avon.
The foregoing premises noted, the Court of Appeals, therefore, committed reversible error in interpreting the
subject exclusivity clause to apply merely to those products in direct competition to those manufactured and
sold by petitioner Avon.
b

Having held that the "exclusivity clause" as embodied in paragraph 5 of the Supervisors Agreement is valid
and not against public policy, we now pass to a consideration of respondent Lunas objections to the validity of
her termination as provided for under paragraph 6("termination clause") of the Supervisors Agreement giving
petitioner Avon the right to terminate or cancel such contract.
Worth stressing is that the right to unilaterally terminate or cancel the Supervisors Agreement with or without
cause is equally available to respondent Luna, subject to the same notice requirement. Obviously, no advantage
is taken against each other by the contracting parties.
WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The Decision dated 20 May 2002
rendered by the Court of Appeals in CA-G.R. CV No. 52550, affirming the judgment of the RTC of Makati
City, Branch 138, in Civil Case No. 88-2595, are hereby REVERSED and SET ASIDE. Accordingly, let a new
one be entered dismissing the complaint for damages. Costs against respondent Leticia Luna.
Yrasuegui v. PAL, 569 SCRA 467 (2008)
Facts: Petitioner was a former international flight steward of PAL, herein respondent. Petitioner was dismissed
because of his failure to adhere to the weight standards of the airline company. Petitioner claims that he was
illegally dismissed.
Held: SC upheld the legality of dismissal. Separation pay, however, should be awarded in favor of the employee
as an act of social justice or based on equity. This is so because his dismissal is not for serious misconduct.
Neither is it reflective of his moral character.
The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code. His obesity may not be unintended, but is nonetheless
voluntary. Voluntariness basically means that the just cause is solely attributable to the employee without any
external force influencing or controlling his actions. This element runs through all just causes under Article 282,
whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just
cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).
Bona fide occupational qualification (BFOQ)
Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin
unless the employer can show that sex, religion, or national origin is an actual qualification for performing the
job. Argument that BFOQ is a statutory defense must fail
The Constitution, the Labor Code, and RA No. 7277or the Magna Carta for Disabled Persons contain provisions
similar to BFOQ.
(1) the employer must show that it adopted the standard for a purpose rationally connected to the performance
of the job; Test (US jurisprudence) in determining whether an employment policy is justified.
(2) the employer must establish that the standard is reasonably necessary to the accomplishment of that workrelated purpose; and
(3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate
work-related purpose. In Star Paper Corporation v. Simbol, this Court held that in order to justify a BFOQ, the
employer must prove:
(1)the employment qualification is reasonably related to the essential operation of the job involved; and
(2)that there is factual basis for believing that all or substantially all persons meeting the qualification
would be unable to properly perform the duties of the job.
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.
BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance.
The weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons
of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports.

The primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It
cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger
confidence on their ability to care for the passengers when something goes wrong.
Entitled to separation pay, even if terminated for just cause Exceptionally, separation pay is granted to a legally
dismissed employee as an act social justice, or based on equity. Provided the dismissal:
(1) was not for serious misconduct; and
(2) does not reflect on the moral character of the employee.
Thus, he was granted separation pay equivalent to one-half (1/2) months pay for every year of
service.
MORALES v HARBOUR CENTRE PORT TERMINAL
G.R. No. 174208, January 25, 2012, PEREZ, J.
FACTS: Petitioner Jonathan Morales was hired by respondent as an accountant and acting finance officer. He
was later promoted to Division Manager of the Accounting Department. After the respondents transfer to its
new office at Tondo, Manila, petitioner received an inter-office memorandum reassigning him to Operations
Cost Accounting tasked with the duty of monitoring and evaluating all consumable requests, gears and
equipment related to the operations of respondent and of interacting with its subcontractor, Bulk Fleet Marine
Corporation. Morales wrote to respondents administration manager, Danilo Singson and expressed his
opposition to his reassignment stating that it is considered as a clear demotion because the position to which he
was transferred was not even included in respondents plantilla. Singson, in response, issued a memorandum
stating that the transfer of employees is a management prerogative. Petitioner was absent from work and was
sent notices of warning. Petitioner filed a complaint against respondent for constructive dismissal alleging that
his reassignment was a demotion and operated as a termination from employment. For its part, respondent
contended that Morales abandoned his employment and was not constructively dismissed.
The LA dismissed petitioners complaint and held that the reassignment was a valid exercise of
respondents management prerogative which cannot be construed as constructive dismissal absent showing that
the same was done in bad faith and resulted to the diminution of his salary and benefits. On appeal to the
NLRC, the decision of the LA was reversed. Respondent appealed to the CA where the NLRCs decision was
reversed.
ISSUE: WON the change in petitioners position constitutes constructive dismissal
RULING: Yes. Constructive dismissal exists where there is cessation of work because "continued employment
is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in
pay" and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear
as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by
him except to forego his continued employment. In cases of a transfer of an employee, the rule is settled that the
employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds
such as genuine business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the
employee. If the employer cannot overcome this burden of proof, the employees transfer shall be tantamount to
unlawful constructive dismissal.
Our perusal of the record shows that respondent miserably failed to discharge the foregoing onus. While
there was a lack of showing that the transfer or reassignment entailed a diminution of salary and benefits, one
fact that must not be lost sight of was that Morales was already occupying the position of Division Manager at
HCPTIs Accounting Department as a consequence of his promotion to said position. Concurrently appointed as
member of HCPTIs Management Committee (MANCOM), Morales was subsequently reassigned by HCPTI
from managerial accounting to Operations Cost Accounting without any mention of the position to which he
was actually being transferred. That the reassignment was a demotion is, however, evident from Morales new
duties which, far from being managerial in nature, were very simply and vaguely described as inclusive of
monitoring and evaluating all consumables requests, gears and equipments related to [HCPTIs] operations as
well as close interaction with [its] sub-contractor Bulk Fleet Marine Corporation. Morales demotion is
evident from the fact that his reassignment entailed a transfer from a managerial position to one which was not
even included in the corporations plantilla.
Admittedly, the right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their assignments or to transfer
them. By management prerogative is meant the right of an employer to regulate all aspects of employment, such
as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding
transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers.
Although jurisprudence recognizes said management prerogative, it has been ruled that the exercise thereof,

while ordinarily not interfered with, is not absolute and is subject to limitations imposed by law, collective
bargaining agreement, and general principles of fair play and justice. Thus, an employer may transfer or assign
employees from one office or area of operation to another, provided there is no demotion in rank or diminution
of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. Indeed, having the right should not be
confused with the manner in which that right is exercised.

Note: G.R. No. 31341 & 43, Mar 31 1996(1976) is the one cited in our syllabus. But I think the following case
should be the real case based on the topic of overtime since theres no overtime issue in the case cited (based on
G.R. No.) in the syllabus. Just check it if you wish to confirm

G.R. No. 170054 : January 21, 2013

GOYA, INC., Petitioner, v. GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
Facts:
Goya, Inc. hired contractual employees from PESO Resources Development Corporation (PESO) to perform
temporary and occasional services in its factory. This prompted Goya, Inc. Employees Union-FFW (Union) to
request for a grievance conference on the ground that the contractual workers do not belong to the categories of
employees stipulated in the existing CBA. When the matter remained unresolved, the grievance was referred to
the National Conciliation and Mediation Board (NCMB) for voluntary arbitration.
The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in
gross violation of the CBA tantamount to ULP. It noted that the contractual workers engaged have been
assigned to work in positions previously handled by regular workers and Union members, in effect violating
Section 4, Article I of the CBA, which provides for three categories of employees in the Company. The
categories of employees under the said provision of the CBA are: (a) Probationary Employee; (b) Regular
Employee; and (c) Casual Employee. With the hiring of contractual employees, the Union contended that it
would no longer have probationary and casual employees from which it could obtain additional Union
members.
In countering the Unions allegations, the Company argued, among others, that Section 4, Article I of the CBA
merely provides for the definition of the categories of employees and does not put a limitation on the
Companys right to engage the services of job contractors or its management prerogative to address
temporary/occasional needs in its operation.
VA Laguesma dismissed the Unions charge of ULP for being purely speculative and for lacking in factual basis,
but the Company was directed to observe and comply with its commitment under the CBA. While the Union
moved for partial reconsideration of the VA Decision, the Company immediately filed a petition for review
before the CA to set aside the directive to observe and comply with the CBA commitment pertaining to the
hiring of casual employees when necessitated by business circumstances. The CA dismissed the petition.
Issue: WON Goya contract out from PESO in the exercise of its management prerogative despite the agreement
in the CBA.
Ruling:
The CA did not commit serious error when it sustained the ruling that the hiring of contractual employees from
PESO was not in keeping with the intent and spirit of the CBA. The Company kept on harping that both the VA
and the CA conceded that its engagement of contractual workers from PESO was a valid exercise of
management prerogative. It is confused. To emphasize, declaring that a particular act falls within the concept of
management prerogative is significantly different from acknowledging that such act is a valid exercise thereof.
What the VA and the CA correctly ruled was that the Companys act of contracting out/outsourcing is within the
purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof.
Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union
delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed,
the VA opined that "the right of the management to outsource parts of its operations is not totally eliminated but
is merely limited by the CBA," while the CA held that "this management prerogative of contracting out
services, however, is not without limitation. x x x These categories of employees particularly with respect to
casual employees serve as limitation to the Companys prerogative to outsource parts of its operations
especially when hiring contractual employees."

PHILEX GOLD vs PHILEX BULAWAN

Respondent Union recognized Union of PhilexGOld. Theres a CBA. After signing the CBA, PHilexGold
made employees of Philex Mining Corporation from Padacal Benguet as its regular supervisory employees. So
some of the so called Ex-padaca supervisors began to work in Bulawan Mines.
It turned out that Ex padacal supervisors were maintained under a confidential payroll, receiving different salary
benefits and higher salaries compared to the locally hired supervisors of similar rank.
Union filed a complait against Philex Gold with NCMB > ruled in favor of the Union. Discriminatory yung
wage policy.
CA > in favour of Union. It used the principle Equal pay for Equal Work
ISSUE: WON the doctrine of equal pay for equal work should not remove management prerogative to institute
difference in salary on the basis of the seniority, skill, experience and the dislocation factor in the same class of
supervisory workers doing the same kind of work. (Guys, eto na rin yung contention ng PhilexGold- may valid
factors daw that exists to justify the classification)
RULING: No. Petitioners even admitted that the same class of workers are doing the same kind of of work.
This means that an exPadcal Supervisor and a locally hired supervisor of equal rank do t the same kind of work.
If an employer accords employees the same position and rank, the presumption if that thee employees perform
equal work.
Here, Petitioners failed to adduce evidence to show that an exPadcal Supervisor and a locally hired supervisor
of the same rank are initially paid the same basic salary for doing the same kind of work. They failed to
differentiate the basic salary from any kind of salary increase or additional benefit which may have been given
to exPadcal supervisors due to their seniority, experience and other factors.
While the law recognizes and safeguards the right of an employer to exercise what are clearly management
prerogatives, such right should not be abused and used as a tool of oppression against labor. The companys
prerogative must be exercised in good faith and with due regard to the rights of labor. They are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements and the general principles of fair
play and justice.

FACTS:
URSUMCO is a domestic corporation engaged in the sugarcane milling business; Cabati is URSUMCOs
Business Unit General Manager.
The complainants were employees of URSUMCO, and were hired on various dates between 1988 and 1996,
and on different capacities, i.e., drivers, crane operators, bucket hookers, welders, mechanics, laboratory
attendants and aides, steel workers, carpenters, among others. The complainants signed contracts of
employment for a period of 1 month or for a given season, and were repeatedly hired to perform the same duties
and, for every engagement, were required to sign new employment contracts for the same duration of one
month or given season.
On August 23, 2002, the complainants filed before the Labor Arbiter complaints for regularization, entitlement
to the benefits under the existing Collective Bargaining Agreement (CBA), and attorneys fees. The Labor
Arbiter dismissed the complaint in the decision dated October 9, 2002, for lack of merit. The Labor Arbiter
pointed out that the complainants were required to perform several projects that were not at all directly related
to URSUMCOs main operations, and that they were project employees, they could not be regularized since their
respective employments end upon the completion of each project. Also, complainants were not entitled to the
benefits granted under the CBA that, as provided, covered only the regular employees of URSUMCO.
7, out of the 22 original complainants, appealed the Labor Arbiters ruling before the NLRC. NLRC reversed the
Labor Arbiter's ruling; it declared the complainants are regular URSUMCO employees because they performed
activities which were usually necessary and desirable in the usual trade or business of URSUMCO, and granted
their monetary claims under the CBA. NLRC denied petitioners motion for reconsideration.
Petitioners elevated the case to the Court of Appeals (CA) via a petition for certiorari.
The CA granted in part the petition. It pointed out that the primary standard for determining regular employment
is the reasonable connection between a particular activity performed by the employee vis-vis the usual trade or
business of the employer. As the complainants have been performing their respective tasks for at least one year,
these same tasks, regardless of whether the performance was continuous or intermittent, constitutes sufficient
evidence of the necessity, if not indispensability, of the activity to URSUMCOs business. On the claim for CBA
benefits, however, the CA ruled that the complainants were not entitled to receive them. CA pointed out that the
CBA covered regular employees of URSUMCO performing tasks needed by the latter for the entire year with
no regard to the changing sugar milling season. For collective bargaining purposes, they constitute a bargaining
unit separate and distinct from the regular employees.
The petitioner filed a petition for review on certiorari after the CA denied their motion for partial
reconsideration.
ISSUE: Whether or not the respondents are regular employees of URSUMCO?
HELD: The respondents are regular seasonal employees of URSUMCO
LABOR LAW : regular seasonal employees
Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular,
project/seasonal and casual.
Regular employment refers to that arrangement whereby the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer. By way of an exception,
paragraph 2, Article 280 of the Labor Code also considers regular a casual employment arrangement when the
casual employees engagement has lasted for at least one year, regardless of the engagements continuity. The
controlling test in this arrangement is the length of time during which the employee is engaged.
Project employment, on the other hand, contemplates on arrangement whereby the employment has been fixed
for a specific project or undertaking whose completion or termination has been determined at the time of the
engagement of the employee. The services of the project employees are legally and automatically terminated
upon the end or completion of the project as the employees services are coterminous with the project.
Seasonal employment operates much in the same way as project employment, albeit it involves work or service
that is seasonal in nature or lasting for the duration of the season. To exclude the asserted seasonal employee

from those classified as regular employees, the employer must show that: (1) the employee must be performing
work or services that are seasonal in nature; and (2) he had been employed for the duration of the season.
Hence, when the seasonal workers are continuously and repeatedly hired to perform the same tasks or activities
for several seasons or even after the cessation of the season, this length of time may likewise serve as badge of
regular employment.
Casual employment refers to any other employment arrangement that does not fall under any of the first two
categories.
In the case at bar, the respondents were made to perform various tasks that did not at all pertain to any specific
phase of URSUMCO's strict milling operations that would ultimately cease upon completion of a particular
phase in the milling of sugar; rather, they were tasked to perform duties regularly and habitually needed in
URSUMCO's operations during the milling season. The respondents duties as loader operators, hookers, crane
operators and drivers were necessary to haul and transport the sugarcane from the plantation to the mill;
laboratory attendants, workers and laborers to mill the sugar; and welders, carpenters and utility workers to
ensure the smooth and continuous operation of the mill for the duration of the milling season, as distinguished
from the production of the sugarcane which involves the planting and raising of the sugarcane until it ripens for
milling. They perform activities that are necessary and desirable in sugarcane production. Also, the respondents
were regularly and repeatedly hired to perform the same tasks year after year. This regular and repeated hiring
of the same workers (two different sets) for two separate seasons has put in place, principally through
jurisprudence, the system of regular seasonal employment in the sugar industry and other industries with a
similar nature of operations.
Therefore, the nature of the employment does not depend solely on the will or word of the employer or on the
procedure for hiring and the manner of designating the employee. Rather, the nature of the employment depends
on the nature of the activities to be performed by the employee, considering the nature of the employers
business, the duration and scope to be done, and, in some cases, even the length of time of the performance and
its continued existence.
The NLRC acted in grave abuse of discretion when it declared the respondents regular employees of
URSUMCO without qualification and that they were entitled to the benefits granted under the CBA, to
URSUMCO's regular employees. We also find that the CA grossly misread the NLRC ruling and missed the
implications of the respondents regularization. To reiterate, the respondents are regular seasonal employees, as
the CA itself opined when it declared that private respondents who are regular workers with respect to their
seasonal tasks or activities and while such activities exist, cannot automatically be governed by the CBA
between petitioner URSUMCO and the authorized bargaining representative of the regular and permanent
employees.
Petition for review on certiorari is partially granted.
MACARTHUR MALICDEM and HERMENIGILDO FLORES,
vs.
MARULAS INDUSTRIAL CORPORATION and MIKE MANCILLA,
Facts:

Malicdem and Flores were hired by Marulas as extruder operators. Their employment contracts were for
a period of one (1) year. Every year thereafter, they would sign a Resignation/Quitclaim in favor of Marulas a
day after their contracts ended, and then sign another contract for one (1) year. Until one day, Flores was told
not to report for work anymore after being asked to sign a paper by Marulas' HR Head to the effect that he
acknowledged the completion of his contractual status. Malicdem was also terminated after signing a similar
document. Thus, both claimed to have been illegally dismissed. Thus, they lodged a complaint against Marulas
and Mancilla for illegal dismissal where the Labor Arbiter (LA) rendered a decision in favor of the respondents,

finding no illegal dismissal. The LA, however, ordered Marulas to pay Malicdem and Flores their respective
wage differentials. NLRC partially granted their appeal with the award of payment of 13th month pay, service
incentive leave and holiday pay for three (3) years. On appeal to the CA their petition was however denied.
Issue:
Whether petitioner may be consider as a regular employee.
Held:
In the earlier case of Maraguinot, Jr. v. NLRC, it was ruled that a project or work pool employee, who
has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or
nature of tasks; and (2) those tasks are vital, necessary and indispensable to the usual business or trade of the
employer, must be deemed a regular employee.
The test to determine whether employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. If the
employee has been performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability of that activity to the business.
Guided by the foregoing, the Court is of the considered view that there was clearly a deliberate intent to
prevent the regularization of the petitioners. To begin with, there is no actual project. The only stipulations in
the contracts were the dates of their effectivity, the duties and responsibilities of the petitioners as extruder
operators, the rights and obligations of the parties, and the petitioners compensation and allowances. As there
was no specific project or undertaking to speak of, the respondents cannot invoke the exception in Article 280
of the Labor Code. This is a clear attempt to frustrate the regularization of the petitioners and to circumvent the
law.
Next, granting that they were project employees, the petitioners could only be considered as regular employees
as the two factors enumerated in Maraguinot, Jr., are present in this case. It is undisputed that the petitioners
were continuously rehired by the same employer for the same position as extruder operators. As such, they were
responsible for the operation of machines that produced the sacks. Hence, their work was vital, necessary and
indispensable to the usual business or trade of the employer.
G.R. Nos. 174365-66, February 04, 2015
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR.,
RICKY S. NICOLAS, CRISPULO D. DONOR, GALO FALGUERA, AND NATIONAL LABOR
RELATIONS COMMISSION, Petitioners, v. COCA-COLA BOTTLERS PHILIPPINES,* Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse
and set aside the Decision1 dated August 31, 2005 and Resolution2 dated August 24, 2006 of the Court of
Appeals (CA) in CA-G.R. SP Nos. 80977 & 87071, which reversed the Resolutions dated January 30, 20033 and
September 24, 20034of the National Labor Relations Commission (NLRC) in NLRC 00-02-01419-97.
The factual antecedents are as follows.
On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao, Jr., Roberto Dela Rama,
Jr., Ricky S. Nicolas, Crispulo D. Donor, Galo Falguera filed a complaint for illegal dismissal with money
claims against respondent Coca-Cola Bottlers Philippines, alleging that respondent dismissed them without just
cause and prior written notice required by law. In their position paper, petitioners provided for the following
material dates:5cralawlawlibrary
Name of Petitioner

Date of Hiring

Date of Dismissal

Dela Rama

November 16, 1995

February 13, 1997

Dizon

October 1988

December 15, 1996

Tumabiao

February 2, 1992

February 13, 1997

Basan

July 13, 1996

January 31, 1997

Donor

September 16, 1995

February 13, 1997

Nicolas

May 10, 1996

January 30, 1997

Falguera

January 15, 1991

April 1996

Respondent corporation, however, countered that it hired petitioners as temporary route helpers to act as
substitutes for its absent regular route helpers merely for a fixed period in anticipation of the high volume of
work in its plants or sales offices.6 As such, petitioners claims have no basis for they knew that their assignment
as route helpers was temporary in duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and found that since they were performing
activities necessary and desirable to the usual business of petitioner for more than the period for regularization,
petitioners are considered as regular employees, and thus, their dismissal was done contrary to law in the
absence of just cause and prior written notice.7 Thus, it ordered respondent to reinstate petitioners with full
backwages from the time their salaries were withheld until their actual reinstatement and to pay their lump sum
increase extended to them in their collective bargaining agreement, their accrued vacation and sick leave
benefits, as well as monetary awards and attorneys fees.8cralawlawlibrary
On January 30, 2003, the NLRC affirmed the Labor Arbiters decision and rejected respondents contention that
petitioners were merely employed for a specific project or undertaking the completion or termination of which
has been determined at the time of their engagement. It stressed that nowhere in the records of the case was it
shown that petitioners were hired as project or seasonal employees, respondent having failed to submit any
contract of project or other similar proof thereof.9 It also noted that neither can petitioners be considered as
probationary employees for the fact that they had performed their services for more than six (6) months. In
addition, the NLRC upheld the Labor Arbiters ruling that petitioners, as route helpers, performed work directly
connected or necessary and desirable in respondents ordinary business of manufacturing and distributing its
softdrink products. Thus, respondent failed to overcome petitioners assertion that they were regular employees.
As such, their employment could only be terminated with just cause and after the observance of the required
due process. Thereafter, the subsequent motion for reconsideration filed by respondent was further denied by
the NLRC on September 24, 2003.
On December 9, 2003, respondent filed a petition for certiorari10 with the CA alleging grave abuse of discretion
on the part of the NLRC in finding that petitioners were regular employees. In the meantime, petitioners filed
before the Labor Arbiter a Motion for Issuance of a Writ of Execution11 dated December 15, 2003, to which
respondent filed a Manifestation and Motion with attached Opposition.12 On March 25, 2004, the Labor Arbiter
ordered that the Writ of Execution be issued, which was affirmed by the NLRC on June 21, 2004. Consequently,
respondent filed another petition for certiorari13 on October 22, 2004, claiming that the NLRC committed grave
abuse of discretion in directing the execution of a judgment, the propriety and validity of which was still under
determination of the appellate court.
In its Decision dated August 31, 2005, the CA consolidated respondents two (2) petitions for certiorari and
reversed the rulings of the NLRC and the Labor Arbiter in the following wise:chanRoblesvirtualLawlibrary
That the respondents performed duties which are necessary or desirable in the usual trade or business of CocaCola, is of no moment. This is not the only standard for determining the status of ones employment. Such fact
does not prevent them from being considered as fixed term employees of Coca-Cola whose engagement was
fixed for a specific period. The respondents repeated hiring for various periods (ranging from more than six
months for private respondent Basan to eight years in the case of private respondent Dizon) would not
automatically categorize them as REGULAR EMPLOYEES.cralawred
xxxx
It being supported by facts on record and there being no showing that the employment terms were foisted on the
employees through circumstances vitiating or diminishing their consent, following Brent School, Inc. vs.
Zamora (G.R. No. 48494, Feb. 5, 1990), the respondents must be considered as fixed term employees whose
seasonal employment or employment for a period have been set down. After all, as conceded by Brent,

fixed term employment continues to be allowed and enforceable in this jurisdiction. Not being permanent
regular employees, it must be held that the respondents are not entitled to reinstatement and payment of full
backwages.14
ChanRoblesVirtualawlibrary
Petitioners sought a reconsideration of the CAs Decision on procedural and substantive grounds. On the
procedural, they alleged that respondent, in filing its appeal of the Labor Arbiters August 21, 1998 decision
with the NLRC only on December 20, 1998, rendered the Decision of the Labor Arbiter final and executory, and
thus, deprived the CA of jurisdiction to alter the final judgment.15 They also claimed that the Resolutions of the
NLRC have become final and executory in view of the Entries of Judgment dated December 16, 2003 and
September 16, 2004 issued by the NLRC. As to the substantial matter, petitioners assert that they are regular
employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners motion for reconsideration in saying that it is no longer
necessary to discuss whether respondent was able to timely appeal the Labor Arbiters decision to the NLRC, in
view of the fact that the latter had already given due course to said appeal by deciding the case on the merits
and, more importantly, petitioners failure to raise the alleged infirmity before the NLRC in opposition to
respondents appeal.
Hence, the instant petition invoking the following grounds:chanRoblesvirtualLawlibrary
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN
RULING THAT THE PETITIONERS WERE NOT REGULAR EMPLOYEES.
II.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN THE CHALLENGED
DECISIONS AS TO WARRANT THE EXERCISE OF THE COURTS DISCRETIONARY APPELLATE
JURISDICTION.
Petitioners essentially maintain that contrary to the findings of the CA, they were continuously hired by
respondent company to perform duties necessary and desirable in the usual trade or business and are, therefore,
regular employees. They allege that if their services had really been engaged for fixed specific periods,
respondent should have at least provided the contracts of employment evidencing the same.
For its part, respondent contends that the petition should be denied due course for its verification and
certification of non-forum shopping was signed by only one of the petitioners. It alleges that even assuming the
validity of the same, it should still be dismissed for the appellate court aptly found that petitioners were fixedterm employees who were hired intermittently. Respondent also asserts that petitioners failed to completely
substantiate their claims, for during the hearing conducted before the Labor Arbiter on March 11, 1998, the
payslips presented by petitioners merely established the following employment terms:
Name of Petitioner

Length of Service

Dates

Dela Rama

5 months, 4 months

Between November 30, 1995

And March 31, 1996

Dizon

4 months
2 months
9 months

In 1993
In 1994
In 1996

Tumabiao

3 months

From November 15, 1996

To January 31, 1997

Basan
1 month

From May 15, 1996

To December 31, 1996
From January 15, 1997
To January 31, 1997

1 month

From February 15, 1996

To March 15, 1996

6.5 months

Donor

From December 15, 1996

To January 15, 1997
1 month
Nicolas

8.5 months

In 1996 and 1997

Falguera

6 months

From 1992
To 1997

Considering that the evidence presented showed that petitioners merely rendered their services for periods of
less than a year, respondent claims that petitioners could not have attained regular employment status. It added
that its failure to present petitioners employment contracts was due to a fire that destroyed its Manila Plant
where said contracts were kept. Nevertheless, respondent persistently asserts that where a fixed period of
employment was agreed upon knowingly and voluntarily by the petitioners, the duration of which was made
known to them at the time of their engagement, petitioners cannot now claim otherwise. In addition, it disagrees
with the contention that petitioners, as route helpers, were performing functions necessary or desirable to its
business.
The petition is impressed with merit.
On the procedural issue, We hold that while the general rule is that the verification and certification of nonforum shopping must be signed by all the petitioners in a case, the signature of only one of them, petitioner
Basan in this case, appearing thereon may be deemed substantial compliance with the procedural requirement.
Jurisprudence is replete with rulings that the rule on verification is deemed substantially complied with when
one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or are true and correct.16
Similarly, this Court has consistently held that when under reasonable or justifiable circumstances, as when all
the petitioners share a common interest and invoke a common cause of action or defense, as in this case, the
signature of only one of them in the certification against forum shopping substantially complies with the
certification requirement.17 Thus, the fact that the petition was signed only by petitioner Basan does not
necessarily result in its outright dismissal for it is more in accord with substantial justice to overlook petitioners
procedural lapses.18 Indeed, the application of technical rules of procedure may be relaxed in labor cases to
serve the demand of justice.19cralawlawlibrary
As for the primordial issue in this case, it must be noted that the same has already been resolved in Magsalin v.
National Organization of Working Men,20 wherein this Court has categorically declared that the nature of work
of route helpers hired by Coca Cola Bottlers Philippines, Inc. is necessary and desirable in its usual business or
trade thereby qualifying them as regular employees, to wit:chanRoblesvirtualLawlibrary
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country.
Respondent workers have long been in the service of petitioner company. Respondent workers, when hired,
would go with route salesmen on board delivery trucks and undertake the laborious task of loading and
unloading softdrink products of petitioner company to its various delivery points.
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to
ensure a "regular" worker's security of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in
the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued in the usual course.
It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on
the particular business or trade. But, although the work to be performed is only for a specific project or
seasonal, where a person thus engaged has been performing the job for at least one year, even if the
performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its
performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of
the employer. The employment of such person is also then deemed to be regular with respect to such activity
and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work

assigned to respondent workers as sales route helpers so involves merely "postproduction activities," one
which is not indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued
by petitioner company, only those whose work are directly involved in the production of softdrinks may
be held performing functions necessary and desirable in its usual business or trade, there would have
then been no need for it to even maintain regular truck sales route helpers. The nature of the work
performed must be viewed from a perspective of the business or trade in its entirety and not on a
confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the
necessity or desirability of their services in the regular conduct of the business or trade of petitioner company.
The Court of Appeals has found each of respondents to have worked for at least one year with petitioner
company. While this Court, in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term
employment, it has done so, however, with a stern admonition that where from the circumstances it is
apparent that the period has been imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and
public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed
period of few months, short of the normal six-month probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of
employment is impressed with public interest. The provisions of applicable statutes are deemed written into the
contract, and "the parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other."21
ChanRoblesVirtualawlibrary
In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc.,22 this Court applied the ruling cited above under the
principle of stare decisis et non quieta movere (follow past precedents and do not disturb what has been settled).
It was held therein that since petitioners, as route helpers, were performing the same functions as the employees
in Magsalin, which are necessary and desirable in the usual business or trade of Coca Cola Philippines, Inc.,
they are considered as regular employees entitled to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners were employed as route helpers in
anticipation of the high volume of work in its plants and sales offices.23 As such, respondents contention that
petitioners could not have attained regular employment status for they merely rendered services for periods of
less than a year cannot be sustained in view of the Magsalin doctrine previously cited. Indeed, the pernicious
practice of engaging employees for a fixed period short of the six-month probationary period of employment,
and again, on a day-to-day basis thereafter, mocks the law.
At this point, it is worth recalling that Article 280 of the Labor Code, as amended,
provides:chanRoblesvirtualLawlibrary
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
Thus, pursuant to the Article quoted above, there are two kinds of regular employees, namely: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.24 Simply stated, regular employees are classified into: (1)
regular employees by nature of work; and (2) regular employees by years of service. The former refers to those
employees who perform a particular activity which is necessary or desirable in the usual business or trade of the
employer, regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of the nature thereof, for at least a year.25cralawlawlibrary

Petitioners, in this case, fall under the first kind of regular employee above. As route helpers who are engaged in
the service of loading and unloading softdrink products of respondent company to its various delivery points,
which is necessary or desirable in its usual business or trade, petitioners are considered as regular employees.
That they merely rendered services for periods of less than a year is of no moment since for as long as they were
performing activities necessary to the business of respondent, they are deemed as regular employees under the
Labor Code, irrespective of the length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming that petitioners were performing
activities which are usually necessary or desirable in its usual business or trade, they were employed not as
regular employees but only for a fixed period, which is well within the boundaries of the law, as ruled in Brent
School, Inc. v. Zamora,26 viz.:chanRoblesvirtualLawlibrary
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on
the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services,
except the general admonition against stipulations contrary to law, morals, good customs, public order or public
policy. Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts
are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific
projects with pre-determined dates of completion; they also include those to which the parties by free
choice have assigned a specific date of termination.
xxxx
Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment as defined therein should
be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever being exercised by the former over the
latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.27
ChanRoblesVirtualawlibrary
Thus, under the above Brent doctrine, while it was not expressly mentioned in the Labor Code, this Court has
recognized a fixed-term type of employment embodied in a contract specifying that the services of the
employee shall be engaged only for a definite period, the termination of which occurs upon the expiration of
said period irrespective of the existence of just cause and regardless of the activity the employee is called upon
to perform.28 Considering, however, the possibility of abuse by employers in the utilization of fixed-term
employment contracts, this Court, in Brent, laid down the following criteria to prevent the circumvention of the
employees security of tenure:chanRoblesvirtualLawlibrary
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms
with no moral dominance exercised by the former or the latter.29
ChanRoblesVirtualawlibrary
Unfortunately, however, the records of this case is bereft of any proof which will show that petitioners freely
entered into agreements with respondent to perform services for a specified length of time. In fact, there is
nothing in the records to show that there was any agreement at all, the contracts of employment not having been
presented. While respondent company persistently asserted that petitioners knowingly agreed upon a fixed
period of employment and repeatedly made reference to their contracts of employment, the expiration thereof
being made known to petitioners at the time of their engagement, respondent failed to present the same in spite
of all the opportunities to do so. Notably, it was only at the stage of its appeal to the CA that respondent
provided an explanation as to why it failed to submit the contracts they repeatedly spoke of.30 Even granting
that the contracts of employment were destroyed by fire, respondent could have easily submitted other pertinent

files, records, remittances, and other similar documents which would show the fixed period of employment
voluntarily agreed upon by the parties. They did not, however, aid this Court with any kind of proof which
might tend to show that petitioners were truly engaged for specified periods, seemingly content with the
convenient excuse that the contracts were destroyed by fire. Indeed, respondents failure to submit the
necessary documents, which as employers are in their possession, gives rise to the presumption that their
presentation is prejudicial to its cause.31cralawlawlibrary
While fixed term employment is not per se illegal or against public policy, the criteria above must first be
established to the satisfaction of this Court. Yet, the records of this case reveal that for years, petitioners were
repeatedly engaged to perform functions necessary to respondents business for fixed periods short of the sixmonth probationary period of employment. If there was really no intent to circumvent security of tenure,
respondent should have made it clear to petitioners that they were being hired only for fixed periods in an
agreement freely entered into by the parties. To this Court, respondents act of hiring and re-hiring petitioners
for periods short of the legal probationary period evidences its intent to thwart petitioners security of tenure,
especially in view of an awareness that ordinary workers, such as petitioners herein, are never on equal terms
with their employers.32 It is rather unjustifiable to allow respondent to hire and rehire petitioners on fixed terms,
never attaining regular status.33 Hence, in the absence of proof showing that petitioners knowingly agreed upon
a fixed term of employment, We uphold the findings of the Labor Arbiter and the NLRC and so rule that
petitioners are, indeed, regular employees, entitled to security of tenure. Consequently, for lack of any clear,
valid, and just or authorized cause in terminating petitioners employment, We find respondent guilty of illegal
dismissal.
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated August
31, 2005 and Resolution dated August 24, 2006 of the Court of Appeals in CA-G.R. SP Nos. 80977 & 87071 are
SET ASIDE. The Resolutions dated January 30, 2003 and September 24, 2003 of the NLRC in NLRC 00-0201419-97, affirming in toto the Decision dated August 21, 1998 of the Labor Arbiter are REINSTATED with
MODIFICATION. Taking into account petitioners reinstatement in 199934 and petitioner Falgueras receipt of
P792,815.64 separation pay,35 respondent is hereby ORDERED to pay petitioners the following: (1) backwages
computed from the date their salaries were withheld from them until their actual reinstatement; (2) allowances
and other benefits, or their monetary equivalent, at the time of their dismissal; (3) attorney's fees equivalent to
ten percent (10%) of the monetary awards; and (4) interest at six percent (6%) per annum of the total monetary
awards, computed from the finality of this Decision until their full satisfaction. For this purpose, the records of
this case are hereby REMANDED to the Labor Arbiter for proper computation of said awards, deducting
amounts already received. Costs against petitioner.
SO ORDERED.chanroblesvirtuallawlibrary

International Catholic Migration Commission vs.

National Labor Relations Commission and
Bernadette Galang
169 SCRA 606
FERNAN, C.J.
FACTS
Petitioner International Catholic Migration Commission (ICMC), a non-profit organization dedicated to
refugee service at the Philippine Refugee Processing Center in Morong, Bataan engaged the services of private
respondent Bernadette Galang as a probationary cultural orientation teacher with a monthly salary of P2,000.00.
Three (3) months thereafter, private respondent was informed, orally and in writing, that her services were being
terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance
evaluation of her supervisors during the teacher evaluation program she underwent along with other newlyhired personnel.
Private respondent returned to Morong, Bataan on board the service bus of petitioner to accomplish the
clearance requirements. In the evening of that same day, she was found at the Freedom Park of Morong wet and
shivering from the rain and acting bizarrely. She was then taken to petitioner's hospital where she was given the
necessary medical attention.
Her father received, on her behalf, the proportionate amount of her 13th month pay and the equivalent of
her two week pay. Subsequently, respondent filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement
with backwages, exemplary and moral damages.
After the parties submitted their respective position papers and other pleadings, Labor Arbiter rendered
his decision dismissing the complaint for illegal dismissal as well as the complaint for moral and exemplary
damages but ordering the petitioner to pay private respondent the sum of P6,000.00 as payment for the last three
(3) months of the agreed employment period pursuant to her verbal contract of employment. Both parties
appealed the decision to the National Labor Relations Commission. The NLRC, sustained the decision of the
Labor Arbiter and thus dismissed both appeals for lack of merit.
Dissatisfied, petitioner filed the instant petition.
ISSUE
Whether or not an employee who was terminated during the probationary period of her employment is
entitled to her salary for the unexpired portion of her six-month probationary employment
RULING
No. Galang was terminated during her probationary period of employment for failure to qualify as a
regular member of petitioners teaching staff in accordance with its reasonable standards. Galang was found by
petitioner to be deficient in classroom management, teacher-student relationship and teaching techniques.
Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just
cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of
the Labor Code.
The labor arbiters decision is erroneous. The award of salary for the unexpired portion of the
probationary employment on the ground that a probationary employment for 6months is an employment for a

"definite period" which requires the employer to exhaust the entire probationary period to give the employee the
opportunity to meet the required standards.
A probationary employee is one who is on trial by an employer during which the employer determines
whether or not he is qualified for permanent employment. A probationary appointment is made to afford the
employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will
become a proper and efficient employee. The word probationary, as used to describe the period of
employment, implies the purpose of the term or period, but not its length.
Being in the nature of a trial period the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee
during said period. The length of time is immaterial in determining the correlative rights of both in dealing with
each other during said period.
It is within the exercise of the right to select his employees that the employer may set or fix a
probationary period within which the latter may test and observe the conduct of the former before hiring him
permanently. As the law now stands, Article 281 of the Labor Code gives ample authority to the employer to
terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of his
engagement. Nothing would preclude the employer from extending a regular or a permanent appointment to an
employee once the employer finds that the employee is qualified for regular employment even before the
expiration of the probationary period.
There was no showing, as borne out by the records, that there was circumvention of the rights of Galang
when she was informed of her termination. Her dismissal does not appear to us as arbitrary, fanciful or
whimsical. She was duly notified, orally and in writing, that her services were terminated for failure to meet the
prescribed standards of petitioner as reflected in the performance evaluation conducted by her supervisors
during the teacher evaluating program. The dissatisfaction of petitioner over the performance of private
respondent in this regard is a legitimate exercise of its prerogative to select whom to hire or refuse employment
for the success of its program or undertaking.
The lower court abused its discretion when it ordered ICMC to Galang her salary for the unexpired
three-month portion of her six-month probationary employment when she was validly terminated during her
probationary employment. To sanction such action would not only be unjust, but oppressive on the part of the
employer.
The petition is GRANTED. The Resolution of the NLRC is REVERSED and SET ASIDE insofar as it
ordered petitioner to pay private respondent her P6,000.00salary for the unexpired portion of her six-month
probationary employment. No cost.

G.R. No. L-44360 March 31, 1977

REGINA S. BIBOSO, NENITA B. BISO, FE CUBIN, MAGELENDE H. DEMEGILLDO, EMERITA O.
PANALIGAN, NILDA P. TAYO, NELDA TORMON, ARDE M. VALENCIANO, MA. LINDA E. VILLA
and the VICMICO SUPERVISORY EMPLOYEES ASSOCIATION (VICSEA), petitioners,
vs.
VICTORIAS MILLING COMPANY, INC. and the OFFICE OF THE PRESIDENT OF THE
PHILIPPINES, respondents.

FERNANDO, J.:t.hqw
The present Constitution of expanding the mandate of protection to labor specifically casts on the State the
obligation to assure workers security of tenure. 1 The decisive question in the controversy now before this Court
is wether the mantle of such guarantee covers the case of the nine petitioners, whose employment admittedly
were on a basis. It was the rulling of the respondent Presidential Executive Assistant Jacobo C. Clave that its

benificent effects could not be invoked by them that is assailed before this Court. While they are pleading by
captioned petition for review, this Court considered it as a cetiorari proceeding in view on his part, the issue of
an alleged unfair labor pratice indulged in by private respondent public official, who acted serious accusation
against respondent public, who acted on behalf of the Office of the President. The petition is not impressed with
the merit.
The order of respondent Jacobo C. Clave, who asss Presidential Executive Assistant acted on an appeal by
private respondent from a decision of the Secretary of Labor dismissed the complaint of petitioners for
reinstatement. He noted at the outset of such challenged order: "Individual complainants herein were employed
by respondent as academic teachers in respondent's school, the St. Mary Mazzarello School, which is operated
by respondent. On or about April 14, 1973, complainants were notified by the school Directress that they
(complainants) were not going to be rehired for the school year 1973-74.sllF The necessary report for such
action was filed by respondent with the Department of Labor on May 28, 1973, informing that complainants'
services were thus terminated after the business hours on June 30, 1973. 2 He then pointed out that petitioners
were quite successful with the Arbitrator, the former National Labor Relations Commission under Presidential
Decree No. 21, and the Secretary of Labor. It was private respondent that appealed to the Office of the
President. After which, his order went into the basic issue thus: "This Office had examined and analyzed the
various contracts Identified during the hearing below and admitted by the complainants to have been signed by
them which clearly show that the complainants were hired as teachers of the school on a year-to-year basis and
that they reapplied before the expiration of the contracts and/or signed new ones, as the case may be, if the
school decided to renew the same. None of the complainants who testified disputed the fact that they all signed
Identical contracts of employment which provided for a definite period of employment which provided for a
definite period of employment expiring June 30 of the particular school year. Thus, under 'Status of
Employment' of said contracts, the complainants were hired as 'temporary as and when required until June 30,
1973,' or whatever year the contract is supposed to terminate. To he specific, Exhs. '4', '5' and '6' signed by
complainant Arde Valenciano show that she was hired on a yearly basis for school year 1970-71, and 1971-72.
The same is true with Exhs. '13' and '14' signed by Linda Villa; Exhs. '16', '17','18' and '19', signed by Emerita 0.
Panaligan; and Exhs.'22' and '23', signed by Magelinde Demegillo all showing that they were hired on a year-toyear basis. 3 Reference was then made to "the official stand of the Department of Labor respecting recognition
by the Labor Code of the policy of the Bureau of Private Schools settling the maximum probationary period for
teachers at three years. Of pertinence hereto is the official letter dated March 12, 1975, of Undersecretary of
Labor Amado G. Inciong to the President of the Coordinating Council of Private Educational Associations
touching on the probationary period for teachers at three years, to wit: ... This refers to your letter of 5 March
1975 in connection with the probationary period for teachers. The Labor Code does not set the maximum
probationary period at six months. Under the Labor Code, the probationary period is the period required to learn
a skill, trade. occupation or profession. In other words, the Labor Code recognizes the policy of the Bureau of
Private Schools settling the maximum probationary period for teachers at three years. 4 It was likewise made
plain therein that as regards the allegation of unfair labor practice, the Office of the President "finds the same
untenable. 5
The petition, as noted at the outset, cannot proper.
1. It is to be noted that in Philippine Air Lines, Inc. v. Philippine Air Lines Employees Association, 6 after
reference was made to the specific provision in the present Constitution not found in the 1935 Charter requiring
the State to assure workers security of tenure, it was stressed that there should be fealty to [such] constitutional
command. 7 Such a mandate was construed in the subsequent case of Almira v. B. F. Goodrich Philippines, Inc.,
8
that even in cases affording justification for disciplinary action to be taken by management against an
employee, "where a penalty less punitive [than dismissal] would suffice, whatever missteps may be committed
by [the latter ought not to be visited with a consequence so severe." 9 The opinion then went on to state: "It is
not only because of the law's concern for the workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. The misery and
pain attendant on the loss of jobs then could be avoided if there be acceptance of the view that under all the
circumstance of this case, petitioners should not be deprived of their means of livelihood. Nor is this to condone
what had been paid. From the strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in
his masterly work, Discretionary Justice, that were a decision may be made to rest on informed judgment rather
than rigid rules, all the equities of the case must be accorded their due weight. Finally, labor law determinations,
to quote from Bultmann, should be not secundum rationem but also secundum caritatem. " 10 That is a doctrine
to which this case is whether it applies to the case of petitioner. The Office of the President answered in the
negative. Thus it exercised its discretion. It cannot be said that an abuse could rightfully be imputed by it, much
less one that is of such gravity that calls fir judicial correction. What is decisive is that petitioners were well
aware all the time that their tenure was for a limited duration. Upon its termination, both parties to the
employment relationship were free to renew it or to let it lapse. It was the decision of private respondent that it

should cease. The Office of the President could find nothing objectionable when it determined that the will of
the parties as to the limited duration thereof should be respected. That was all that was decided.
2. This is by no means to assert that the security of tenure protection of the constitution does not apply t
probationary employees. The Labor code has wisely provided for such a case thus: "The termination of
employment of probationary employees and those employed with a fixed period shall be subject to such
regulations as the Secretary of labor may priscribe to prevent the circum\vention of the right of the employees to
be secured in their employment as provided herein." 11 There is no question here, as noted in the assailed order
of Presidential Executive Assistant Clave, that petitioners did not enjoy a permanent status. During such period
they could remian in their positions and any circumvention of their of the rights, in accordance with the
statutory statutory scheme, subject to inquirey and therafter correction by the Department of Labor. Thus there
was the safeguard as to the duration of their employment being respected. To that extent, their tenure was
secure. The moment, however, the period expired in accordance with contracts freely entered into, they could no
longer invoke the constitutional protection. To repeat, that was what transpired in this case.sllF The ruling
of the Office of the President, now assailed, is not without support in law.
3. It would be a different matter of course had the failure to renew the contracts of petitioners been justly
attributable to their joining petitioner labor union, Vicmico Supervisoyr Employees Association. That would be
a clear case of an unfair labor practice. 12 There was such an allegation by them. The Office of the President
found "the same untenable." 13 Nor did it stop there. It explained why: "The records disclose, and it is a fact
admitted by the union, that the teachers of Don Bosco Technical Institute, also run and operated by respondent,
are all members of the VICSEA. The allegation that the Company refused re-employment of complainants
simply because they joined the VICSEA isnegated by the fact that in a much bigger school, the Don bosco
Technical Institute, respondent has allowed the members of the faculty to join the CIVSEA without any serious
objection or reprisal. If at all the respondent had objected to the teachers of the St. Mary Mazzarello school
being considered within the same bargaining unit as the otgher employees of the company, it was for the reason
that the exemption from coverage of employes hired for a definite period of employment, like the complainants
herein, who were indisputably shown that the term of their contract of employment prior to the time that they
become permanent under the Manual of the Bureau of Private Schools, was temporary in nature or for a definite
period." 14
In the comment submitted on behalf of respondent public official, reference was made to the admission by
individual petitioners that before they joined such labor union, "they had serious differences with the school
officials respecting their methods of teaching and conduct in school." 15 That was followed by a recital of what
was testified to by some of the petitioners. Then came this portion of the comment: "The above-quoted
testimonies of individual petitioners clearly show that their competence, efficiency, loyalty and integrity were in
question long before they became members of petitioner union VICSEA and it was because of these failings on
their part that their contracts to teach were not renewed. This also shown by Exhibit 39, ... (3) Some of the
teachers retained to teach in the school were also members of petitioner union VICSEA.... If respondent
VICMICO was against individual petitioners joining the union, why did it not terminate the employment of
these two teachers as well? (4) Don Bosco of Bacolod City, another school run by respondent VICMICO, is
manned by teachers who are members of petitioner union VICSEA ... Considering "he foregoing circumstances,
it is difficult to believe the submission of individual petitioners that they were terminated from employment
because they joined petitioner union VICSEA It would appear that it was the other way around. Knowing that
their contracts were about to expire and that they would probably not be extended new ones, petitioners sought
membership in petitioner union VICSEA to render it more difficult for respondent VICMICO to remove them
from their teaching positions. This is indicated by the fact that petitioners became members of petitioner union
VICSEA only in January, 1973. Before this date, individual petitioners were already being closely observed to
gauge their performance for purposes of determining who shall be accorded permanent status. Thus, individual
petitioners knew that they would either be made permanent or will be dropped from the faculty roster at the end
of the school year 1972-73. So they joined the union. That the purpose of individual petitioners in joining the
union is to avert their forthcoming removal from the faculty roster was impliedly admitted by one of the
individual petitioners in her testimony: 'Q But according to you, precisely, the reason why you joined the
union was because it would be very hard for the school toterminate you if you are already a member of the
union, did you not say that? A I said it!" 16 The memorandum for petitioners did stress testimony coming
from the Directress of the school in question to show that the refusal to retain them in employment was due to
their membership in the union. Certainly, it cannot be assumed that the Office of the President in the evaluation
of the conflicting evidence did not take it into consideration. The conclusion it reached was adverse to
petitioners. It is now well-settled that the certiorari jurisdiction of this Tribunal extends only to a grave abuse of
discretion. There must be the element of arbitrariness or caprice. In the light of what appears of record, the
conclusion that the decision reached by it is tainted by such infirmity is unwarranted.

WHEREFORE, the petition for certiorari is dismissed.

Barredo, Antonio and Concepcion Jr., JJ., concur.
G.R. No. 74246 January 26, 1989
MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and Employment
judgment, and JOAQUIN A. DEQUILA, respondents.
FACTS:
Joaquin A. Dequila (or Dequilla) was hired on probation by Mariwasa Manufacturing, Inc. as a general utility
worker on January 10, 1979. After 6 months, he was informed that his work was unsatisfactory and had failed to
meet the required standards. To give him another chance, and with Dequilas written consent, Mariwasa
extended Dequilas probationary period for another three months: from July 10 to October 9, 1979. Dequilas
performance, however, did not improve and Mariwasa terminated his employment at the end of the extended
period.
Dequila filed a complaint for illegal dismissal against Mariwasa and its VP for Administration, Angel T. Dazo,
and violation of Presidential Decrees Nos. 928 and 1389.
DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed. Termination is justified. Thus, Dequila
appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a regular
employee at the time of his dismissal, thus, he was illegally dismissed. (Initial order: Reinstatement with full
backwages. Later amended to direct payment of Dequilas backwages from the date of his dismissal to
December 20, 1982 only.)
ISSUE: WON employer and employee may, by agreement, extend the probationary period of employment
beyond the six months prescribed in Art. 282 of the Labor Code?
RULING: YES, agreements stipulating longer probationary periods may constitute lawful exceptions to the
statutory prescription limiting such periods to six months.
The SC in its decision in Buiser vs. Leogardo, Jr. (1984) said that Generally, the probationary period of
employment is limited to six (6) months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is established by company policy or when
the same is required by the nature of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment,
such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980
to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling,
or when the job requires certain qualifications, skills experience or training.
In this case, the extension given to Dequila could not have been pre-arranged to avoid the legal consequences of
a probationary period satisfactorily completed. In fact, it was ex gratia, an act of liberality on the part of his
employer affording him a second chance to make good after having initially failed to prove his worth as an
employee. Such an act cannot now unjustly be turned against said employers account to compel it to keep on
its payroll one who could not perform according to its work standards.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit
attaching to the completion of said period if he still failed to make the grade during the period of extension. By
reasonably extending the period of probation, the questioned agreement actually improved the probationary
employees prospects of demonstrating his fitness for regular employment.

Petition granted. Order of Deputy Minister Leogardo reversed.

G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA

OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
DISSENTING OPINION
BRION, J.:
Before the Court are respondent Pearlie Ann Alcaraz's motion for reconsideration of the Court's July 23, 2013
Decision, and petitioners Abbott Laboratories, Phils. (Abbott), Cecille Te1Tible, Edwin Feist, Maria Olivia
Yabut-Misa, Teresita Bernardo, and Allan Almazar's comment thereon. I submit this Dissenting Opinion to grant
the present motion for reconsideration and to maintain my view that the petitioners' earlier petition for review
lacked merit and should have been denied by the Court.
THE MOTION F'OR RECONSIDERATION
In her motion for reconsideration, Alcaraz alleges that the Court engaged in judicial legislation when it equated
Alcaraz's job description and, in the process, enumerated the circumstances showing when and how the
petitioners conveyed Alcaraz's duties and responsibilities to her to the reasonable standards for regularization
required by the Labor Code. She argues that "one's job description cannot by itself be considered the standard
for regularization"1 because a "standard denotes a measure of quantity or quality."2
In so doing, the Court acted contrary to the principles of social justice and protection to labor.
Alcaraz further claims that the Court erred in considering her dismissal on the third month of her probationary
employment to be a mere due process violation that only warrants an award of nominal damages. In support,
Alcaraz cites Abbott's own rules under which Abbott must evaluate Alcaraz's performance on the third and fifth
months of the probationary period; if Abbott finds Alcaraz to be underperforming on the third month, Abbott
should come up with a performance improvement plan (PEP). Only upon her failure to meet this PEP that
Abbott may end her probationary employment.
Alcaraz also points out that Abbott failed to abide by its own rules and immediately dismissed Alcaraz, without
any just cause under Article 281 of the Labor Code to support its action. Without a just cause, the dismissal is
illegal and entitles her to reinstatement and backwages.
Lastly, even assuming that Abbott can terminate Alcaraz at any time for failure to qualify for regularization, it is
clear that Abbott "merely feigned its dissatisfaction"3 of Alcarazs job performance as shown by the highhanded manner Abbott used in implementing her dismissal.
THE COMMENT
In their Comment, the petitioners maintained the correctness of the Courts ruling on both procedural and
substantive grounds.
Abbott argues that the Court correctly proceeded as it did in evaluating the facts and evidence in deciding the
case. While the Court does not normally embark on the re-examination of the evidence presented by the parties,
it may do so when, among others: (i) the findings are grounded entirely on speculation, surmises or conjectures;
(ii) the judgment is based on misapprehension of facts; (iii) the findings of fact are conflicting; (iv) when the
findings are contrary to the trial court; and (v) the Court of Appeals (CA) manifestly overlooked certain relevant
facts not disputed by the parties which, if properly considered, would justify a different conclusion. In the
present case, all these instances are present.

The probationary nature of Alcarazs employment is clear from the evidence and should be respected. In fact, in
her reply-letter to Abbott, Alcaraz even asked that the probationary period of six months be reduced to three
months since "Abbott can already determine if [she] is fit for the position."4 Her statement does not only show
her knowledge of the nature of her employment but proves her acknowledgment that there were standards to be
met and that the company will evaluate her compliance with these standards.
The petitioners posit that this same statement belies Alcarazs claim that she was not informed of these
standards.5 In fact, Alcaraz herself admitted that "Abbott has only one evaluation system for all types of
employees in the organization."6 She knew that she had to undergo the
Probationary Performance Standards Evaluation (PPSE) (based on the duties and responsibilities of her
position, i.e., her job description) to document her performance during the probationary period and to serve as
basis in recommending her regularization or termination.
The petitioners also note that in signing her appointment paper, Alcaraz agreed "to abide by all existing policies,
rules and regulations of the company, as well as those, which may hereinafter be promulgated."7 All these taken
together comply with the legal requirement that the probationary employee be informed of the reasonable
standards at the time of her engagement.
Citing Alcira v. NLRC,8 the petitioners claim that they "substantially complied" with the notification
requirement since they informed Alcaraz of the PPSE; it is only natural that the evaluation should be made vis-vis the performance standards for the job.
DISCUSSION
A. Procedural Objection
I shall first address the petitioners claim that the Court can normally undertake a review of the facts and
evidence under a Rule 45 petition, citing the numerous exceptions to what is otherwise claimed as the general
rule. In doing so, I reiterate my position in my earlier Dissent, with added arguments to specifically address the
petitioners claim and the ponencias present explanation.
A1. The Rule 65 petition and Montoya v. Transmed
When a labor case reaches the judicial system, courts must proceed based on two basic premises: first, the
ruling of the National Labor Relations Commission (NLRC) is declared by law to be a final ruling that is no
longer appealable; and second, the only remedy left to set aside or modify this ruling is through a Rule 65
review by the CA that is narrowly grounded on jurisdictional errors i.e., whether the NLRC acted without or
in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction.
Once the CA decision reaches the Court under a Rule 45 petition for review on certiorari, from what prism does
the Court examine the CA decision? Note that Rule 45 of the Rules of Court limits the scope of the petition to
"pure questions of law."9 This review is not a matter of right but of sound judicial discretion. Obviously, the
sound judicial discretion requirement is meant to limit what could otherwise be an unlimited exercise of
discretion by the Highest Court to lay open and review the whole case, both as to fact and law.
Montoya v. Transmed Manila Corporation10 instructs us that in a Rule 45 review (of the CA decision rendered
under Rule 65), the question of law that confronts the Court is the legal correctness of the CA decision i.e.,
whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, and not on the basis of whether the NLRC decision on the merits of the case was correct. As applied in
the present case, the Court should simply determine the legal correctness of the CAs finding that the NLRC
ruling had basis in fact and law, not the question of whether it was or was not correct. I clearly stated these in
my Dissenting Opinion, as follows:
Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Courts review is limited
to:

(1) Ascertaining the correctness of the CAs decision in finding the presence or absence of a grave abuse
of discretion. This is done by examining, on the basis of the parties presentations, whether the CA
correctly determined that at the NLRC level, all the adduced pieces of evidence were considered; no
evidence which should not have been considered was considered; and the evidence presented supports
the NLRC findings; and
(2) Deciding any other jurisdictional error that attended the CAs interpretation or application of the
law.11
While these two questions should sufficiently delimit the narrow scope of review under Rule 65, nonetheless,
the petitioners submit that factual review is appropriate under the numerous exceptions cited in a case where the
decisions of the trial court and the appellate court were brought on appeal to the Supreme Court. Notably,
jurisprudence has even extended the application of these numerous exceptions to the decisions rendered by the
labor tribunals and the CA.
In other words, based on these exceptions, the existence of a conflict in the factual findings and/or conclusions
at any stage of the case, from the labor arbiter (LA) to the CA, renders it open for the Court to conduct a factual
review that is deemed necessary in deciding the case.
This approach obviously considers the Rule 65 petition route to the CA (instead of this Court) only in light of
the doctrine of hierarchy of courts and disregards the final and unappealable character of the NLRC decision. If
a courts certiorari jurisdiction has a limited scope and breadth, the Court, under a Rule 45 petition for review
(of the CA decision), could not have a more expanded jurisdiction than what Rule 45 expressly provides, i.e.,
that the issue is limited to pure questions of law.
Too, this approach has resulted in turning the rule (that factual findings of labor tribunals are binding on the
Court) into an exception - the Court effectively becomes a trier of facts and vice versa. Notably, when one
traces in jurisprudence the justification for the exception, it will invariably point to cases where the Supreme
Court departed from the rule that the jurisdiction of the Court in cases brought to it from the CA is limited to
the review of errors of law, as the factual findings of the lower courts are deemed conclusive when, among
others, the findings of facts by the trial court and the appellate court are conflicting.12
The indiscriminate adoption of this remedial law principle into labor cases stands on shaky legal grounds. To
begin with, certiorari is different from appeal. In an appellate proceeding, the original suit is continued on
appeal.1awp++i1 In a certiorari proceeding, the certiorari petition is an original and independent action that
was not part of the trial that had resulted in the rendition of the judgment or order complained of. "[T]he higher
court uses its original jurisdiction in accordance with its power of control and supervision over the proceedings
of lower courts."13
Put more bluntly, when the Court undertakes a review of the factual findings made by the lower courts, it does
so on the premise that the recourse to the CA is part of the appellate process authorized by law. Hence, when the
trier of facts at the trial and appellate level reach divergent factual findings, even if the same pieces of evidence
are before them, the Court, in the exercise of its sound discretion, sets aside the rule that only questions of law
may be raised under a Rule 45 petition in order to arrive at a correct and just decision. The same situation does
not apply in labor cases because statutory law does not provide for an appellate process beyond the NLRC, and
thus, the mere existence of a conflict in the factual findings at any stage of the proceedings does not by itself
warrant the Court to undertake an independent review.
A2. The question of how a probationary
employee "is deemed to have been
informed of the standards of his
regularization" may be a question of law,
but not from the prism of a decision
rendered under Rule 65

According to the ponencia, the Court may consider "other questions of law aside from the CAs finding on the
NLRCs grave abuse of discretion." In the present case, this other question of law or "ancillary issue" is the
"question of how a probationary employee is deemed to have been informed of the standards of regularization."
To the ponencia, this consideration is necessary "if only to determine if the concepts and principles of labor law
were correctly applied or misapplied by the NLRC in its decision."
I strongly disagree with the ponencias reasoning for two reasons:
First, the ponencia unmistakably validates the very objection I raised in my earlier Dissenting Opinion that there
were in fact no communication standards expressly communicated to Alcaraz; the Court, through the Decision
under review, simply attempted to supply this fatal omission via an assumption and disjointed implication. I
reiterate the following points in my earlier Dissent:
The ponencias reasoning, however, is badly flawed.
1st. The law and the rules require that these performance standards be communicated at the time of engagement
to the probationary employee. The performance standards to be met are the employers specific expectations of
how the probationary employee should perform. The ponencia impliedly admits that no performance standards
were expressly given but argues that because [Alcaraz] had been informed of her duties and responsibilities (a
fact that was and is not disputed), she should be deemed to know what was expected of her for purposes of
regularization. This is a major flaw that the ponencia satisfies only via an assumption. The ponencia apparently
forgets that knowledge of duties and responsibilities is different from the measure of how these duties and
responsibilities should be delivered. They are separate elements and the latter element is missing in the present
case.
xxxx
4th. The ponencia also forgets that these "performance standards" or measures cannot simply be assumed
because they are critically important in this case, or for that matter, in any case involving jobs whose duties and
responsibilities are not simple or self-descriptive. If [Alcaraz] had been evaluated or assessed in the manner that
the companys internal rules require, these standards would have been the basis for her performance or lack of
it. Last but not the least, [Alcarazs] services were terminated on the basis of the performance standards that, by
law, the employer set or prescribed at the time of the employees engagement. If none had been prescribed in the
first place, under what basis could the employee then be assessed for purposes of termination or regularization?
Second, in considering the "ancillary issue" as a proper subject of a Rule 45 petition for review on certiorari of a
ruling rendered under a Rule 65 petition, the ponencia apparently fails to distinguish the difference between
errors of law and errors of jurisdiction in an attempt to justify its decision that is based solely on assumptions.
Error of jurisdiction is one where the act complained of was issued by the court without or in excess of
jurisdiction. This is the province of the writ of certiorari. The writ of certiorari will not be issued to cure errors
in the appreciation of the evidence of the parties, and its conclusions anchored on the said findings and its
conclusions of law. If the CA finds that the NLRC committed no error of jurisdiction, the Courts task is to only
determine the legal correctness of this CA finding and not to supplant the NLRC and the CAs conclusion with
what the Court thinks should be the correct interpretation of the law, in utter disregard of the different levels of
review the case underwent. If the Court will undertake a review of the "ancillary issues" suggested by the
ponencia, the Court will in effect create a right of appeal from the NLRC ruling when the law confers none.
Too, a Rule 65 petition requires the presence of grave abuse of discretion and not mere abuse of discretion
before courts may issue the corrective writ of certiorari in labor cases not only because the ruling under review
is already final; but, more importantly, because the appreciation of the evidence and its legal effects carries with
it discretion within the bounds of the law. The discretion granted to the NLRC to affirm or reverse the LA, on
one hand, and the discretion granted to the CA to determine whether grave abuse of discretion attended the
NLRCs ruling, on the other hand, are discretions within legal bounds that the Court cannot supplant at will,
much less via mere assumption.

In sum, these are what the NLRC and the CA found as matters of fact and law:
1. Abbott failed to specify the reasonable standards by which Alcaraz alleged poor performance was
evaluated, much less to prove that such standards were made known to her at the time of her
recruitment.
2. The employment contract does not show that Alcaraz had been apprised of the requirements to
become a regular employee.
3. The Labor Arbiters reasoning that a top level pharmaceutical corporation would not be remiss in
leaving its standards of continued employment undisclosed to its employees is simply non sequitur.
4. Alcaraz receipt of Abbotts Code of Good Corporate Conduct, Probationary Performance Standards
and Evaluation and Performance Excellence Orientation Modules for the Hospira ALSU Staff cannot be
equated with being actually informed of the performance standards.
Notably, what Alcaraz received was the Probationary Performance Standards for the Hospira ALSU Staff.
5. Alcaraz received these various documents not at the time of her engagement but only on March 3,
2005 or a month after her engagement.
6. Abbotts claim on Alcaraz poor performance (on account of her tardiness, poor time management,
failure to build effective rapport, non-completion of training and poor time management skills) [was] not
supported by evidence.
7. There is also no evidence to show that Abbott conveyed to or confronted Alcaraz with her alleged
inefficiencies or incompetence at any time during her tenure with Abbott.
8. While Abbott has a standard operating procedure in evaluating probationary employees, there is no
evidence that Alcaraz underwent this procedure.
9. What makes [Alcarazs] dismissal for alleged dismal performance even more highly suspicious is that
she was even complimented by no less than Ms. Kelly Walsh in her electronic mail dated 25 April
2005.14
Based on these findings, the CA correctly determined that the NLRC did not commit grave abuse of discretion
in reversing the LAs ruling. Consider the following: first, the LAs ruling that Alcaraz was apprised of the
reasonable standards (to qualify as regular employee) was merely based on Alcarazs factual narrations in her
position paper narrations that by themselves do not at all speak of any reasonable performance standards. This
is not even disputed by the ponencia; second, Alcaraz received the documents that purportedly contain the
performance standards only on March 3, 2005 or a month after her engagement contrary to what the law
requires on when the reasonable standards must be communicated; and third, the LA himself is not convinced
that these documents would suffice to prove the existence of performance standards that he had to rely on a
baseless assumption that a top level pharmaceutical corporation would not be remiss in leaving its standards of
continued employment undisclosed to its employees. In reversing the CAs ruling that no grave abuse of
discretion existed, the Court itself might have crossed into prohibited territory through its own grave abuse of
discretion.
B. Substantive Objections
I. The constitutional guarantee of
security of tenure
The Constitution decrees that all workers are entitled to security of tenure. This means that an employer cannot
terminate his employees employment (whether actual or constructive) or otherwise suspend him without any
just or authorized cause and without complying with the due process requirements mandated by law. This

constitutional and statutory guarantee seeks, in the ultimate, to prevent the capricious exercise by the employer
of his power to dismiss.15
Aside from the just and authorized causes provided by law, the law also allows the employer to dismiss a
probationary employee if he "fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his engagement." The inclusion of this phrase in
Article 281 of the Labor Code and the manner by which it is phrased indicate that: first, a probationary
employment is not a default mode of an employment contract; and second, inadequate performance of ones
duties and failure to comply with reasonable standards cannot actually mean the same thing.
1. Probationary employment is not a
default mode of employment contract
Regardless of the kind of employment arrangement between the parties, an employer has the right to put a
newly-hired employee under a probationary period or it may choose not to do so, as part and parcel of its power
to hire. If the employer opts for the latter, however, he may not easily sever the relationship without proving the
existence of a just or authorized cause and without complying with procedural due process. If the employer opts
to hire an employee on a probationary basis, valid severance of the employer-employee relationship - outside of
the just and authorized causes - presupposes that the employer had accomplished the following things:
1. The employer must communicate to the employee that he is being hired on a probationary basis;
2. The employer must convey to the probationary employee the reasonable standards to qualify for
regularization;
3. The probationary status of the newly-hired employee must be communicated to him prior to the
commencement of his employment;
4. The employer must convey these reasonable standards at the time of the probationary employees
engagement;
5. The employer must evaluate the performance of the probationary employee vis the duly
communicated reasonable standards; and
6. The employee fails to comply with these reasonable standards before the completion of the
probationary period.
These cumulative requirements are demanded from the employer itself and cannot be supplied for him by law.
These requirements, too, should serve to dispel the wrong notion that a probationary employee enjoys lesser
rights than a regular employee under the Labor Code. Since a probationary employment is not an "employment
at will" situation as that phrase is understood in American jurisprudence, the only way by which the
constitutional guarantee of security of tenure may be enforced is to ensure that the employer sufficiently
discharges its burden of proving compliance with these requirements in the same manner that it is burdened to
prove the existence of a valid cause in dismissing an employee.16
2. "Inadequate performance of ones
duties" and "failure to comply with
reasonable standards" cannot actually
mean the same thing
The ponencia reiterates that adequate performance of ones duties and responsibilities constitutes the inherent
and implied standard for regularization. In short, "if the probationary employee had been fully apprised by his
employer of these duties and responsibilities, then basic knowledge and common sense dictate that he must
adequately perform the same."17 Otherwise, he may be terminated on the ground that his performance during
the probationary period is "inadequate."

If this is the case, then the law could have simply stated that a probationary employee can be dismissed "if he
fails to adequately perform his duties and responsibilities" if it actually meant the "adequate performance of
ones duties" and "reasonable standards" to mean the same thing.
In employing its present terms, Article 281 of the Labor Code merely proceeded from the premise that security
of tenure is not merely a statutory but a constitutionally guaranteed right. To consider an employees
regularization on the overly broad basis of "adequacy of performance" alone would practically negate the
constitutional guarantee. Rather, the law employed a qualitative and quantitative measurement of ones
performance by requiring a probationary employees performance to be measured on the basis of reasonable
standards. These standards or measurement of performance serve as a statutory limitation to the employers
prerogative to dismiss an employee, consistent with the constitutional right to security of tenure.
The reason for requiring the existence of reasonable standards that are duly communicated to the employee is
not hard to discern. The probationary period of employment is not exclusively for the benefit of the employer
but of both the employer and the employee: on one hand, the employer observes the fitness, propriety and
efficiency of a probationary employee to ascertain whether she is qualified for permanent employment; the
probationary employee, on the other hand, seeks to prove to the employer that she has the qualifications to meet
the reasonable standards duly communicated by the employer for permanent employment.
In the same manner that the probationary period of employment (or trial period) is meant to serve the interests
of both the employer and the employee, the requirement of reasonable standards seeks to protect the rights of
both the employer (to his management prerogative) and the employee (since his employment is in a sense a
property right).
In the context of the present case, an employer who duly communicates to a probationary employee these
reasonable standards for regularization can reasonably expect that his exercise of management prerogative
(whether to hire or fire) will be respected by the State (through its labor tribunals and eventually the courts).
Similarly, a probationary employee who has been duly informed cannot be heard to cry foul later should she fail
in these performance standards of which she has notice.
II. Elements of valid probationary
employment
Based on Article 281 of the Labor Code and Section 6(d) of the Implementing Rules of Book VI, Rule I of the
Labor Code, a valid probationary employment presupposes the concurrence of two requirements: First, the
employer shall make known to the employee the reasonable standard (performance standard) that the
probationary employee must comply with to qualify as a regular employee. Second, the employer shall inform
the employee of the applicable performance standard at the time of his/her engagement. Failing in one or both,
the employee, even if initially hired as a probationary employee, should be considered a regular employee.
Both these elements are sorely wanting in this case.
1. The rule and the exception in jurisprudence
For emphasis, performance standards are the specific expectations of the employer on how the probationary
employee should perform. These specific expectations cannot be equated with the duties and responsibilities
attached to the position. While the "specific expectations" inhere in an employer and, accordingly, vary from
one employer to another, the duties and responsibilities inhere in the peculiarities of the particular job itself.
Due to the difference between the two, proof of the existence of one does not necessarily prove the existence of
the other and vice versa.
In Aberdeen Court, Inc. v. Agustin, Jr.,18 the Court made a qualification to the rule that failure to comply with
the two requirements for valid probationary employment would make the employment a regular employment.
Where the employee acted "in a manner contrary to basic knowledge and common sense, in regard to which

there is no need to spell out a policy or standard to be met,"19 then his termination on this ground will be
upheld by the Court.
In Robinsons Galleria/Robinsons Supermarket Corporation v. Ranchez,20 the Court stated that a probationary
employee shall be deemed a regular employee where no standards are made known to him at the time of his
engagement "unless the job is self-descriptive, like maid, cook, driver, or messenger."
Under these two instances, the very nature of the duty or duties to be performed by the employee or of what he
failed to perform (showing lack of basic knowledge and common sense) is necessarily equated with the
performance standard or specific expectations of the employer as required by law. Notably, what these cases
instruct finds its logic in the law itself: failure to meet a performance standard that is rooted on "basic
knowledge and common sense" can be a valid ground to terminate a probationary employee without the need of
an express prior communication of the performance standard to the probationary employee. Basic knowledge
and common sense should be possessed by anyone desiring to find a regular employment.
Additionally, if the very nature of the job no longer permits the employer from specifying his expectations that
would constitute performance standards beyond what the job itself entails, the law likewise cannot demand
something more from the employer. The law, however, does not bar the employer from expressly laying down
his terms, even with the simplicity of the job, before a probationary employee can qualify for regularization.
While all jobs, regardless of their nature, would necessitate a description of what they entail, not all jobs would
legally require the employers to set and communicate a performance standard applicable to them, as enunciated
under the exceptions. The legal requirement for the employer to lay down and communicate the performance
standards to the employee at the time of his engagement arises from the nature of the probationary employment
as a trial period. A trial period presupposes the existence of a standard against which the probationary
employees performance would be tried and measured. Accordingly, the communication of a performance
standard is a requirement imposed by law - on top of the practical requirement of describing the job and
communicating, expressly or impliedly, this description to the employee - unless the nature of the job falls
within the exceptions.
In the present case, while the ponencia did not and could not expressly claim that the petitioners case falls
within the exceptions it oddly leaned on the exceptions to stretch its reading of the general rule. This legal
maneuvering is most unwarranted for going against the basic principle in dismissal-of-employees cases, i.e., the
burden of proof rests upon the employer to show that the dismissal is for a just cause and failure to do so would
necessarily mean that the dismissal is not justified.21
These observations lead to the conclusion that the laws demand for compliance with the two requirements (for
a valid probationary employment to exist) becomes greater as the complexity of the job increases since the same
complex nature of the job results in varying needs and specific expectations from different employers that are
engaged in the same line of industry. Hence, it is highly inappropriate to cite Alcarazs "extensive training and
background" to effectively make up for Abbotts own failure to comply with the requirements of the law.
In other words, the more complex the job is (like that of managerial employee) the more it becomes necessary
to specify what the employers specific expectations are vis--vis the duties and responsibilities that the job
entails. In this manner, compliance with the twin requirements of a valid probationary employment may require
the employer to lay down a quantitative or qualitative standard (or both) in measuring the performance of a
probationary employee.
In the present case, none of the petitioners evidence shows what these quantitative and/or qualitative standards
are.
2. Abbotts pre-employment orientation
and other documentary evidence
cannot amount to performance
standards

The pre-employment orientation the petitioners conducted for Alcaraz and the office policies communicated to
her cannot be equated with the performance standards required by law. The pre-employment orientation pertains
to Alcarazs duty to implement Abbotts Code of Conduct and office policies as they relate to the staff she has to
manage and supervise. The other pieces of documentary evidence Abbott presented - Code of Conduct, PPSE
and Performance Excellence Orientation Modules - were likewise in line with its purpose of acquainting and
assisting Alcaraz in her duty in supervising and evaluating the employees assigned to her department.
Interestingly, even if these documents were not given to Alcaraz for the purpose of communicating the
performance standards that apply to her, Abbott claims that since it has only one evaluation system for all its
employees, Alcaraz very well knew that the contents of these documents would be the same measure in
evaluating Alcarazs performance. However, the facts, as found by the ponencia itself, tell otherwise, i.e., that
Alcaraz was actually subjected to a different work performance evaluation:
On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbotts former HR
Director, to discuss certain issues regarding staff performance standards. In the course x x x thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some staff members which essentially contained
queries regarding the formers job performance. Alcaraz asked if Walshs action was the normal process of
evaluation. Terrible said that it was not.22 (emphasis ours)
This is a uniform, undisputed finding of fact of the LA, the NLRC and the CA. Given the difference in
treatment by Abbott in Alcarazs case, Abbott cannot avoid the conclusion that it may only legally be allowed to
divert from the usual procedure on the ground that Alcaraz is actually bound by a different set of specific
expectations by her employer because of the nature of the duties and responsibilities that a managerial employee
like her has to discharge. If she is bound by a different set of expectations, then Abbott must prove what these
expectations are in order to comply with the requiredperformance standards.
As the NLRC and the CA found however, there is no evidence on record to show what these standards really
were and that they were duly communicated. Much less was there evidence that Alcaraz was actually evaluated
on the basis of the required duly communicated standards.
Abbotts own admission that it had only one evaluation system for all of its employees actually backfires
against it for being inconsistent with its own conduct (when it subjected Alcaraz to a different evaluation
process) and omission (when it failed to communicate to Alcaraz the performance standards that are actually
applicable to her). By itself, its admission proves the utter lack of evidence to show Abbotts compliance with
the first (and, much less the second) requirement of a valid probationary employee. If Abbott would insist on the
uniformity of its performance standard, one can be tempted to ask whether Abbott can assess its Regulatory
Affairs Manager, like Alcaraz, who has an initial salary of P110,000.00 on the same standard Abbott applies to
its office receptionist or clerk and objectively consider the application compliant with the law.
To be sure, Abbott cannot answer this question affirmatively without, at the same time, suggesting the
superfluity of the two requirements in Article 281 of Labor Code for a valid probationary employment to exist.
The law precisely required the performance standards to be "reasonable" since the performance standard
applicable to only one type of employee (e.g., managerial) cannot reasonably be applied to a different type of
employee (e.g., clerical).
Abbott likewise cannot answer in the negative without contradicting its own admission on record and without
emphasizing what the NLRC and the CA have found all along the absence of an applicable performance
standard duly communicated to Alcaraz.
Since the validity of Alcarazs dismissal hinges on whether Abbott complied with the twin requirements under
Article 281 of the Labor Code, then proof of its compliance with these requirements must be substantiated by
the evidence and not merely assumed from or impelled by something that, in the first place, the NLRC and the
CA did not find existing.
3. The case of Aliling v. Feliciano

On this point, I submit that Alcira v. NLRC,23 far from advancing Abbotts position, in fact, supports this
Dissent in the same manner that the case of Armando Aliling v. Jose B. Feliciano, et al.,24 cited by Alcaraz,
does.
In Aliling, there were three grounds cited, each of which can independently support the Courts ruling, in
finding that the probationary employee was actually a regular employee, for failure to comply with the
requirements of the law on probationary employment.
First, the labor tribunals and the CA uniformly found the lack of performance standards duly communicated to
the employee. In the present case, the fact that the LA arrived at a conclusion different from those reached by
the NLRC and the CA does not authorize the Court to simply brush aside the factual findings at these two levels
of review because the Courts jurisdiction under a Rule 45 petition is limited. More importantly, the LAs ruling
itself was legally and factually baseless, thus warranting its reversal on appeal.
At the risk of being repetitive, what the CA reviews under a Rule 65 petition is a ruling that under the law is
already final. To warrant the issuance of the writ of certiorari, the CA should find the existence of grave abuse
of discretion. Should it find none, as in the present case, the Court, under a Rule 45 petition, is confined to the
determination of the legal correctness of the CAs finding that the NLRC ruling of illegal dismissal had basis in
fact and in law (i.e., was not attended by grave abuse of discretion).
Second, the probationary employee was "assigned to GX trucking sales, an activity entirely different from the
Seafreight Sales he was originally hired and trained for."25 The difference in assignment led the Court to
conclude that "at the time of his engagement, the standards relative to his assignment with GX sales could not
have plausibly been communicated to him as he was under Seafreight Sales."26
This circumstance is admittedly absent in the present case. Nonetheless, the third ground cited by the Court
requires an extended discussion since it touches on the quantitative and qualitative assessment of probationary
employees now advanced by the ponencia.
a. The quantitative and qualitative
assessment of probationary employees
In Aliling, the letter-offer to the probationary employee states that the regularization standards or the
performance norms to be used are still to be agreed upon by the probationary employee and his supervisor i.e.,
the two would "jointly define [their] objectives compared with the job requirements of the position"27 without
the employer proving that an agreement has, in fact, been reached. While there was evidence that the supervisor
reminded the probationary employee of the sales quota he must reach for continued employment, this standard
was communicated belatedly or one month after the employees engagement.
While the specific expectations of an employer may cut across the details of ones job description, the Court
must not confuse one with the other. In the case of a salesperson (account executive), specific expectations may
translate into the minimum quota that a probationary employee must reach to be entitled to regularization. In the
present case, there is absolutely nothing in the petitioners evidence that would have given the NLRC and the
CA and this Court - a hint as to what the petitioners expectations would translate into. The ponencias
reasoning that it is the adequacy of the performance of these duties and responsibilities, which constitutes as the
"implied and inherent" reasonable standards for regularization, begs the question. On what basis is the
"adequacy" legally gauged? To this argument, the ponencia offers an explanation.
The determination of "adequate performance" is not, in all case, measurable by quantitative specification, such
as that of a sales quota It also hinged on the qualitative assessment of the employees work; by its nature, this
largely rests on the reasonable exercise of the employers management prerogative. While in some instances the
standards used in measuring the quality of work may be conveyed xxx not all standards of quality measurement
may be reducible to hard figures or are readily articulable in specific pre-engagement descriptions. A good
example would be the case of probationary employees whose tasks involve the application of discretion and
intellect, such as xxx lawyers, artists and journalist. In these kinds of jobs, the best that the employer can do at

the time of engagement is to inform the probationary employee of his duties and responsibilities and to orient
him on how to properly proceed with the same. The employer cannot bear out in exacting detail at the beginning
of the engagement what he deems as "quality work" especially since the employee has yet to submit the
required output. In the ultimate analysis, the communication of performance standards should be perceived
within the context of the nature of probationary employees duties and responsibilities.28
The fundamental flaw in the ponencias explanation is that it contradicts the evidence on record. Applying the
ponencias reasoning, Abbott itself may have recognized that the standards for measuring the quality (instead of
quantity) of Alcarazs work are not "reducible to hard figures."29 To be able to comply with the law, Abbott
devised its own system of evaluation to measure the "adequacy of Alcarazs performance." Since the "adequacy
of performance" cannot entirely be left to the whims and caprices of Abbott, the Court can rightfully consider
Abbotts PPSE as its legal compliance with Article 281 of the Labor Code on the twin requirements of
probationary employment. Abbotts PPSE requires:
a. Performance standards must be discussed in detail with the employee within the first two weeks on
the job. This means the leader should have already identified the Core Job Responsibilities, goals, and
competency expectations prior to discussion with the probationary employee.
b. A signed copy of the Probationary Performance Standards and Evaluations (PPSE) must be submitted
to HRD within employees 1st two weeks on the job.
c. The completed PPSE will serve as documentation of the employees performance during his/her
probationary period, and will serve as basis for recommending confirmation or termination of
employment with Abbott. To be submitted to HRD on the probationary employees 5th month on the
job.30
In short, based on Abbotts own manner of legal compliance with the laws requirement on performance
standards, Abbott prescribes the procedure for making the evaluation and it is only through compliance with this
procedure that Abbotts determination of the adequacy of performance can be shown. Since not all probationary
standards of quality measurement are "reducible to hard figures or are readily articulable in specific preengagement descriptions,"31 Abbotts PPSE is its own solution, as far as practicable, to be able to "map into
technical indicators or convey in precise detail the quality standards"32 by which Alcarazs probationary
employment would be assessed. The truism that the substance of the law can be found in the interstices of the
procedure cannot be more applicable than in the present case.
Abbotts failure to comply with its own prescribed manner of determining a probationary employees
performance goes into and against the very nature of the employers legal obligation to evaluate the
probationary employees performance and to determine that she actually failed to comply with the reasonable
standards required by the law itself. In the ponencias words, this reasonable standard is the adequacy of
performance of her duties and responsibilities. Abbotts failure to comply with its own procedure in evaluating
Alcarazs performance and in actually deviating therefrom is itself a palpable proof that there were no duly
communicated performance standards in the present case to begin with, both in point of fact and law.
On this point and contrary to the ponencias view, Abbotts non-compliance with the terms of the PPSE cannot
be regarded as a mere matter of procedural lapse. In reality, one cannot divorce the requirement of reasonable
standards and of duly communicating it to the probationary employee, on one hand, and the requirement that the
employee, in fact, failed to comply with these standards in the manner that the employer himself had
contractually determined if only to give life to the constitutional guarantee of security of tenure to all workers,
on the other hand. For this reason, the ponencia cannot insist that the non-compliance with the PPSE is only a
formal defect and yet claim that adequacy of performance is not reducible to figures. Abbott cannot have its
cake and eat it too.
Notably, prior to or at the time of Alcarazs engagement, Abbotts communications to Alcaraz comprised only
of: (i) her job description; (ii) the duties and responsibilities attached to the position; (iii) the conditions of her
employment, i.e., the position title, the assigned department, the status of employment, and the period of

employment; (iv) Abbotts organizational structure; and (v) what she had to implement, i.e., Abbotts Code of
Conduct, office policies on human resources and finance, and to whom she would be reporting to.
Even if we go by the ponencias reasoning, these communications by themselves do not establish the legal
gauge of "adequacy" of performance by which Alcarazs probationary performance would be measured. To
emphasize, Abbotts PPSE serves as a legal gauge to measure the adequacy of Alcarazs performance.
Unfortunately, the silence of the ponencia and the dearth of evidence on why this legal gauge was not applied to
Alcaraz would keep this aspect of the case in mystery. To make matters worse, the PPSE (together with the
Performance Excellence Orientation Modules) was given to Alcaraz almost a month after her engagement.
In other words, even the "totality of circumstances" approach by the ponencia is fractured from the very start.
The 2nd requirement for a valid probationary employment under the Labor Code is, in fact, an offshoot of the
first requirement of a reasonable standard: a standard is reasonable not only because it lays down the employers
specific expectations applicable to a particular type of employee vis the attendant duties and responsibilities but
also because it is duly communicated to the employee. A belated communication of what the reasonable
standard is deprives the standard of the character of reasonableness.
Still, Abbott attempts to show the inadequacy of Alcarazs performance although deviating from the
prescribed procedure by presenting its May 19, 2005 letter addressed to Alcaraz, noting her "NA (Not
Achieved) ratings in the area of Core Job Competencies."33 The ponencia unqualifiedly bought this claim in
this manner The employee in Aliling, a sales executive, was belatedly informed of his quota requirement. Thus, considering
the nature of his position, the fact the he was not informed of his sales quota at the time of his engagement
changed the complexion of his employment. Contrarily the nature of respondents duties and responsibilities as
Regulatory Affairs Manager negates the application of the foregoing. Records show that respondent was
terminated because she xxx. Due to the nature of these tasks, the performance standards for measuring the same
were hardly articulable at the time of her engagement unlike those in Aliling which were already conveyable.
Hence, since the reasonableness of respondents assessment clearly appears from the records, her termination
was justified.34
The ponencias statements require some serious reflection from the Court. First, are we, in effect, saying that the
reasonable standards required by the law may be communicated at a point beyond the time of the employees
engagement? To put it bluntly, is the Court not engaging in clear judicial legislation? Article 281 of the Labor
Code is pointedly clear.
Art. 281. Probationary employment. - Probationary employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary basis may be terminated for a just cause
or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. [italics supplied; emphasis and underscore ours]
Second, the ponencia makes the qualitative assessment (in contrast with a quantitative assessment) of a
probationary employee far more esoteric in business application than it actually is. As may be implied from my
earlier discussion, had Abbott discussed the PPSE with Alcaraz vis--vis her duties and responsibilities, Abbott
could have easily communicated to Alcaraz, at least substantially, the specific expectations that translate into the
reasonable standards required of it by law. Not only did Abbott fail in this regard, Abbott, in fact, belatedly gave
the PPSE to Alcaraz, in patent violation of Article 281 of the Labor Code.
Third, the ponencia wrote too early in claiming that it did not undertake a "factual appellate review" of the case.
Yet, it weighed in on the supposed "reasonableness of [the petitioners] assessment" of Alcarazs performance
because it "clearly appears on the record."35 As the NLRC and the CA found however, the factual accuracy of
Abbotts assessment of Alcaraz is not supported by evidence.

b. Rubbing it in: extension of the Agabon

and Jaka rulings does not cure a fatal flaw
In an apparent attempt to belittle Abbotts non-compliance with its internal procedure, the Court for the first
time extends the application of its rulings in Agabon v. NLRC36 and Jaka Food Processing Corporation v.
Pacot37 to the present case. In these cases, the Court ruled that when a valid cause for termination exists, the
employers non-compliance with the procedural requirements warrants the payment of nominal damages.
In these cases, however, the procedural requirements do not have a bearing on the validity of the dismissal since
the existence of a just or authorized cause can be proved by independent and objective evidence. In the present
case, what the ponencia advances as ground for termination of a probationary employee is the inadequacy of her
probationary performance. At the risk of raising a rhetorical question, what is the legal gauge of this basis of
adequacy that is consistent with the constitutionally guaranteed right of security of tenure? In other words,
where the validity of the cause of dismissal adequacy of performance - cannot be resolved without undergoing
the very process prescribed by the employer for measuring the adequacy, there is no reason to extend the
Agabon and Jaka rulings in the present case.
On this score, it is highly inapt to equate Abbotts internal procedure of evaluating a probationary employee
with the notice requirements under the law even as a consoling gesture on the part of the Court. The inextricable
link between the procedure devised by Abbott for evaluating Alcaraz (as a means to qualitatively specify
Abbotts specific expectations vis-a-vis the duties and responsibilities of Alcaraz position and to evidence its
qualitative assessment of Alcaraz), on one hand, and the end that this procedure seeks to achieve, on the other
hand, suffices to distinguish Abbotts internal procedure and the statutory procedural requirements.
c. Evidence of performance standards
As stated in my earlier Dissent, the performance standard contemplated in law may be proven by evidence of
how the employees performance was intended to be or was, in fact, measured by the employer. The
performance standard may be in the form of a clear set of the employers expectations, or by a system of
feedbacks (e.g., comment cards) and document evaluation or performance evaluation and appraisals conducted
by the employer.
To this, again the ponencia offers an explanation:
[T]he performance standard contemplated by law should not, in all cases, be contained in a specialized system
of feedbacks or evaluation. The Court takes judicial notice of the fact that not all employers, such as simple
businesses or small-scale enterprises, have a sophisticated form of human resource management, so much so
that the adoption of technical indicators as utilized through "comment cards" or "appraisal" tools should not be
treated as a prerequisite for every case of probationary engagement.38
The problem with the ponencias explanation is that it veers away from the problem at hand in the same
manner that it did when it claimed that actual communication of specific standards might not be necessary
"when the job is self-descriptive in nature, for instance, in the case of maids, cooks, drivers, or messengers"
even if Alcaraz was, in the first place, never a maid, cook, driver or a messenger. Abbott is not engaged in a
simple business nor is it a small-scale enterprise. Abbott is a multinational corporation, with branches and
different facilities located all over the world. As such, it is most unfortunate that the specialized system it
actually has in place as a legal gauge to measure the "adequacy of performance" of Alcaraz, i.e., the PPSE
was never observed, not to mention, not duly communicated.39
III. Consequence of non-compliance
with Article 281 of the Labor Code
Since Abbott failed to comply with the requisites for valid probationary employment, then Alcaraz should be
deemed a regular employee who can be removed only with just or authorized causes. In the present case, the
petitioners failed to show that Alcaraz's dismissal was for a valid cause. The petitioners also failed to comply

with the two-written notice requirement under Section 2, Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code, in violation of Alcaraz's procedural due process rights under the law.
In addition, the abrupt and oppressive manner by which the petitioners dismissed Alcaraz from her employment
justified the award of moral and exemplary damages and attorney's fees. To reiterate my earlier Dissent:
The narration of facts of the Labor Arbiter, the NLRC and the CA shows, among others, that: ( 1) the individual
petitioners did not follow the petitioner's prescribed procedure performance evaluation as, in fact, the
respondent's work was not evaluated; (2) the individual petitioners, through their concerted actions, ganged up
on the respondent in forcing her to resign from employment; (3) the individual petitioners pressured the
respondent to resign by announcing her resignation to the office staff, thereby subjecting her to unwarranted
humiliation; and (4) they blackmailed the respondent by withholding her personal possessions until she resigned
from employment.
Bad faith can also be inferred from the lack of fairness and underhandedness employed by the individual
petitioners on how they informed the respondent of the termination of her employment. The records disclose
that the respondent was lured into a meeting on the pretext that her work performance was to be evaluated; she
was caught off-guard when she was info1med that her employment had been terminated. Aside from the abrupt
notification, bad faith can also be deduced from the fact that the termination was made immediately effective;
the respondent was immediately banned from the petitioner's premises after she was informed that her
employment had been terminated.
In these lights, I vote to grant the motion for reconsideration.
G.R. No. L-63316 July 31, 1984
ILUMINADA VER BUISER, MA. CECILIA RILLOACUA and MA. MERCEDES P. INTENGAN,
petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the Ministry of Labor &
Employment, and GENERAL TELEPHONE DIRECTORY, CO., respondents.
Jimenez, Apolo & Leynes Law Office for petitioners.
The Solicitor General for respondent Deputy Minister.
Abad, Legayada & Associates for private respondent.

GUERRERO, J.:
This is a petition for certiorari seeking to set aside the Order of the Deputy Minister of Labor and Employment,
affirming the Order of the Regional Director, National Capital Region, in Case No. NCR-STF-5-2851-81, which
dismissed the petitioners' complainant for alleged illegal dismissal and unpaid commission.
Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY COMPANY as
sales representatives and charged with the duty of soliciting advertisements for inclusion in a telephone
directory.
The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into an
"Employment Contract (on Probationary Status)" on May 26, 1980 with private respondent, a corporation
engaged in the business of publication and circulation of the directory of the Philippine Long Distance

Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same employment contract on June
11, 1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included the following common
provisions:
l. The company hereby employs the employee as telephone representative on a probationary
status for a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. It is
understood that darung the probationary period of employment, the Employee may be terminated
at the pleasure of the company without the necessity of giving notice of termination or the
payment of termination pay.
The Employee recognizes the fact that the nature of the telephone sales representative's job is
such that the company would be able to determine his true character, conduct and selling
capabilities only after the publication of the directory, and that it takes about eighteen (18)
months before his worth as a telephone saw representative can be fully evaluated inasmuch as
the advertisement solicited by him for a particular year are published in the directory only the
following year.
Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by the petitioners.
Failing to meet their respective sales quotas, the petitioners were dismissed from the service by the private
respondent. The records show that the private respondent terminated the services of petitioners Iluminada Ver
Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18, 1981 for
their failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and Employment,
a complaint for illegal dismissal with claims for backwages, earned commissions and other benefits, docketed
as Case No. NCR-STF-5-2851-81.
The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the complaints of the
petitioners, except the claim for allowances which private respondent was ordered to pay. A reconsideration of
the Order was sought by the petitioners in a motion filed on September 30, 1982. This motion, however, was
treated as an appeal to the Minister of Labor.
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated January 7,
1983, affirming the Regional Director's Order dated September 21, 1982, wherein it ruled that the petitioners
have not attained permanent status since private respondent was justified in requiring a longer period of
probation, and that the termination of petitioners' services was valid since the latter failed to meet their sales
quotas.
Hence, this petition for certiorari on the alleged ground that public respondent committed grave abuse of
discretion amounting to lack of jurisdiction. Specifically, petitioners submit that:
1. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to
lack of jurisdiction in ruling that the probationary employment of petitioners herein is eighteen (18) months
instead of the mandated six (6) months under the Labor Code, and in consequently further ruling that petitioners
are not entitled to security of tenure while under said probation for 18 months.
2. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to
lack of jurisdiction in ruling that petitioners were dismissed for a just and valid cause.
3. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to
lack of jurisdiction in ruling that petitioners are not entitled to the commissions they have earned and accrued
during their period of employment.

Petitioners contend that under Articles 281-282 of the Labor Code, having served the respondent company
continuously for over six (6) months, they have become automatically regular employees notwithstanding an
agreement to the contrary. Articles 281-282 read thus:
Art. 282. Probationary Employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it iscCovered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. (As amended by PD 850).
Art. 281. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceeding paragraph.
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
(As amended by PD 850).
It is petitioners' submission that probationary employment cannot exceed six (6) months, the only exception
being apprenticeship and learnership agreements as provided in the Labor Code; that the Policy Instruction of
the Minister of Labor and Employment nor any agreement of the parties could prevail over this mandatory
requirement of the law; that this six months prescription of the Labor Code was mandated to give further
efficacy to the constitutionally-guaranteed security of tenure of workers; and that the law does not allow any
discretion on the part of the Minister of Labor and Employment to extend the probationary period for a longer
period except in the aforecited instances. Finally, petitioners maintain that since they are regular employees,
they can only be removed or dismissed for any of the just and valid causes enumerated under Article 283 of the
Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The exception to this general
rule is When the parties to an employment contract may agree otherwise, such as when the same is established
by company policy or when the same is required by the nature of work to be performed by the employee. In the
latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of
probationary employment, such as in the present case where the probationary period was set for eighteen (18)
months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular
kind of work such as selling, or when the job requires certain qualifications, skills, experience or training.
Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts on the
period of probationary employment. It states as follows:
Probationary Employment has been the subject of misunderstanding in some quarter. Some
people believe six (6) months is the probationary period in all cases. On the other hand employs
who have already served the probationary period are sometimes required to serve again on
probation.

Under the Labor Code, six (6) months is the general probationary period ' but the probationary
period is actually the period needed to determine fitness for the job. This period, for lack of a
better measurement is deemed to be the period needed to learn the job.
The purpose of this policy is to protect the worker at the same time enable the employer to make
a meaningful employee selection. This purpose should be kept in mind in enforcing this
provision of the Code. This issuance shall take effect immediately.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine
the character and selling capabilities of the petitioners as sales representatives. The Company is engaged in
advertisement and publication in the Yellow Pages of the PLDT Telephone Directories. Publication of solicited
ads are only made a year after the sale has been made and only then win the company be able to evaluate the
efficiency, conduct, and selling ability of its sales representatives, the evaluation being based on the published
ads. Moreover, an eighteen month probationary period is recognized by the Labor Union in the private
respondent company, which is Article V of the Collective Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular or permanent shall undergo a
probationary or trial period of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be eighteen (I 8) months.
And as indicated earlier, the very contracts of employment signed and acquiesced to by the petitioners
specifically indicate that "the company hereby employs the employee as telephone sales representative on a
probationary status for a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. This
stipulation is not contrary to law, morals and public policy.
We, therefore, hold and rule that the probationary employment of petitioners set to eighteen (18) months is legal
and valid and that the Regional Director and the Deputy Minister of Labor and Employment committed no
abuse of discretion in ruling accordingly.
On the second assignment of error that public respondent committed grave abuse of discretion in ruling that
petitioners were dismissed for a just and valid cause, this is not the first time that this issue has been raised
before this Court. Earlier, in the case of "Arthur Golez vs. The National Labor Relations Commission and
General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983, the petition for certiorari which raised the
same issue against the herein private respondent was dismissed by this Court for lack of merit.
The practice of a company in laying off workers because they failed to make the work quota has been
recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers, 26
SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless of the permanent or probationary status of their
employment. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain
work goals or work quotas, either by failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. This management prerogative of requiring standards availed of so long as they
are exercised in good faith for the advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA) of September
1981, in support of their third assignment of error. Petitioners cannot avail of this agreement since their services
had been terminated in May, 1981, at a time when the CBA of September, 1981 was not yet in existence.
In fine, there is nothing in the records to show any abuse or misuse of power properly vested in the respondent
Deputy Minister of Labor and Employment. For certiorari to lie, "there must be capricious, arbitrary and
whimsical exercise of power, the very antithesis of the judicial prerogative inaccordance with centuries of both
civil and common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180). The "abuse of discretion must be
grave and patent, and it must be shown that the discretion was exercised arbitrarily or despotically." (Palma and

Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100; Philippine Virginia Tobacco Administration vs. Lucero, 125
SCRA 337, 343).
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.

UE DEAN Eleanor Javier vs Pepiano

The petitioners, UE professors Analiza Pepanio and Mariti Bueno, who were hired in 2000 and 1997,
respectively, filed a labor case against then UE dean Eleanor Javier, contesting the schools policy that obligated
them to acquire masters degrees as a condition for tenureship.
Pepanio and Bueno said the 1994-1999 collective bargaining agreement (CBA) between UE management and
its faculty provided that the school shall extend semester-to-semester appointments to college faculty staff like
themselves who did not possess the minimum qualifications such as a masters degree.
In 2001, the new CBA extended probationary full-time appointments to full-time faculty members who did not
yet have the required postgraduate degrees provided that the latter complied with the requirement within their
probationary period.
In 2003, Javier reminded Pepanio and Bueno of the expiration of their probationary status. The two, however,
demanded that they be placed on regular status given the years of service they had rendered.
The labor arbiter, in 2004, ruled in favor of the professors and ordered their reinstatement. UE, however,
appealed to the National Labor Relations Commission, which reversed the arbiters decision in 2006.
The professors ran to the Court of Appeals and in 2010 secured a reversal of the NLRC decision. The UE
management then elevated the case to the Supreme Court.
The Supreme Court upheld the policy of CHED and stated that The government has a right to ensure that only
qualified persons in possession of sufficient academic knowledge and teaching skills are allowed to teach in
such institutions. Government regulation in this field of human activity is desirable for protecting, not only the
students, but the public as well from ill-prepared teachers lacking in the required scientific or technical
knowledge. They may be required to take an examination or to possess postgraduate degrees as a prerequisite to
employment.
Holiday Inn vs. NLRC

GR No. 109114

Sep. 14, 1993

FACTS: Elena Honasan applied for employment with Holiday Inn and on April 15, 1991 was accepted for onthe-job training as telephone operator for 3 weeks. After her training, she was subsequently hired on a
probationary basis for a period of six months ending Nov. 12, 1991. Her employment contract stipulated that the
Hotel could terminate her probationary employment at any time prior to the expiration of the six-month period
in the event of her failure (a) to learn or progress in her job; (b) to faithfully observe and comply with the hotel
rules and the instructions and orders of her superiors; or (c) to perform her duties according to hotel standards.
On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn notified her of her
dismissal, on the ground that her performance had not come up to the standards of the Hotel.
She filed a complaint for illegal dismissal contending that she was already a regular employee at the time of her
separation and is thus entitled to security of tenure. The Labor Arbiter dismissed the complaint. On appeal, the
NLRC reversed the ruling and ordered the petitioner to reinstate Honasan. hence, this petition.
ISSUE: Whether or not Honasan is a regular employee.
CASE FOR THE COMPANY
The NLRC erred in holding that Honasan was already a regular employee at the time of her dismissal,
which was made 4 days before the expiration of the probationary period.

CASE FOR THE EMPLOYEE

She is a regular employee and is entitled to security of tenure.
RULING: The petition is dismissed and the NLRC's ruling was sustained. Honasan was placed by the
petitioner on probation twice, first during her on-the-job training for three weeks, and next during another
period of six months, ostensibly in accordance with Article 281. Her probation clearly exceeded the period of
six months prescribed by this article.
Probation is the period during which the employer may determine if the employee is qualified for possible
inclusion in the regular force. In the case at bar, the period was for three weeks, during Honasan's on-the-job
training. When her services were continued after this training, the petitioners in effect recognized that she had
passed probation and was qualified to be a regular employee. Honasan was certainly under observation during
her three-week on-the-job training. If her services proved unsatisfactory then, she could have been dropped as
early as during that period. But she was not. On the contrary, her services were continued, presumably because
they were acceptable, although she was formally placed this time on probation.
Even if it be supposed that the probation did not end with the three-week period of on-the-job training,
there is still no reason why that period should not be included in the stipulated six-month period of probation.
Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her probation could be extended
beyond that date, it nevertheless could continue only up to October 15, 1991, after the end of six months from
the earlier date. Under this more lenient approach, she had become a regular employee of Holiday Inn and
acquired full security of tenure as of October 15, 1991.
PINES CITY EDUCATIONAL CENTER VS. NLRC
Facts: Private respondents were all employed as teachers on probationary basis by petitioner Pines City
Educational Center, represented in this proceedings by its President, Eugenio Baltao. With the exception of Jane
Bentrez who was hired as a grade school teacher, the remaining private respondents were hired as college
instructors. All the private respondents, except Roland Picart and Lucia Chan, signed contracts of employment
with petitioner for a fixed duration. Due to the expiration of private respondents' contracts and their poor
performance as teachers, they were notified of petitioners' decision not to renew their contracts anymore.
Private respondents filed a complaint for illegal dismissal before the Labor Arbiter, alleging that their dismissals
were without cause and in violation of due process. Except for private respondent Leila Dominguez who
worked with petitioners for one semester, all other private respondents were employed for one to two years.
They were never informed in writing by petitioners regarding the standards or criteria of evaluation so as to
enable them to meet the requirements for appointment as regular employees. They were merely notified in
writing by petitioners, of the termination of their respective services on account of their below-par performance
as teachers. For their part, petitioners contended that private respondents' separation from employment, apart
from their poor performance, was due to the expiration of the periods stipulated in their respective contracts.
The Labor Arbiter rendered judgment in favor of private respondents. On appeal to the National Labor
Relations Commission, the decision was affirmed in toto.
Issue: WON private respondents were illegally dismissed
Ruling: Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of
employment are concerned, their services were lawfully terminated by reason of the expiration of the periods of
their respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta Ribaya, Virginia Boado,
Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann Bermudez. Thus, public respondent committed
grave abuse of discretion in affirming the decision of the Labor Arbiter ordering the reinstatement and payment
of full backwages and other benefits and privileges.
With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign any contract
fixing the periods of their employment nor to have knowingly and voluntarily agreed upon fixed periods of
employment, petitioners had the burden of proving that the termination of their services was legal. As

probationary employees, they are likewise protected by the security of tenure provision of the Constitution.
Consequently, they cannot be removed from their positions unless for cause.
LOLITA R. LACUESTA vs. ATENEO DE MANILAUNIVERSITY
FACTS: Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time
lecturer for the 2nd semester of school year 1988-1989. She was re-hired, still on a contractual basis, for the 1st
and 2nd semesters of school year 1989-1990. Petitioner was appointed as full-time instructor on probation
effective June 1, 1990 until March 31, 1991. Her contract as faculty on probation was renewed on
April 1, 1991 until March 31, 1992 and again from April 1, 1992 until March 31, 1993. During years she was on
probation status. In a letter dated January 27, 1993, respondent notified petitioner that her contract would no
longer be renewed because she did not integrate well with the English Department and that she was not
being terminated, but her contract would simply expire; hence, Lacuestas petition.
Petitioner contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations for Private
Schools, is the applicable law to determine whether or not an employee in an educational institution has
acquired regular or permanent status. She argues that (1) under Article 281, probationary employment shall not
exceed six (6) months from date of employment unless a longer period had been stipulated by an apprenticeship
agreement; (2) under Article 280, if the apprenticeship agreement stipulates a period longer than one year and
the employee rendered at least one year of service, whether continuous or broken, the employee shall be
considered as regular employee with respect to the activity in which he is employed while such activity exists;
and (3) it is with more reason that petitioner be made regular since she had rendered services as part-time and
full-time English teacher for four and a half years, services which are necessary and desirable to the usual
business of Ateneo.
Respondents, for their part, contend that the Manual of Regulations for Private Schools is controlling. In the
Manual, full-time teachers who have rendered three consecutive years of satisfactory service shall be considered
permanent. Respondents also claim that the petitioner was not terminated but her employment contract expired
at the end of the probationary period. Further, institutions of higher learning, such as respondent Ateneo, enjoy
the freedom to choose who may teach according to its standards. Respondents also argue that the quitclaim,
discharge and release by petitioner is binding and should bar her complaint for illegal dismissal.
ISSUE: 1) Whether the Labor Code, and not the Manual of Regulations for Private Schools, is the applicable
law to determine whether or not an employee in an educational institution has acquired regular or permanent
status; 2)Whether or not petitioner has already acquired permanent employment and was illegally
dismissed.
RULING: 1) The Manual of Regulations for Private Schools, and not the Labor Code, determines whether or
not a faculty member in an educational institution has attained regular or permanent status. In University of
Santo Tomas v. National Labor Relations Commission the Court en banc said that under Policy Instructions No.
11 issued by the Department of Labor and Employment, the probationary employment of professors, instructors
and teachers shall be subject to the standards established by the Department of Education and Culture. Said
standards are embodied in paragraph 75 (now Section 93) of the Manual of Regulations for Private Schools.
Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers who have
satisfactorily completed their probationary period shall be considered regular or permanent.
2) The requisites to acquire permanent employment, or security of tenure, are (1) the teacher is a fulltime teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such
service must have been satisfactory. Only when one has served as a full-time teacher can he acquire
permanent or regular status. The petitioner was a part-time lecturer before she was appointed as a fulltime instructor on probation. As a part-time lecturer, her employment as such had ended when her contract
expired. Thus, the three semesters she served as part-time lecturer could not be credited to her in computing the
number of years she has served to qualify her for permanent status.
Moreover, completing the probation period does not automatically qualify her to become a
permanent employee of the university. Petitioner could only qualify to become a permanent
employee upon fulfilling the reasonable standards for permanent employment as faculty member.

Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the
prerogative to provide standards for its teachers and determine whether these standards have been met.
In the instant case, petitioner, did not attain permanent status and was not illegally dismissed.
G.R. No. 183572

April 13, 2010

YOLANDA M. MERCADO, CHARITO S. DE LEON, DIANA R. LACHICA, MARGARITO M. ALBA,

JR., and FELIX A. TONOG, Petitioners,
vs.
AMA COMPUTER COLLEGE-PARAAQUE CITY, INC. , Respondent.
FACTS:
AMACC is an educational institution engaged in computer-based education in the country. The
petitioners were faculty members who started teaching at AMACC on May 25, 1998. The petitioner Mercado
was engaged as a Professor 3, while petitioner Tonog was engaged as an Assistant Professor 2. On the other
hand, petitioners De Leon, Lachica and Alba, Jr., were all engaged as Instructor 1. The petitioners executed
individual Teachers Contracts for each of the trimesters that they were engaged to teach, with the common
stipulation that they agreed to accept a non-tenured appointment to work in the College of xxx effective xxx to
xxx or for the duration of the last term that the TEACHER is given a teaching load based on the assignment
duly approved by the DEAN/SAVP-COO.
For the school year 2000-2001, AMACC-Paranaque City implemented new faculty screening guidelines. Under
the new screening guidelines, teachers were to be hired or maintained based on extensive teaching experience,
capability, potential, high academic qualifications and research background. The performance standards under
the new screening guidelines were also used to determine the present faculty members entitlement to salary
increases. The petitioners failed to obtain a passing rating based on the performance standards; hence AMACC
did not give them any salary increase.
Because of AMACCs action on the salary increases, the petitioners filed a complaint with the Arbitration
Branch of the NLRC for underpayment of wages, non-payment of overtime and overload compensation, 13th
month pay, and for discriminatory practices.
The petitioners individually received a memorandum from AMACC informing them that with the expiration of
their contract to teach, their contract would no longer be renewed. Hence, petitioners amended their labor
arbitration complaint to include the charge of illegal dismissal against AMACC.
AMACC contended in response that the petitioners worked under a contracted term under a non-tenured
appointment and were still within the three-year probationary period for teachers. Their contracts were not
renewed for the following term because they failed to pass the Performance Appraisal System for Teachers
(PAST) while others failed to comply with the other requirements for regularization, promotion, or increase in
salary. This move, according to AMACC, was justified since the school has to maintain its high academic
standards.
The Labor Arbiter ruled that the petitioners had been illegally dismissed and ordered AMACC to reinstate them
to their former positions without loss of seniority rights and to pay them full back wages, attorneys fees and
13th month pay. The LA ruled that Article 281 of the Labor Code on probationary employment applied to the
case. Significantly, the LA found no "discrimination in the adjustments for the salary rate of the faculty
members based on the performance and other qualification which is an exercise of management prerogative."
On appeal, the NLRC denied AMACCs appeal for lack of merit. The NLRC, however, observed that the
applicable law is Section 92 of the Manual of Regulations for Private Schools (which mandates a probationary
period of nine consecutive trimesters of satisfactory service for academic personnel in the tertiary level where
collegiate courses are offered on a trimester basis), not Article 281 of the Labor Code (which prescribes a
probationary period of six months) as the LA ruled. Despite this observation, the NLRC affirmed the LAs

finding of illegal dismissal since the petitioners were terminated on the basis of standards that were only
introduced near the end of their probationary period.
In a decision issued by the CA, it granted AMACCs petition for certiorari and dismissed the petitioners
complaint for illegal dismissal. The CA ruled that under the Manual for Regulations for Private Schools,
teaching personnel in a private educational institution (1) must be a full time teacher; (2) must have rendered
three consecutive years of service; and (3) such service must be satisfactory before he or she can acquire
permanent status.
The CA noted that the petitioners had not completed three (3) consecutive years of service (i.e. six regular
semesters or nine consecutive trimesters of satisfactory service) and were still within their probationary period;
their teaching stints only covered a period of two (2) years and three (3) months when AMACC decided not to
renew their contracts on September 7, 2000.
The CA disagreed with the NLRCs ruling that the new guidelines for the school year 2000-20001 could not be
imposed on the petitioners and their employment contracts. The appellate court opined that AMACC has the
inherent right to upgrade the quality of computer education it offers to the public; part of this pursuit is the
implementation of continuing evaluation and screening of its faculty members for academic excellence. The CA
noted that the nature of education AMACC offers demands that the school constantly adopt progressive
performance standards for its faculty to ensure that they keep pace with the rapid developments in the field of
information technology.
Finally, the CA found that the petitioners were hired on a non-tenured basis and for a fixed and predetermined
term based on the Teaching Contract exemplified by the contract between the petitioner Lachica and AMACC.
ISSUE:

Whether or not petitioners were illegally dismissed

Whether or not teachers probationary status be disregarded because the contracts were fixed-

term
RULING:
Yes. The common practice is for the employer and the teacher to enter into a contract, effective for one
school year. At the end of the school year, the employer has the option not to renew the contract, particularly
considering the teachers performance. If the contract is not renewed, the employment relationship terminates. If
the contract is renewed, usually for another school year, the probationary employment continues. Again, at the
end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of
the contract for another school year would then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may now decide whether to extend a
permanent appointment to the employee, primarily on the basis of the employee having met the reasonable
standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the
teacher remains under probation. Upon the expiration of his contract of employment, being simply on probation,
he cannot automatically claim security of tenure and compel the employer to renew his employment contract. It
is when the yearly contract is renewed for the third time that Section 93 of the Manual becomes operative, and
the teacher then is entitled to regular or permanent employment status.
It is important that the contract of probationary employment specify the period or term of its effectivity. The
failure to stipulate its precise duration could lead to the inference that the contract is binding for the full threeyear probationary period.
Academic and Management Prerogative
Last but not the least factor in the academic world, is that a school enjoys academic freedom a guarantee that
enjoys protection from the Constitution no less. Section 5(2) Article XIV of the Constitution guarantees all
institutions of higher learning academic freedom.

The institutional academic freedom includes the right of the school or college to decide and adopt its aims and
objectives, and to determine how these objections can best be attained, free from outside coercion or
interference, save possibly when the overriding public welfare calls for some restraint. The essential freedoms
subsumed in the term "academic freedom" encompass the freedom of the school or college to determine for
itself: (1) who may teach; (2) who may be taught; (3) how lessons shall be taught; and (4) who may be admitted
to study.
It is the prerogative of the school to set high standards of efficiency for its teachers since quality education is a
mandate of the Constitution. As long as the standards fixed are reasonable and not arbitrary, courts are not at
liberty to set them aside. Schools cannot be required to adopt standards which barely satisfy criteria set for
government recognition.
The same academic freedom grants the school the autonomy to decide for itself the terms and conditions for
hiring its teacher, subject of course to the overarching limitations under the Labor Code. Academic freedom,
too, is not the only legal basis for AMACCs issuance of screening guidelines. The authority to hire is likewise
covered and protected by its management prerogative the right of an employer to regulate all aspects of
employment, such as hiring, the freedom to prescribe work assignments, working methods, process to be
followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and
dismissal and recall of workers. Thus, AMACC has every right to determine for itself that it shall use fixed-term
employment contracts as its medium for hiring its teachers. It also acted within the terms of the Manual of
Regulations for Private Schools when it recognized the petitioners to be merely on probationary status up to a
maximum of nine trimesters.
The Conflict: Probationary Status
and Fixed-term Employment
The fixed-term character of employment essentially refers to the period agreed upon between the employer and
the employee; employment exists only for the duration of the term and ends on its own when the term expires.
In a sense, employment on probationary status also refers to a period because of the technical meaning
"probation" carries in Philippine labor law a maximum period of six months, or in the academe, a period of
three years for those engaged in teaching jobs. Their similarity ends there, however, because of the overriding
meaning that being "on probation" connotes, i.e., a process of testing and observing the character or abilities of
a person who is new to a role or job.
Understood in the above sense, the essentially protective character of probationary status for management can
readily be appreciated. But this same protective character gives rise to the countervailing but equally protective
rule that the probationary period can only last for a specific maximum period and under reasonable, well-laid
and properly communicated standards. Otherwise stated, within the period of the probation, any employer move
based on the probationary standards and affecting the continuity of the employment must strictly conform to the
probationary rules.
Under the given facts where the school year is divided into trimesters, the school apparently utilizes its fixedterm contracts as a convenient arrangement dictated by the trimestral system and not because the workplace
parties really intended to limit the period of their relationship to any fixed term and to finish this relationship at
the end of that term. If we pierce the veil, so to speak, of the parties so-called fixed-term employment contracts,
what undeniably comes out at the core is a fixed-term contract conveniently used by the school to define and
regulate its relations with its teachers during their probationary period.1avvphi1
To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school,
however, cannot forget that its system of fixed-term contract is a system that operates during the probationary
period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is
made, the requirements of this Article on probationary status would be fully negated as the school may freely
choose not to renew contracts simply because their terms have expired. The inevitable effect of course is to
wreck the scheme that the Constitution and the Labor Code established to balance relationships between labor
and management.

Given the clear constitutional and statutory intents, we cannot but conclude that in a situation where the
probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article
281 should assume primacy and the fixed-period character of the contract must give way. This conclusion is
immeasurably strengthened by the petitioners and the AMACCs hardly concealed expectation that the
employment on probation could lead to permanent status, and that the contracts are renewable unless the
petitioners fail to pass the schools standards.
To highlight what we mean by a fixed-term contract specifically used for the fixed term it offers, a replacement
teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent
teacher on a one-year study leave. The expiration of the replacement teachers contracted term, under the
circumstances, leads to no probationary status implications as she was never employed on probationary basis;
her employment is for a specific purpose with particular focus on the term and with every intent to end her
teaching relationship with the school upon expiration of this term.
If the school were to apply the probationary standards (as in fact it says it did in the present case), these
standards must not only be reasonable but must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in
addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract. As explained above, the details of this finding of just cause must be communicated to the
affected teachers as a matter of due process.
In lieu of reinstatement, AMA Computer College-Paraaque City, Inc. is hereby DIRECTED to pay separation
pay computed on a trimestral basis from the time of separation from service up to the end of the complete
trimester preceding the finality of this Decision.
CIELO vs. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 78693

January 28, 1991

CRUZ, J.:

FACTS: Petitioner is a truck driver who claims he was illegally dismissed by the private respondent, the Henry
Lei Trucking Company. An agreement was entered into by the parties. The agreement specifically declared that
there was no employer-employee relationship between the parties. The agreement commenced on June 30,
1984, and to end on December 31, 1984. On December 22, 1984, however, the petitioner was formally notified
by the private respondent of the termination of his services on the ground of expiration of their contract.
Petitioner claimed he started working for the private respondent on June 16, 1984, and having done so for more
than six months had acquired the status of a regular employee. As such, he could no longer be dismissed except
for lawful cause. He also contended that he had been removed because of his refusal to sign, as required by the
private respondent, an affidavit that he received his salary and allowances and have no more claim against the
company.
The private respondent maintains that the labor laws are not applicable because the relations of the parties are
governed by their voluntary stipulations. The contract having expired, it was the prerogative of the trucking
company to renew it or not as it saw fit. According to its position paper, the petitioner's refusal to sign the
affidavit constituted disrespect or insubordination, which had "some bearing on the renewal of his contract of
employment with the respondent."
HELD: Petitioner was a regular employee.
Under the arrangement, the private respondent hoped to be able to terminate the service of the driver without
the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements, which, significantly,
were uniformly limited to a six-month period. No cause had to be established because such renewal was subject
to the discretion of the parties. In fact, the private respondent did not even have to wait for the expiration of the
contract as it was there provided that it could be "earlier terminated at the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from becoming regular employees
and thus be entitled to security of tenure and other benefits.
In Brent School, Inc. vs. Zamora, the Court affirmed the general principle that "where from the circumstances it
is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they

should be struck down or disregarded as contrary to public policy, morals, etc." Such circumstances have been
sufficiently established in the case at bar and justify application of the following conclusions:
Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment as defined therein should
be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
GEORGE ANDERSON, petitioner, vs. THE LABOR RELATIONS COMMISSION,
BUSINESS VENTURES INC. and KAMAL AL BITAR, respondents.

PACIFIC

FACTS:
Petitioner was recruited by respondent Pacific Business Ventures, Inc. to work as foreman of the Fiberglass
Division of the Bitar Metal Fabrication Factory in Damman, Kingdom of Saudi Arabia. The period of
employment was two (2) years. After nine (9) months on the job, petitioner was told by the proprietor and
general manager, respondent Kamal Al Bitar, that his services were being terminated. Four days after his lay off,
petitioner returned to the Philippines.
Petitioner filed with the POEA a complaint for illegal dismissal, recovery of salary differential, vacation leave
pay, refund of transportation expenses and recruitment violations.
Private respondents denied petitioners allegations. They alleged that petitioner had been dismissed for loss
of confidence. In a supplemental position paper filed by them, private respondents claimed that petitioner
lacked the leadership and motivation required of the head of the fiberglass division.
After due hearing, the POEA found petitioner to have been illegally dismissed and, for this reason, ordered
private respondents to pay the balance of petitioners salary for two years and salary differential.
On Appeal, the NLRC set aside the decision of the POEA and dismissed petitioners complaint. Petitioner
moved for a reconsideration, but his motion was denied.

ISSUE: Whether or not petitioner was illegally dismissed.

RULING: YES.
There is no dispute that loss of confidence constitutes a just cause for terminating an employer-employee
relationship. Proof beyond reasonable doubt is not even required to terminate employment on this ground. But
the loss of confidence cited in this case to justify the dismissal of petitioner is not based on any act of
dishonesty or disloyalty on the part of petitioner but on alleged lack of leadership, and technical know-how and
on the allegation that worse, he exhibited a negative attitude toward his work.
Kamal Al Bitars affidavit cites no specific acts or omissions constituting unsatisfactory performance by
petitioner of his work. What qualities of leadership and technical knowledge petitioner was required to possess
as supervisor of a fiberglass company has not been specified. On the contrary, what is established is that before
petitioner was hired, Kamal Al Bitar required him to demonstrate his knowledge and skill and it was only after
he had done so was he hired for the job of supervisor of the fiberglass division. In fact petitioner had already
been on the job for nine months when Kamal Al Bitar terminated petitioners employment. On the other hand,
what negative attitude petitioner had shown toward his work is anybodys guess. There are no specific instances
cited to show petitioners negative attitude toward his work.

Indeed, Kamal Al Bitars affidavit contained nothing but general, vague and amorphous allegations of
petitioners unfitness for the job. The NLRC, while citing the affidavit, did not specify why in its opinion
petitioners dismissal was justified. Instead it stressed petitioners failure to answer the affidavit. The NLRC did
not consider the affidavit by evaluating its merit.
It is true that in the cases cited by private respondents this Court upheld the power of the NLRC to admit on
appeal additional evidence to show just cause for dismissal. In those cases, however, the delay in the submission
of the additional evidence was explained. What is more, the additional evidence clearly proved the employers
allegation of just cause for dismissing the employee.
But in the case at bar, not only was the delay in the submission of Kamal Al Bitars affidavit not explained
but the affidavit belatedly submitted does not show that petitioners dismissal was indeed for a just cause. To
repeat, the only reason the NLRC had for reversing the decision of the POEA is the fact that petitioner failed to
answer the affidavit. But there was a reason for petitioners failure to do so. It was because a copy of the
affidavit was served on him instead of his counsel. Unaided by counsel, he was unable to refute the allegations
in the affidavit. The service of the affidavit was contrary to the Rules of Procedure of the NLRC which require
that if a party is represented by counsel or an authorized representative, service must be made on his counsel or
representative.
Petitioner complains that he was dismissed without being informed of: the cause of his dismissal and
without being given prior notice as required by the Contract of Employment.
On the other hand, private respondents reply that while no prior notice was given to petitioner the latter was
given separation pay equivalent to one months pay which he accepted.
Private respondents contention is well taken. The employment contract clearly states that in lieu of prior
notice the employee may be given termination pay equal to thirty days pay for every year of service. This is in
addition to the payment to him of his salary for the unexpired portion of his contract.
The rule is that an employee cannot be dismissed except for cause as provided by law (i.e., Labor Code,
Arts. 282-283) and only after due notice and hearing. If an employee is dismissed without cause, he has a right
to be reinstated without loss of seniority rights and other privileges and to be paid full backwages, inclusive of
allowances and other benefits. If he is dismissed without notice and hearing, although for a just cause, he will be
entitled to the payment of indemnity.
If the contract is for a fixed term and the employee is dismissed without just cause, he is entitled to the
payment of his salaries corresponding to the unexpired portion of his contract. In this case, as petitioners
contract was for two years and his dismissal was not for a just cause, he is entitled to be paid his salary for 15
months corresponding the balance of the contract. The grant to him of a termination pay under his employment
contract may be considered indemnity for his dismissal without prior notice and hearing
AMA COMPUTER COLLEGE, PARAAQUE VS. AUSTRIA

Facts:
Petitioner AMA Computer College, Paraaque (AMA) is an educational institution duly organized under the
laws of the Philippines. The rest of the petitioners are principal officers of AMA. Respondent Rolando A.
Austria (respondent) was hired by AMA on probationary employment as a college dean on April 24,
2000. On August 22, 2000, respondents appointment as dean was confirmed by AMAs Officer-in-Charge (OIC),
Academic Affairs, in his Memorandum, which reads:
After a thorough evaluation of the performance of Mr. Rolando Austria as Dean, we are happy to
inform you that he is hereby officially confirmed as Dean of AMA College Paraaque effective
April 17, 2000 to September 17, 2000.

In view of this, he will be entitled to a transportation allowance of One Thousand Five Hundred
Sixty Pesos (P1,560.00).
In the event that Mr. Austria gives up the Dean position or fails to meet the standards of the (sic)
based on the evaluation of his immediate superior, he shall be considered for a faculty position
and the appointee agrees that he shall lose the transportation allowance he enjoys as Dean and be
entitled to his faculty rate.
Sometime in August 2000, respondent was charged with violating AMAs Employees Conduct and Discipline
provided in its Orientation Handbook (Handbook), as follows:
1) leaking of test questions;
2) failure to monitor general requirements vital to the operations of the
company; and
3) gross inefficiency.
Eventually, on September 29, 2000, respondent was informed of his dismissal. Respondent filed a Complaint
for Illegal Dismissal, Illegal Suspension, Non-Payment of Salary and 13 th Month Pay with prayer for Damages
and Attorney's Fees against AMA and the rest of the petitioners.
Labor Arbiter held that respondent substantially refuted the charges of gross inefficiency, incompetence, and
leaking of test questions filed against him. But since respondent can no longer be reinstated beyond September
17, 2000 as his designation as college dean was only until such date. On appeal, while the NLRC sustained the
Labor Arbiter's finding that petitioners failed to establish the grounds for respondent's dismissal, it held that the
Labor Arbiter erred in declaring that respondent's appointment was only from April 24 to September 17,
2000.Accordingly, the NLRC declared that respondent was a regular employee and that he was illegally
dismissed.
Petitioners went to the CA via Petition for Certiorari under Rule 65. CA held that based on the Handbook and
on respondent's appointment, it can be inferred that respondent was a regular employee, and as such, his
employment can only be terminated for any of the causes provided under Article 282 of the Labor Code and
after observance of the requirements of due process.
Issue:
Whether the nature of respondents employment is that of regular employment?
Ruling:
We held that Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed
period. Even if the duties of the employee consist of activities necessary or desirable in the usual
business of the employer, the parties are free to agree on a fixed period of time for the performance
of such activities. There is nothing essentially contradictory between a definite period of employment and the
nature of the employees duties.
The instant case involves respondent's position as dean, and comes within the purview of
the Brent School doctrine.
First. The letter of appointment was clear. Respondent was confirmed as Dean of AMA
College, Paraaque, effective from April 17, 2000 to September 17, 2000. In numerous cases decided by this
Court, we had taken notice, that by way of practice and tradition, the position of dean is normally an
employment for a fixed term. [36] Although it does not appear on record and neither was it alleged by any of the
parties that respondent, other than holding the position of dean, concurrently occupied a teaching position, it
can be deduced from the last paragraph of said letter that the respondent shall be considered for a faculty
position in the event he gives up his deanship or fails to meet AMA's standards. Such provision reasonably
serves the intention set forth in Brent School that the deanship may be rotated among the other members of the
faculty.
Second. The fact that respondent did not sign the letter of appointment is of no moment.
The fact that respondent voluntarily accepted the employment, assumed the position, and performed the
functions of dean is clear indication that he knowingly and voluntarily consented to the terms and conditions of
the appointment, including the fixed period of his deanship. Other than the handwritten notes made in the letter
of appointment, no evidence was ever presented to show that respondents consent was vitiated, or that

respondent objected to the said appointment or to any of its conditions. Furthermore, in his status as dean, there
can be no valid inference that he was shackled by any form of moral dominance exercised by AMA and the rest
of the petitioners.
Viernes vs NLRC
Facts:
Complainants services as meter readers were contracted for hardly a months duration, or from October 8 to 31,
1990. The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or until
January 2, 1991. On January 3, 1991, they were each served their identical notices of termination dated
December 29, 1990. On the same date, the complainants filed separate complaints for illegal dismissal. They
contended that they were not apprentices but regular employees whose services were illegally and unjustly
terminated in a manner that was whimsical and capricious. On the other hand, Benguet Electric Cooperative
(BENECO) invokes Article 283 of the Labor Code in defense of the questioned dismissal.
LA dismissed the complaint but directed BENECO to extend said contract to each complainant, with the
exception of Viernes(he was extended an appointment as regular employee). NLRC modified its judgment by
declaring complainants dismissal illegal, thus ordering their reinstatement to their former position as meter
readers or to any equivalent position with payment of backwages limited to one year.
Issue: WON petitioners should be reinstated to their former position as meter readers on probationary status in
spite of its finding that they are regular employees under Article 280 of the Labor Code.
Ruling:
Reinstatement means restoration to a state or condition from which one had been removed or separated. In case
of probationary employment, Article 281 of the Labor Code requires the employer to make known to his
employee at the time of the latters engagement of the reasonable standards under which he may qualify as a
regular employee. A review of the records shows that petitioners have never been probationary
employees. There is nothing in the letter of appointment, to indicate that their employment as meter readers was
on a probationary basis. It was not shown that petitioners were informed by the private respondent, at the time
of the latters employment, of the reasonable standards under which they could qualify as regular
employees. Instead, petitioners were initially engaged to perform their job for a limited duration, their
employment being fixed for a definite period, from October 8 to 31, 1990. The principle we have enunciated
in Brent applies only with respect to fixed term employments. While it is true that petitioners were initially
employed on a fixed term basis as their employment contracts were only for October 8 to 31, 1990, after
October 31, 1990, they were allowed to continue working in the same capacity as meter readers without the
benefit of a new contract or agreement or without the term of their employment being fixed anew. After October
31, 1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment
relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained the status
of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer, or a casual employee who has rendered at
least one year of service, whether continuous or broken, with respect to the activity in which he is employed.
They were engaged to perform activities that are necessary to the usual business of private respondent. We
agree with the labor arbiters pronouncement that the job of a meter reader is necessary to the business of
private respondent because unless a meter reader records the electric consumption of the subscribing public,
there could not be a valid basis for billing the customers of private respondent. The fact that the petitioners were
allowed to continue working after the expiration of their employment contract is evidence of the necessity and
desirability of their service to private respondents business. In addition, during the preliminary hearing of the
case on February 4, 1991, private respondent even offered to enter into another temporary employment contract
with petitioners. This only proves private respondents need for the services of herein petitioners. With the
continuation of their employment beyond the original term, petitioners have become full-fledged regular
employees. The fact alone that petitioners have rendered service for a period of less than six months does not
make their employment status as probationary. Since petitioners are already regular employees at the time of

their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular
employees, not merely probationary.

COCOMANGAS HOTEL BEACH RESORT v. VISCA

G.R. No. 167045

August 29, 2008

FACTS:
The present controversy stemmed from five individual complaints3 for illegaldismissal filed on June 15, 1999
by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca
(respondents) against Cocomangas Hotel Beach Resort and/or its owner-manager, Susan Munro (petitioners)
before Sub-Regional Arbitration Branch No. VI of the National Labor Relations Commission (NLRC) in
Kalibo, Aklan.
Respondents alleged that: they were regular employees of petitioners tasked with the maintenance and repair of
the resort facilities; on May 8, 1999,they were informed not to report for work since the ongoing constructions
and repairs would be temporarily suspended because they caused irritation and annoyance to the resort's guests;
when not less than ten workers were subsequently hired by petitioners to do repairs in two cottages of the resort
and two workers were retained after the completion without respondents being allowed to resume work, they
filed their individual complaints for illegal dismissal.
In their Position Paper, petitioners denied any employer-employee relationship with respondents and countered
that respondent Visca was an independent contractor who was called upon from time to time when some repairs
in the resort facilities were needed and the other respondents were selected and hired by him.
The Labor Arbiter (LA) dismissed their complaint, holding that respondent Visca was an independent contractor
and the other respondents were hired by him to help him with his contracted works at the resort; that there was
no illegal dismissal but completion of projects; that respondents were project workers, not regular employees.
Initially, the NLRC rendered a Decision setting aside the Decision of the LA. The NLRC held that respondents
were regular employees of petitioners since all the factors determinative of employer-employee relationship
were present and the work done by respondents was clearly related to petitioners' resort business.
But on February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a
Resolution13 dismissing the complaint, holding that respondents were not regular employees but project
employees, hired for a short period of time to do some repair jobs in petitioners' resort business.
The CA reversed the NLRCs Resolution and reinstated the NLRCs Decision. It held respondents were regular
employees, not project workers, since in the years that petitioners repeatedly hired respondents' services, the
former failed to set, even once, specific periods when the employment relationship would be terminated; that
the repeated hiring of respondents established that the services rendered by them were necessary and desirable
to petitioners' resort business; at the least, respondents were regular seasonal employees, hired depending on the
tourist season and when the need arose in maintaining petitioners' resort for the benefit of guests.
ISSUE:
Whether respondents are regular or project employees.
HELD:
The Court is constrained to resolve the issue of whether respondents are regular or permanent employees due to
the conflicting findings of fact of the LA, the NLRC and the CA, thus, necessitating a review of the evidence on
record.
The petitioners were ambivalent in categorizing respondents. In their Position Paper filed before the LA,
petitioners classified respondent Visca as an independent contractor and the other respondents as his employees;
while in their Motion for Reconsideration31 before the NLRC, petitioners treated respondents as project
employees.

At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding that
respondents were regular employees, not project employees. A project employee is one whose "employment has
been fixed for a specific project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season." Before an employee hired on a per-project basis can be
dismissed, a report must be made to the nearest employment office, of the termination of the services of the
workers every time completes a project, pursuant to Policy Instruction No. 20.
In the present case, respondents cannot be classified as project employees, since they worked continuously for
petitioners from three to twelve years without any mention of a "project" to which they were specifically
assigned. While they had designations as "foreman," "carpenter" and "mason," they performed work other than
carpentry or masonry.
More importantly, there is no evidence that petitioners reported the termination of respondents' supposed project
employment to the DOLE as project employees. Department Order No. 19, as well as the old Policy Instructions
No. 20, requires employers to submit a report of an employees termination to the nearest public employment
office every time his employment is terminated due to a completion of a project. Petitioners' failure to file
termination reports is an indication that the respondents were not project employees but regular employees.
The Court is not persuaded by petitioners' submission that respondents' services are not necessary or desirable
to the usual trade or business of the resort. The repeated and continuing need for their services is sufficient
evidence of the necessity, if not indispensability, of their services to petitioners' resort business.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution dated
February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620 are AFFIRMED with
MODIFICATION that the award for backwages should be computed from the time compensation was
withheld up to the time of actual reinstatement.

HANJIN HEAVY INDUSTRIES vs. IBANEZ| GR 170181 | June 26 2008

FACTS: Felicito Ibanez (tireman), Elmer Gacula (Crane Operator), Elmer Dagotdot (Welder), Aligwas
Carolino (Welder), Ruel Calda (Warehouseman)filed a complaint at the NLRC for illegal dismissal with prayer
for reinstatement and payment of back wages. The group alleged that the contract they have is good for three
months, subject to automatic renewal if there is no notice of termination from Hanjin, and that the contract
would automatically terminate upon the completion of the project. They further averred that during the time
they were dismissed, the project was still ongoing and Hanjin hired people for the positions that they had
vacated. Lastly, they also allege that they are entitled to a completion bonus as part of the industry practice and
this was substantiated by past payroll payments. Hanjin failed to furnish a copy of the contract agreements with
the dismissed group. Instead it showed the quitclaims that had been executed by the group that released Hanjin
and its representatives from any claims with their employment. It contained clearance certificates that show that
respondents are free from accountability.
ISSUE: WON the members of the dismissed group are project employees?
HELD: No, Hanjin was unable to prove they were not regular employees The rehiring of construction workers
on a project to project basis does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred. Employees who are hired
for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment, are properly
treated as project employees and their services may be lawfully terminated upon the completion of a project.
Should the terms of their employment fail to comply with this standard, they cannot be considered project
employees. Hanjin was unable to show the written contracts it had with the workers. White the absence of the
contract does not grant permanent status it is the burden of the employer to prove that the employees were
aware that their contract with the company is for per project only. While Hanjin submitted a termination report

including the workers names to prove that the services of their services were only contracted for a per project
basis, Hanjin only submitted one report. It was unable to disprove the allegation of the workers that they were
part of a pool that Hanjin contacts once a project is to be completed. Employers cannot mislead their employees,
whose work is necessary and desirable in the former's line of business, by treating themas though they are part
of a work pool from which workers could be continually drawn and then assigned to various projects and
thereafter denied regular status at any time by the expedient act of filing a Termination Report. This would
constitute a practice in which an employee is unjustly precluded from acquiring security of tenure, contrary to
public policy, morals, good customs and public order. Hanjin alleged that per Department Order 19, Series of
1993 of DOLE, the payment of completion bonus is further proof that the workers were only project employees
as Hanjin is mandated by law to pay it to the temporary workers whose contracts are about to end upon the
completion of the project. SC views the completion bonus terminology here reflects the fact that the project has
already been completed and that is the premium they wished to pay. Quitclaims are viewed with disfavor,
especially when a. There is clear proof that the waiver was wangled from an unsuspecting or gullible person.
Where the terms are unconscionable in its face. For quitclaims to be valid, it must constitute a reasonable
settlement commensurate to their legal rights. It does not preclude them from seeking benefits they were
entitled to such as back wages.

INTEGRATED CONTRACTOR and PLUMBING WORKS vs NLRC and SOLON

Petitioner is a plumbing contractor. Its business depends on the number and frequency of the projects it is able
to contact with its clients. Respondent Solon worked for petitioner. Heres his work:

December 14, 1994 up to January 14, 1995 St. Charbel Warehouse

February 1, 1995 up to April 30, 1995 St. Charbel Warehouse
May 23, 1995 up to June 23, 1995 St. Charbel Warehouse
August 15, 1995 up to October 31, 1995 St. Charbel Warehouse
November 2, 1995 up to January 31, 1996 St. Charbel Warehouse
May 13, 1996 up to June 15, 1996 Ayala Triangle
August 27, 1996 up to November 30, 1996 St. Charbel Warehouse[4]
July 14, 1997 up to November 1997 ICPWI Warehouse
November 1997 up to January 5, 1998 Cathedral Heights

Later on, when he was about to log out from work, he was instructed that it was his last day from work as he
had been terminated. He went to Petitioners office and inquired and when hes about to sign a clearance he
found out that allegedly he resigned.
He then filed a claim for illegal dismissal.
LA- he is a regular employee.
NLRC affirmed LAs decision.
Contention: Petitioner asserts that respondent is a project employee. Thus, when a project was completed and
private respondent was no re-assigned to another project, petitioner did not violate any law.
ISSUE: WON respondent is a project employee of the petitioner or a regular employee.
RULING: He is a regular employee. The test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has
been performing the job for at least one year, even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished, the employees are removed from the
scope of project employees and are considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in determining if the
employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable
to the usual business or trade of the employer. Here, private respondent had been a project employee several
times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired
due to the demands of petitioners business. Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy, morals, good customs or public order.
Further, Policy Instructions No. 20 requires employers to submit a report of an employees termination to the
nearest public employment office every time his employment was terminated due to a completion of a project.
The failure of the employer to file termination reports is an indication that the employee is not a project
employee.

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE

SEGURA
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE
Facts:
Respondents organized themselves into a union. Thus, when the union was certified as the collective
bargaining representative in the certification elections, petitioner under the pretext that the result was on appeal,
refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover,
the workers including complainants were not given work for more than one month. In protest, complainants
staged a strike which was however settled upon the signing of a Memorandum of Agreement. However,
petitioner reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all
means including the use of private armed guards to prevent the organizers from entering the premises.
Thereafter, petitioner did not any more give work assignments to the complainants forcing the union to stage a
strike. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed. When
petitioner again reneged on its commitment; complainants filed the complaint. Petitioner countered having
complainant refusing to work and being choosy in the kind of work they have to perform.
Issue:
Whether respondents may be consider as a seasonal employee.
Held:
For respondents to be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been employed only for the duration
of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that
respondents repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter.
Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular
employment is applicable.
In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v.
NLRC, in which this Court held:
"The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually necessary or desirable
in the usual trade or business of the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme of the particular business or trade
in its entirety. Also if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists.
xxx

xxx

xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the
duration of the . . . season does not detract from considering them in regular employment since in
a litany of cases this Court has already settled that seasonal workers who are called to work from
time to time and are temporarily laid off during off-season are not separated from service in said
period, but merely considered on leave until re-employed." 14

MANAGERIAL EMPLOYEES VS SUPERVISORY EMPLOYEES

68. RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III, vs. ARJAY RONNEL H.
JULVE, G.R. No. 169750, February 27, 2007
FACTS: On August 1, 1997, the Rural Bank of Cantilan, Inc., petitioner, hired respondent as a management
trainee. Later, he was appointed as planning and marketing officer.
On June 18, 2001, William Hotchkiss III (also a petitioner), president of petitioner bank, issued a memorandum
addressed to all its branch managers informing them of the abolition of the positions of planning and marketing
officer and remedial officer; that this was undertaken in accordance with the banks Personnel Streamlining
Program; and that the operations officer shall absorb the functions of the abolished offices.
On July 18, 2001, Hotchkiss sent respondent a memorandum stating that he has been appointed bookkeeper I at
the banks branch in Madrid, Surigao del Sur effective immediately with the same salary corresponding to his
old position. Initially, respondent agreed to accept the appointment, but eventually, he changed his mind and
made the following notation on Hotchkiss memorandum, thus:
I am withdrawing my signature on this appointment because I feel that this is a demotion (on the position itself
and allowances) and not a lateral transfer as what the President told me yesterday. I believe I do not deserve a
demotion.
Thank you.
On August 9, 2001, Hotchkiss appointed respondent as bookkeeper I and assistant branch head of the Madrid
branch. However, he did not report for work.
On September 11, 2001, Hotchkiss directed respondent to explain why he should not be sanctioned for his
failure to assume his new post at the Madrid branch.1awphi1.net
The following day, respondent submitted his written explanation, which partly reads:
I regret to say that I am not accepting the position of Asst. Branch Head of RBCI-Madrid Branch for the very
reason that the papers were not left with me by the Admin. Officer after she let me read them. Considering that
Asst. Branch Head is a newly-created position, I requested her for a copy of the said papers first so I can
thoroughly study them before making my decision. But she immediately took them back from me after I told
her about this.
On September 14, 2001, respondent filed with the Regional Arbitration Branch No. XIII, National Labor
Relations Commission (NLRC), Butuan City, a complaint for constructive dismissal against petitioners,
docketed as NLRC Case No. RAB-13-09-00276-2001.
On January 14, 2002, the Labor Arbiter rendered a Decision Declaring complainant as constructively illegally
dismissed; Ordering respondents to reinstate complainant to his former or equivalent position without loss of
seniority rights with full backwages from the time his salary was withheld from him up to the time he is actually
reinstated; to pay complainant his partial backwages in the amount of P57,165.33 computed up to the date of
this decision as follows and: ordering respondents to pay complainant moral and exemplary damages in the total
amount of P100,000.00 plus P15,718.53, as attorneys fees which is equivalent to 10% of the total monetary
award.
On appeal by petitioners, the NLRC, in its Resolution dated November 19, 2002, set aside the Labor Arbiters
judgment.
On September 23, 2004, the Court of Appeals rendered its Decision granting the petition, granting the instant
Petition. The NLRC Resolutions dated 19 November 2002 and 26 February 2003 are hereby ANNULLED and
SET ASIDE. The Labor Arbiters Decision dated 14 January 2002 is hereby REINSTATED.

ISSUE: Whether the Court of Appeals erred in holding that respondent was constructively dismissed from
employment.
HELD: In resolving this issue, we rely on the following guide posts:
Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to
his own discretion and judgment, all aspects of employment, including hiring, work assignments, working
methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and
discipline, dismissal, and recall of employees.2 The only limitations to the exercise of this prerogative are those
imposed by labor laws and the principles of equity and substantial justice.
While the law imposes many obligations upon the employer, nonetheless, it also protects the employers right to
expect from its employees not only good performance, adequate work, and diligence, but also good conduct and
loyalty.3 In fact, the Labor Code does not excuse employees from complying with valid company policies and
reasonable regulations for their governance and guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a
movement from one position to another of equivalent rank, level or salary without break in the service or a
lateral movement from one position to another of equivalent rank or salary;4 (b) the employer has the inherent
right to transfer or reassign an employee for legitimate business purposes;5 (c) a transfer becomes unlawful
where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion
without sufficient cause;6 (d) the employer must be able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee.7
Constructive dismissal is defined as "quitting when continued employment is rendered impossible,
unreasonable, or unlikely as the offer of employment involves a demotion in rank and diminution of pay."8
In light of the above guidelines, we agree with the NLRC in ruling that respondent was not constructively
dismissed from employment.
Respondent contends that the abolition of his position as planning and marketing officer and his appointment as
bookkeeper I and assistant branch head of the Madrid Branch is a demotion. However, a look at the functions of
his new position shows the contrary. The bookkeeper and assistant branch head is not only charged with
preparing financial reports and monthly bank reconciliations, he is also the head of the Accounting Department
of a branch. Under any standard, these are supervisory and administrative tasks which entail great responsibility.
Moreover, respondents transfer did not decrease his pay.
Nor was respondents transfer motivated by ill-will or prejudice on the part of petitioners. His position was not
the only one abolished pursuant to the banks Personnel Streamlining Program. We recall that the position of
remedial officer was likewise abolished. Petitioners reason was to acquire savings from the salaries it would
pay to full-time personnel in these positions.
Finally, we note that despite respondents refusal to accept the new appointment, petitioners did not dismiss
him. Rather, it was he who opted to terminate his employment when he purposely failed to report for work.
In fine, we hold that the Court of Appeals erred when it concluded that respondent was constructively dismissed
from employment.
WHEREFORE, we GRANT the petition and REVERSE the Decision of the Court of Appeals in CA-G.R. SP
No. 77206. The Resolutions of the NLRC dated November 19, 2002 and February 26, 2003, dismissing
respondents complaint are AFFIRMED. SO ORDERED.
Gaa vs. CA
FACTS: Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at
T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator. On December

12, 1973, Europhil Industries commenced an action (Civil Case No. 92744) in the Court of First Instance of
Manila for damages against petitioner "for having perpetrated certain acts that Europhil Industries considered a
trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and
gate passes of its officials and employees." On June 28, 1974, said court rendered judgment in favor of
respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages,
P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. A Notice of Garnishment
was issued upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission
and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment on the ground that her "salaries, commission and, or remuneration are exempted from execution
under Article 1708 of the New Civil Code. Petitioner filed with the Court of Appeals a petition for certiorari
against filed with the Court of Appeals a petition for certiorari against said order. The Court of Appeals
dismissed the petition for certiorari.
ISSUE: WON the petitioner is not a mere laborer as contemplated under Article 1708.
HELD: YES. It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly
place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel" so as to ensure the cleanliness, maintenance and orderliness of all
guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of
petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that
of a managerial or supervisory position. Article 1708 used the word "wages" and not "salary" in relation to
"laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as
distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated
times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment,
or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates
considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a
larger and more important service. The legislature did not intend the exemption in Article 1708 of the New Civil
Code to operate in favor of any but those who are laboring men or women in the sense that their work is
manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present
support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is
definitely not within that class.
PROTACIO VS. LAYANG MANANGHAYA & CO.
Facts: Respondent firm hired petitioner as Tax Manager, and he was subsequently promoted to the position of
Senior Tax Manager, and again to the position of Tax Principal. However, petitioner tendered his resignation,
and he sent a letter to respondent firm demanding the immediate payment of his 13 th month pay, and the cash
commutation of his leave credits. Petitioner sent to respondent firm two more demand letters for payment of his
reimbursement claims under pain of legal action. Respondent firm failed to act upon the demand letters. Thus,
petitioner filed before the NLRC a complaint for the payment of his money claims. During the pendency of the
case before the LA, respondent firm on three occasions sent check payments to petitioner, covering petitioners
money claims. Petitioner acknowledged the receipt of the 13 th month pay but disputed the computation of the
cash value of his vacation leave credits and reimbursement claims.
The LA rendered a decision ordering respondents to jointly and solidarily pay petitioner. Respondent firm
appealed to the NLRC, which affirmed the decision of the LA with modification as to the amount of
reimbursement claims to be awarded. Respondents elevated the matter to the Court of Appeals via a petition for
certiorari. The Court of Appeals further reduced the total money award to petitioner.
Issue: WON petitioner is entitled to the year-end lump sum pay claim
Ruling: The evidence on record establishes that aside from the basic monthly compensation, petitioner received
a yearly lump sum amount during the first two years of his employment, with the payments made to him after
the annual net incomes of the firm had been determined. Thus, the amounts thereof varied and were dependent
on the firms cash position and financial performance. In one of the letters of respondent Mananghaya to
petitioner, the amount was referred to as petitioners "share in the incentive compensation program."

While the amount was drawn from the annual net income of the firm, the distribution thereof to non-partners or
employees of the firm was not, strictly speaking, a profit-sharing arrangement between petitioner and
respondent firm contrary to the Court of Appeals finding. The payment thereof to non-partners of the firm like
herein petitioner was discretionary on the part of the chairman and managing partner coming from their
authority to fix the compensation of any employee based on a share in the partnerships net income. The
distribution being merely discretionary, the year-end lump sum payment may properly be considered as a yearend bonus or incentive. Contrary to petitioners claim, the granting of the year-end lump sum amount was
precisely dependent on the firms net income; hence, the same was payable only after the firms annual net
income and cash position were determined.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in addition to what is
ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry
and loyalty which contributed to the success of the employers business and made possible the realization of
profits. Generally, a bonus is not a demandable and enforceable obligation. It is so only when it is made part of
the wage or salary or compensation. When considered as part of the compensation and therefore demandable
and enforceable, the amount is usually fixed. If the amount would be a contingent one dependent upon the
realization of the profits, the bonus is also not demandable and enforceable.
In the instant case, petitioners claim that the year-end lump sum represented the balance of his total
compensation package is incorrect. The fact remains that the amounts paid to petitioner on the two occasions
varied and were always dependent upon the firms financial position.
In one case, the Court held that if the bonus is paid only if profits are realized or a certain amount of
productivity achieved, it cannot be considered part of wages. If the desired goal of production is not obtained, of
the amount of actual work accomplished, the bonus does not accrue. Only when the employer promises and
agrees to give without any conditions imposed for its payment, such as success of business or greater production
or output, does the bonus become part of the wage. Petitioners assertion that he was responsible for generating
revenues amounting to more than P7 million remains a mere allegation in his pleadings. The records are
absolutely bereft of any supporting evidence to substantiate the allegation.
The granting of a bonus is basically a management prerogative which cannot be forced upon the employer who
may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the
employees basic salaries or wages. Respondents had consistently maintained from the start that petitioner was
not entitled to the bonus as a matter of right. The payment of the year-end lump sum bonus based upon the
firms productivity or the individual performance of its employees was well within respondent firms
prerogative. Thus, respondent firm was also justified in declining to give the bonus to petitioner on account of
the latters unsatisfactory performance.
Petitioner failed to present evidence refuting respondents allegation and proof that they received a number of
complaints from clients about petitioners "poor services." For purposes of determining whether or not
petitioner was entitled to the year-end lump sum bonus, respondents were not legally obliged to raise the issue
of substandard performance with petitioner, unlike what the Labor Arbiter had suggested. Of course, if what
was in question was petitioners continued employment vis--vis the allegations of unsatisfactory performance,
then respondent firm was required under the law to give petitioner due process to explain his side before
instituting any disciplinary measure. However, in the instant case, the granting of the year-end lump sum bonus
was discretionary and conditional, thus, petitioner may not question the basis for the granting of a mere
privilege.