Petition for review on certiorari of the decision of the Employees Compensation Commission dated

August 19, 1982, affirming the denial by the Government Service Insurance System of petitioner's
claim for benefits under PD No. 626, as amended, for the death of his spouse, Lourdes Bonifacio.

The facts are undisputed.

The late Lourdes Bonifacio was a classroom teacher assigned to the district of Bagamanoc, Division of
Catanduanes, Ministry of Education and Culture from August, 1965 until she contracted carcinoma of the
breast with metastases to the gastrointestinal tract and lungs which caused her death on October 5,
1978.

Dra. Corazon Yabes-Almirante of the Ospital ng Bagong Lipunan certified that the late Lourdes Bonifacio
underwent radical mastectomy for cancer of the breast in 1973. In 1976, when her ailment was noted to
have metastasized to her abdomen, she submitted herself to an operation known as "exploratory
laparotomy" in March of the same year. On September 1, 1978, she complained of "abdominal pain,
abdominal enlargement, vomiting, and failure to pass stools inspite of laxatives." Upon operation it was
found that her entire gastrointestinal tract was enveloped by carcinoma. Despite chemotherapy, she died
on October 5, 1978 from carcinoma of the breast metastatic to gastrointestinal tract and lungs.

Thereafter a claim for death benefits under P.D. No. 626, as amended, was filed by petitioner with the
GSIS. The same was however denied on the ground that the decedent's principal ailment, carcinoma of
the breast with metastases to gastrointestinal tract and lungs, is not an occupational disease for her
particular work as a teacher, nor is the risk of contracting said disease increased by her working
conditions.

The Employees Compensation Commission, on appeal affirmed the decision of the respondent System.

Petitioner now assails the decision of the respondent Commission on the following grounds:

a] The respondent Commission's affirmance of the denial by respondent System totally ignored the
Supreme Court's pronouncements on compensation cases; and

b] Under the law, in case of doubt in the implementation and interpretation of the provisions of the
Labor Code, including its implementing rules and regulations, the same shall be resolved in favor of the
laborer.
We hold that the GSIS and the Employees Compensation Commission did not err in denying petitioner's
claim.

A compensable sickness means "any illness definitely accepted as an occupational disease listed by the
Employees Compensation Commission, or any illness caused by employment subject to proof by the
employee that the risk of contracting the same is increased by working conditions. For this purpose, the
Commission is empowered to determine and approve occupational diseases and work-related illnesses
that may be considered compensable based on peculiar hazards of employment." [Art. 167(1) Labor
Code as amended by P.D. No. 1368, effective May 1, 1978].

Thus, for the sickness or the resulting disability or death to be compensable, the sickness must be the
result of an accepted occupational disease fisted by the Employees Compensation Commission [Annex
"A" of the Amended Rules on Employees Compensation], or any other sickness caused by employment
subject to proof by claimant that the risk of contracting the same is increased by working conditions.
[Sec. 1, Rule 11, Amended Rules on Employees Compensation].

Carcinoma of the breast with metastases to the gastrointestinal tract and lungs is not listed by the
Commission as an occupational disease. As to the "metastases to the gastrointestinal tract and lungs"
the Commission lists such disease as occupational only in the following employment:

Occupational Diseases

Nature of Employment

16. Cancer of stomach and other lymphatic and blood forming vessels; nasal cavity and sinuses

Woodworkers, wood products industry carpenters, loggers and employees in pulp and paper mills and
plywood mills

17. Cancer of the lungs, liver and brain.

Vinyl chloryde workers, plastic workers.

[Annex A, Amended Rules on Employees Compensation, see p. 38, Rollo.]

The cancer which affected the deceased not being occupational in her particular employment, it became
incumbent upon petitioner to prove that the decedent's working conditions increased the risk of her
contracting the fatal illness. This onus petitioner failed to satisfactorily discharge. We note the following
medical report on breast cancer which the Employees Compensation Commission cited in its decision
and which the petitioner failed to controvert:

... Recent observations on the epidemeology of breast cancer suggest that it is intimately linked to
"estrogenic hormones" [W.A.P Anderson, Mosby, Pathology 5th edition, pp. 1217-1218]. Mammary
carcinoma is likely to metastasize relatively early to the regional lymph nodes-axillary and supra
clavicular, if the primary site is in the outer half of the breast. From thence it spreads primarily to the
bones, lungs, skin and subcutaneous tissues generally; less frequently to the brain. [Wintrobe et. al.,
Harrison's Principles of Internal Medicine, 7th edition, pp. 584-585]. (pp. 3-4, ECC decision dated August
19, 1982).

Petitioner's contention that the decision of the Employees Compensation Commission totally ignored
the Supreme Court's pronouncements on compensation cases is unmeritorious. The petitioner evidently
overlooked that his claim is now within the ambit of the Labor Code and the rulings under the old law,
Act No. 3428, as amended, no longer control.

The old law as embodied particularly in Section 43 of RA No. 772 amending Act No. 3812, provided for
"the presumption of compensability and the rule on aggravation of illness, which favor the employee,"
and "paved the way for the latitudinarian or expansive application of the Workmen's Compensation Law
in favor of the employee or worker." [Sulit v. ECC, 98 SCRA 483, 489] The presumption in essence states
that in any proceeding for the enforcement of the claim for compensation under the Workmen's
Compensation Act "it shall be presumed in the absence of substantial evidence to the contrary that the
claim comes within the provisions of the said Act, that sufficient notice thereof was given, that the injury
was not occasioned by the willful intention of the injured employee to bring about the injury or death of
himself or of another, that the injury did not result solely from the intoxicatiojn of the injured employee
while on duty, and that the contents of verified medical and surgical reports introduced in evidence by
claimants for compensation are correct."

Thus, under the Workmen's Compensation Law, it is not necessary for the claimant to carry the burden
of proof to establish his case to the point of demonstration [Abana vs. Quisumbing, 22 SCRA 1278]. It is
"not necessary to prove that employment was the sole cause of the death or injury suffered by the
employee. It is sufficient to show that the employment had contributed to the aggravation or
acceleration of such death or ailment." [Fontesa vs. ECC, 22 SCRA 282] "Once the disease had been
shown to have arisen in the course of employment, it is presumed by law, in the absence of substantial
evidence to the contrary, that it arose out of it." [Hernandez vs. ECC, et. al. L-20202, May 31, 1965].

With this legal presumption in the old law, the burden of proof shifts to the employer and the employee
no longer suffers the burden of showing causation. Under the present Labor Code, the "latitudinarian or
expansive application of the Workmen's Compensation Law in favor of the employee or worker" no
longer prevails as the burden of showing proof of causation has shifted back to the employee particularly
in cases of sickness or injuries which are not accepted or listed as occupational by the Employees
Compensation Commission. As stated in Sulit vs. Employees Compensation Commission [supra] "the
Labor Code abolished the presumption of compensability and the rule on aggravation of illness caused
by the nature of the employment. "

While we do not dispute petitioner's contention that under the law, in case of doubt in the
implementation and interpretation of the provisions of the Labor Code, including its implementing rules
and regulations, the doubt shall be resolved in favor of the laborer, we find that the same has no
application in this case since the pertinent provisions of the Labor Code leave no room for doubt either
in their interpretation or application.

WHEREFORE, the petition is dismissed and the decisions of the GSIS and the Employees Compensation
Commission denying the claim are affirmed. No costs.

SO ORDERED
G.R. No. 177114 April 13, 2010

MANOLO A. PEÑAFLOR, Petitioner,

vs.
OUTDOOR CLOTHING MANUFACTURING CORPORATION, NATHANIEL T. SYFU, President, MEDYLENE M.
DEMOGENA, Finance Manager, and PAUL LEE, Chairman, Respondents.

RESOLUTION

BRION, J.:

In our Decision of January 21, 2010, we granted petitioner Manolo Peñaflor’s (Peñaflor) petition for
review on certiorari and reversed the Court of Appeals (CA) decision of December 29, 2006 and
resolution of March 14, 2007. We found that Peñaflor had been constructively dismissed from his
employment with respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing). Outdoor
Clothing now seeks a reconsideration of this ruling.

FACTUAL BACKGROUND

Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March
13, 2000, more than six months from the time he was hired, Peñaflor learned that Outdoor Clothing’s
President, Nathaniel Syfu (Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and
Accounting Manager. After enduring what he claimed as discriminatory treatment at work, Peñaflor
considered the appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable
resignation from Outdoor Clothing effective at the close of office hours on March 15, 2000. He thereafter
filed an illegal dismissal complaint with the labor arbiter claiming that he had been constructively
dismissed. The labor arbiter agreed with Peñaflor and issued a decision in his favor on August 15, 2001.

On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter’s ruling in its
September 24, 2002 decision. When Peñaflor questioned the NLRC’s decision before the CA, the
appellate court affirmed the NLRC’s decision. Hence, Peñaflor filed a petition for review on certiorari
with the Court.

The Court’s January 21, 2010 Decision

Our January 21, 2010 decision focused on resolving the issue of whether Peñaflor’s resignation from
Outdoor Clothing was voluntary or a forced one, the latter making it a constructive dismissal equivalent
to an illegal dismissal. We found it crucial to determine whether Peñaflor filed his resignation letter
before or after the appointment of Buenaobra as concurrent HRD and Accounting Manager. If the
resignation was submitted before Syfu’s appointment of Buenaobra, little support would exist for
Peñaflor’s allegation of constructive dismissal, as the appointment would merely be intended to cover
the vacancy created by Peñaflor’s resignation.

If, however, the resignation was made after the appointment of Buenaobra, then factual basis exists to
consider Peñaflor as constructively dismissed by Outdoor Clothing, as the resignation would be a
response to the unacceptable appointment of another person to a position he still occupied.

Peñaflor claimed that he filed his undated resignation letter on the very same date he made his
resignation effective – March 15, 2000. On the other hand, Outdoor Clothing contended that the letter
was submitted on March 1, 2000. In support of this allegation, Outdoor Clothing presented three
memoranda:

a. the March 1, 2000 memorandum from Syfu to Buenaobra appointing the latter as the concurrent HRD
and Accounting Manager;

b. the March 3, 2000 memorandum from Buenaobra to Syfu accepting the appointment; and

c. the March 10, 2000 office memorandum from Syfu informing all concerned of Buenaobra’s new
appointment.

Our analysis of the records led us to conclude that Peñaflor submitted his resignation on March 15, 2000
as a response to the appointment of Buenaobra to his post.

We considered suspicious Outdoor Clothing’s above memoranda because these were only presented to
the NLRC on appeal, but not before the labor arbiter. They were not even mentioned in Outdoor
Clothing’s position paper filed with the labor arbiter. The failure to present them and to justify this
failure are significant considering that these are clinching pieces of evidence that allowed the NLRC to
justify the reversal of the labor arbiter’s decision.

The surrounding circumstances of the issuance of these memoranda also cast doubts on their
authenticity. Although the memoranda directly concerned Peñaflor, he was never informed of their
contents nor given copies. While the March 10, 2000 memorandum bore signatures of its recipients,
there were no marks on the March 1 and 3, 2000 memoranda indicating that their intended recipients
actually received them on the date they were issued. It was likewise strange that Peñaflor’s resignation
and Buenaobra’s appointment would be kept under wraps from the supposed filing of Peñaflor’s
resignation letter on March 1, 2000 up to Syfu’s issuance of the March 10, 2000 office memorandum,
since the turnover of responsibilities and work load alone to a successor in a small company such as
Outdoor Clothing would have prevented the resignation from being kept a secret.

We also considered the timeliness of Peñaflor’s resignation. It was highly unlikely for Peñaflor to resign
on March 1, 2000, as claimed by Outdoor Corporation, considering that he would have become a regular
employee by that time. It did not appear logical that an employee would tender his resignation on the
very same day he was entitled by law to be considered a regular employee, especially when downsizing
was taking place and he could have availed of its benefits if separated from the services as a regular
employee.

Considering the above circumstances, and applying basic labor law principles, the Court ruled that
Peñaflor was constructively dismissed from his employment with Outdoor Clothing. We thus reversed
the CA’s decision and resolution and reinstated the decision of the labor arbiter which found the
respondents (Outdoor Clothing and its corporate officers) jointly and severally liable to pay Peñaflor
backwages, illegally deducted salaries, proportionate 13th month pay, attorney’s fees, moral and
exemplary damages.

THE MOTION FOR RECONSIDERATION

Outdoor Clothing now moves for the reconsideration of the Court’s January 21, 2010 Decision. It alleges
that the Court erred in declaring that Peñaflor was constructively dismissed from his employment
despite his submission of an "irrevocable resignation" letter. It also claims that the Court erred in holding
all the respondents jointly and severally liable to pay Peñaflor the salaries and damages awarded in his
favor.

Outdoor Clothing maintains that Peñaflor’s resignation was voluntary; Peñaflor resigned because he
wanted to disassociate himself from a company that was experiencing severe financial difficulty and to
focus on his teaching job. Indeed, Peñaflor’s own letter stating his decision to irrevocably resign from his
employment with Outdoor Clothing was a clear indication that he was not forced to leave the company.

Outdoor Clothing also relies heavily on the three memoranda it presented before the NLRC to support its
claim of Peñaflor’s voluntary resignation. Although belatedly filed, Outdoor Clothing claims there is
nothing in the rules which disallows the filing of new documents before the NLRC. "Submission of
additional documents, albeit belatedly done, should always be looked upon with liberality especially
when the same was important for any factual determination of the case."1

Since it was Peñaflor who filed the resignation letter, Outdoor Clothing posits that the burden of proving
that the resignation was involuntary rests on Peñaflor. The evidence presented by Peñaflor simply failed
to overcome this burden and thus, his resignation should be deemed voluntary and should absolve
Outdoor Clothing of any liability for illegal dismissal.

Additionally, Outdoor Clothing asserts that the Court erred in reinstating the labor arbiter’s decision
which ordered all the respondents jointly and severally liable for the sums due to Peñaflor. There was
nothing in the decision of the Court or even those of the CA and the administrative bodies finding
Outdoor Clothing’s corporate officers Syfu, Medylene Demogena (Demogena), and Paul Lee (Lee) to have
personally acted in bad faith or with malice with respect to Peñaflor’s resignation. Assuming Outdoor
Clothing is indeed liable to Peñaflor for illegal dismissal, it would be legally out of line to consider its
corporate officers solidarily liable with the company without a finding of bad faith or malice on their
part.

THE COURT’S RULING

Other than the issue of solidary liability of the respondents in the present case, Outdoor Clothing raises
no new matter that would merit a reconsideration of the Court’s January 21, 2010 Decision.

Peñaflor’s resignation letter read:

Mr. Nathaniel Y. Syfu

Chief Corporate Officer
Outdoor Clothing Manufacturing Corporation

Sir:

Please accept my irrevocable resignation effective at the close of office on March 15, 2000.

Thank you.

Very truly yours,

Manolo A. Peñaflor2

While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it
was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working
environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely
within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily
resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a
clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the
employee.3 The gauge for constructive dismissal is whether a reasonable person in the employee’s
position would feel compelled to give up his employment under the prevailing circumstances. 4 With the
appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased
out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s
dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco,5 we ruled
that should the employer interpose the defense of resignation, it is still incumbent upon the employer to
prove that the employee voluntarily resigned. To our mind, Outdoor Clothing did not discharge this
burden by belatedly presenting the three memoranda it relied on. If these memoranda were authentic,
they would have shown that Peñaflor’s resignation preceded the appointment of Buenaobra. Thus, they
would be evidence supporting the claim of voluntariness of Peñaflor’s resignation and should have been
presented early on in the case – any lawyer or layman by simple logic can be expected to know this.
Outdoor Clothing however raised them only before the NLRC when they had lost the case before the
labor arbiter and now conveniently attributes the failure to do so to its former counsel. Outddor
Clothing’s belated explanation as expressed in its motion for reconsideration, to our mind, is a
submission we cannot accept for serious consideration. We find it significant that Peñaflor attacked the
belated presentation of these memoranda in his Answer to Outdoor Clothing’s Memoranda of Appeal
with the NLRC, but records do not show that Outdoor Clothing ever satisfactorily countered Peñaflor’s
arguments. It was not until we pointed out Outdoor Clothing’s failure to explain its belated presentation
of the memoranda in our January 21, 2010 decision that Outdoor Clothing offered a
justification.1avvphi1

Whatever doubts that remain in our minds on the credibility of the parties’ evidence should, by the law’s
dictate, be settled in favor of the working man. Our ruling that Peñaflor was constructively dismissed
from his employment with Outdoor Clothing therefore stands.

We modify, however, our ruling on the extent of liability of Outdoor Clothing and its co-respondents. A
corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations
incurred as a result of the directors’ and officers’ acts as corporate agents, are not their personal liability
but the direct responsibility of the corporation they represent. As a rule, they are only solidarily liable
with the corporation for the illegal termination of services of employees if they acted with malice or bad
faith. In the present case, malice or bad faith on the part of the Syfu, Demogena, and Lee, as corporate
officers of Outdoor Clothing, was not sufficiently proven to justify a ruling holding them solidarily liable
with Outdoor Clothing.6

WHEREFORE, we PARTIALLY GRANT respondents’ motion for reconsideration and MODIFY our Decision
dated January 21, 2010. Respondent Outdoor Clothing is hereby ordered to pay petitioner the following:

a. backwages computed from the time of constructive dismissal up to the time of the finality of the
Court’s Resolution;
b. separation pay, due to the strained relations between the parties, equivalent to the petitioner’s one
month’s salary;

c. illegally deducted salary for six days, as computed by the labor arbiter;

d. proportionate 13th month pay;

e. attorney’s fees, moral and exemplary damages in the amount of ₱100,000.00; and

f. costs against the respondent corporation.

SO ORDERED.
VIRGEL DAVE JAPOS, PETITIONER, V. FIRST AGRARIAN REFORM MULTI-PURPOSE COOPERATIVE
(FARMCOOP) AND/OR CRISLINO BAGARES, RESPONDENTS.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari (With Supplemental Allegations In Support Of The Application To
Litigate As An Indigent)[1] assails the July 29, 2011 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP
No. 03319-MIN which reversed and set aside the August 27, 2009 and October 15, 2009 Resolutions [3] of
the National Labor Relations Commission (NLRC) in NLRC Case No. MAC-09-010462-08, and the CA's
subsequent September 18, 2012 Resolution[4] denying herein petitioner's Motion for Reconsideration.[5]

Factual Antecedents

Respondent First Agrarian Reform Multi-Purpose Cooperative (FARMCOOP) is a registered domestic

cooperative doing business in Kisolon, Sumilao, Bukidnon as a banana contract grower for DOLE
Philippines, Inc. Respondent Crislino Bagares is FARMCOOP's chairman/executive officer.

Petitioner Virgel Dave Japos was employed by FARMCOOP in 2001 as gardener. Under FARMCOOP's
Personnel Policies and Procedures,[6] it is provided that:

11. Absences

In order not to disrupt the operations due to absences, prior authorization or permission from the
immediate superior must be secured. A Personnel Leave Authority (PLA) form must be properly filled
up/[sic]approved to be submitted to the Personnel Section. The immediate superior shall have the
discretion to allow or [disapprove] leave applications depending on the work/activity schedules at the
particular time. However, leave of absence for any personal reason may be granted up to a maximum of
20 days only for every year, subject to our disciplinary action policies.

xxxx

14. Attendance and Punctuality

The Cooperative expects all its members and non-members to be in their work place regularly and at the
time designated in the schedule.

Note: AWOL[7] RULE

An employee/worker is subject to disciplinary action if he/she incures [sic] the following COMMULATIVE
[sic] ABSENCES:

xxx

1st Offense -Written Warning

2nd Offense - 1 to 7 days suspension (Notice shall be prepared by Personnel)

3rd Offense - 8 to 15 days suspension (Notice shall be prepared by Personnel)

4th Offense - DISMISSAL

xxxx

I. ATTENDANCE

1. UNAUTHORIZED LEAVE OF ABSENCE

An employee who wants to be absent from work must seek previous approval from his/her supervisor by
applying for leave using the prescribed [form] for application for leave.

An employee/worker is subject to discharge if he/she incurs six (6) or more absences without permission
within one employment year.

FIRST INFRACTION - suspension 1 to 7 days

SECOND INFRACTION- suspension 8 to 15 days
THIRD INFRACTION - dismissal

Note: AWOP[8] RULE

An employee is subject to disciplinary action if he/she incurs the following CONSECUTIVE ABSENCES:

xxx

First three (3) days - Written Warning

4th day - 1 to 7 days suspension (Notice shall be prepared by Personnel)

5th day - 8 to 15 days suspension (Notice shall be prepared by Personnel)

6th day - DISMISSAL[9]

During his stint with FARMCOOP, petitioner incurred the following absences: [10]

1. May 2-15, 2003 - which is covered by a Medical Certificate dated May 16, 2003;

2. December 18-27, 2003 - for which no doctor's certificate was submitted;

3. January 26, 2005 - absence without permission, for which petitioner was issued a Written
Warning dated January 28, 2005;

4. February 28, 2005 - absence without permission, for which petitioner was issued a 2nd Written
Warning dated March 2, 2005;

5. May 24, 2005- absence without permission, for which petitioner was issued a Last Warning
dated June 9, 2005; and

6. June 22-28, 2005 - absence without permission, but which is supposedly covered by a Medical
Certificate[11] issued on July 7, 2005 by a certain Dr. Carolyn R. Cruz (Dr. Cruz), Medical Officer IV
of the Philhealth Center, certifying that petitioner was diagnosed and given treatment for
respiratory tract infection, although the document did not indicate the period during which
petitioner was ill, diagnosed, or had undergone treatment.
With regard to his June 22-28, 2005 absences, petitioner received on June 28, 2005 an inter-office
memorandum[12] giving him until July 4, 2005 to explain the same in writing. On June 30, 2005, he
personally submitted his signed written explanation[13] of even date, which states, in part:

SIR, MADAM,

SORRY, I WAS NOT ABLE TO REPORT ON JUNE 22, 2005 UNTIL NOW BECAUSE I'M SUFFERING ENFLUENZA
[sic]. I'M SORRY IF I DIDN'T REPORT TO THE OFFICE FOR FILLING [sic] LEAVE.

HOPING FOR YOUR KIND CONSIDERATION OF THIS MATTER.[14]

On July 5, 2005, petitioner reported back to work, but he was not admitted by FARMCOOP as he did not
present a medical certificate. It was only on July 7, 2005 that petitioner was able to secure Dr. Cruz's
Medical Certificate and submit the same to his employer. Also, on July 5, 2005, FARMCOOP issued a
Notice of Termination[15] informing petitioner that effective July 6, 2005, his employment would be
terminated.

On July 8, 2005, petitioner submitted a Personnel Leave Authority Application Form [16] of even date,
which was not acted upon by FARMCOOP as petitioner was already considered dismissed as of July 6,
2005. In said application, petitioner sought approval of his leave/absence from June 22 to July 7, 2005.

Ruling of the Labor Arbiter

On February 6, 2008, petitioner filed a complaint against respondents before the Labor Arbiter for illegal
dismissal, separation pay, underpayment of salaries, and other monetary claims, which was docketed as
NLRC Case No. RAB 10-02-00116-2008. He claimed that his dismissal was effected without due process
and, thus, illegal.

On July 21, 2008, the Labor Arbiter issued a Decision[17] finding that petitioner was legally terminated for
the unauthorized June 22-28, 2005 absences. He ruled that petitioner was dismissed for cause; that
petitioner's past infractions, his unauthorized January 26, February 28, and May 24, 2005 absences for
which written warnings were issued against him, were justifiably considered by FARMCOOP in arriving at
the decision to dismiss petitioner; that procedural due process was observed by respondents; and that
petitioner failed to prove that he is entitled to monetary claims, except for wage differential. Thus, the
Labor Arbiter ruled:

WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the respondent FCI-FARM
Coop., Inc. [sic] to pay the complainant in the sum of P8,739.00 representing wage differential plus 10%
of the total award in the sum of P873.90 representing attorney's fees.

SO ORDERED.[18]

Ruling of the National Labor Relations Commission Petitioner appealed before the NLRC which
overturned the Labor Arbiter. In its August 27, 2009 Resolution in NLRC Case No. MAC-09- 010462-08, it
ruled as follows:

The complainant being able to present a Personnel Leave Authority and a Medical Certificate for his
absences on June 22 to July 5, 2005, his termination from employment cannot be said to be justified.
While the Labor Arbiter is correct in citing and we quote:
'Generally, absences, once authorized or with prior approval of the employer, irrespective of length
thereof, may not be invoked as ground for termination of employment. Consequently, dismissal of an
employee due to his prolonged absence with leave by reason of illness duly established by the
presentation of a medical certificate, is not justified x x x. however [sic], unauthorized absences or those
incurred without official leave, constitute gross and habitual neglect in the performance of work x x x.'

We cannot sustain his conclusion that 'complainant was dismissed for a valid cause and after observance
of due process.' The Labor Arbiter should have followed the doctrine laid down in the case of Oriental
Mindoro Electric Cooperative, Inc. v. NLRC and not that of Cando v. NLRC considering that a Personnel
Leave Authority and a Medical Certificate was [sic] submitted by the complainant. The prolonged
absence of complainant cannot be construed as abandonment of work when said absences was [sic] due
to a justifiable reason.

The fact that, in complainant's July 7, 2005 medical certificate, he was diagnosed to have "acute
respiratory tract infection" while in his letter of explanation dated June 30, 2005, complainant
mentioned "influenza" should not militate against him. Complainant is not a medical practitioner as to
be in a position to know how to diagnose his illness. The date of medical certificate, July 7, 2005, is
likewise of no serious concern since it merely refers to the date when said medical certificate was
executed and not to the date complainant was ill.

In fine, we find the complainant's dismissal illegal.

WHEREFORE, premises considered, the appealed Decision is hereby REVERSED and VACATED, except as
regards the award of wage differentials, and a new one is entered declaring the dismissal of complainant
as ILLEGAL. Consequently, respondent is hereby ordered to forthwith reinstate complainant to his former
or equivalent position without loss of seniority rights and other privileges and to pay his full backwages,
inclusive of allowances and to his other benefits or its [sic] monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.

The respondent is likewise ordered to pay complainant's attorney's fees equivalent to ten (10%) percent
of the total awards herein granted.

The Regional Arbitration Branch is hereby directed to cause the computation of the awards granted in
this Resolution.

The award of wage differentials granted in the appealed decision stays.

SO ORDERED.[19] (Citations omitted)

Respondents moved to reconsider,[20] but the NLRC stood its ground.

Ruling of the Court of Appeals

In a Petition for Certiorari[21] filed with the CA and docketed as CAG.R. SP No. 03319-MIN, respondents
sought to reverse the above dispositions of the NLRC and reinstate the Labor Arbiter's July 21, 2008
Decision, arguing that the NLRC committed grave abuse of discretion ruling that petitioner was illegally
dismissed and was entitled to his money claims; that the NLRC wrongly appreciated the evidence and
the facts; that the medical certificate submitted by petitioner, which stated that petitioner was
diagnosed and treated for respiratory tract infection, could not be given credence because it conflicted
with petitioner's own claim that he was sick with influenza; that petitioner's supposed illness was an
obvious fabrication to cover up for his unauthorized absences; that the medical certificate was of
doubtful veracity; and that overall, petitioner's case was not covered by substantial evidence.

Petitioner submitted his Comment,[22] wherein he argued that the NLRC committed no error; that it
would be absurd under FARMCOOP's rules and policies to require an employee to submit a Personnel
Leave Authority prior to contracting illness when it could not be known or planned precisely when he
might get sick; that his past infractions could not be used to justify the penalty of dismissal since he was
penalized therefor with mere warnings, thus, the penalty for the latest infraction should have been mere
suspension only and not dismissal; and that the penalty of dismissal was not commensurate to his
infraction, which did not involve moral turpitude nor gross misconduct.

On July 29, 2011, the CA issued the assailed Decision containing the following pronouncement:

We find the dismissal of private respondent Japos valid.

For an employee's dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee
must be afforded due process.

In the case at bench, records indubitably show that Japos incurred several absences without authority or
permission from his immediate supervisor even before he was terminated from service in violation of
FARMCoop's policy. Records likewise show that FARMCoop was quite lenient and considerate to Japos as
he was not penalized for his previous unauthorized absences despite its policy providing for the
suspension and dismissal of its employee in case of infraction thereto. In fact, before he was terminated
and despite his unauthorized absences he was only served with written warnings instead of immediate
suspension. FARMCoop's policy further provides that if an employee incurs six (6) or more absences
without permission within one (1) employment year, the employee could be validly dismissed from
employment. In the year 2005, and prior to his dismissal, he already incurred three (3) unauthorized
absences where he was served with three (3) written warnings with a warning that should he incur
further unauthorized absences, the same would be dealt with seriously. Nonetheless, despite said
warning, he was again absent for more than six (6) consecutive days from June 22, 2005 until he
reported back to work on July 5, 2005 allegedly for being sick with influenza without any medical
certificate to substantiate the same. It was only on July 7, 2005 when he submitted a medical certificate
dated on even date certifying that he was examined and found to have acute respiratory tract infection.

It should be emphasized however, that the said medical certificate did not indicate the period within
which he was examined by the physician and the period he was to rest due to his illness. It fails to refer
to the specific period of his absences. It should likewise be emphasized that in the absence of evidence
indicating that he was indeed sick before the date stated in the medical certificate, his alleged
sickness/illness ought not be considered as an excuse for his excessive absences without leave. In the
case of Filflex Industrial & Manufacturing Corp. vs. NLRC, the Supreme Court ruled that if the medical
certificate fails to refer to the specific period of the employee's absence, then such absences are not
supported by competent proof and hence, unjustified.

Corollarily, under Article 282(b) of the Labor Code, gross and habitual neglect of duty by the employee of
his duties is a just cause for the termination of the latter's employment. Settled is the rule that an
employee's habitual absenteeism without leave, which violated company rules and regulation, is
sufficient to justify termination from the service. In the case of R.B. Michael Press vs. Galit, it was ruled
that habitual tardiness and/or absenteeism is a form of neglect of duty as the same exhibit the
employee's deportment towards work and is therefore inimical to the general productivity and business
of the employer. This is especially true when the tardiness and/or absenteeism occurred frequently and
repeatedly within an extensive period of time. In the instant case, Japos failed to refute and controvert
the fact of his habitual absenteeism. Instead, he admitted his absences though he tried to justify the
same by belatedly submitting a medical certificate. Unfortunately, said medical certificate did not help
his case.

Moreover, it should be noted that Japos' previous infractions, past and present absences considered, can
be used collectively by petitioner as a ground for his dismissal. As held in a case, ‘[P]revious infractions
may be used as justification for an employee's dismissal from work in connection with a subsequent
similar offense.'

Furthermore, in the case of Valiao vs. Court of Appeals, the Supreme Court ratiocinated that:

xxxx

x x x Petitioner's repeated acts of absences without leave and his frequent tardiness reflect his
indifferent attitude to and lack of motivation in his work. More importantly, his repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct unexpected from an
employee of petitioner's stature. This Court has held that habitual absenteeism without leave constitute
gross negligence and is sufficient to justify termination of an employee.’

Thus, private respondent Japos was validly dismissed for a cause.

Anent the requirement of due process, we find that Japos was afforded the same. Law and jurisprudence
require an employer to furnish the employee two written notices before termination of his employment
may be ordered. The first notice must inform him of the particular acts or omissions for which his
dismissal is sought; the second, of the employer's decision to dismiss the employee after he has been
given the opportunity to be heard and defend himself.

In the case at bench, records show that the first notice requirement was complied with by FARMCoop
when prior to his termination, an interoffice memorandum was sent to him asking him to explain in
writing why he was absent. It should be noted however that this notice was sent to Japos after he was
already warned three (3) times in writing that a similar offense in the future would be dealt with
severely. On July 30, 2005 he submitted his written explanation but FARMCoop found it implausible and
without basis as he failed to substantiate his allegation that he was sick.

Corollarily, the second notice requirement was again complied with when FARMCoop sent another
notice to Japos informing him of his termination. Consequently, private respondent and his father sent a
letter to FARMCoop's BOD questioning private respondent's termination. In a letter dated August 8, 2005
the BOD explained to Japos why he was terminated. Hence, we hold that such notices sent to Japos and
the opportunity to thereafter assailed [sic] his termination before the FARMCoop's BOD satisfy the due
process requirement.

It should be stressed that the essence of due process lies simply in an opportunity to be heard, and not
that an actual hearing should always and indispensably be held. Even if no hearing or conference was
conducted, the requirement of due process had been met since private respondent was accorded a
chance to explain his side of the controversy.

Finally, notice and hearing in termination cases does [sic] not connote full adversarial proceedings as
elucidated in numerous cases decide [sic] by the Supreme Court. In a case, it was held that due process
is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to
explain one's side or an opportunity to seek a reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all instances essential, as the due process
requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain
their side of the controversy at hand. What is frowned upon is the absolute lack of notice and hearing.

Thus, in this case, private respondent Japos was given ample opportunity to be heard, and his dismissal
was based on valid grounds.

WHEREFORE, premises considered, the petition is GRANTED. The assailed Resolutions dated August 27,
2009 and October 15, 2009 of the National Labor Relations Commission are hereby REVERSED and SET
ASIDE. The Decision dated July 21, 2008 of the Labor Arbiter is REINSTATED.

SO ORDERED.[23] (Citations and emphases omitted)

Petitioner filed his Motion for Reconsideration, which was denied by the CA in its September 18, 2012
Resolution. Hence, the instant Petition.

In a July 15, 2013 Resolution,[24] this Court granted petitioner's application to litigate as an indigent. And
in June 15, 2015 Resolution,[25] the Court resolved to give due course to the Petition.

Issues

Petitioner claims that:

FIRST

THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING AND SETTING ASIDE THE RESOLUTIONS OF THE
NATIONAL LABOR RELATIONS COMMISSION AS THE DISMISSAL OF THE PETITIONER WAS ILLEGAL FOR
FAILURE OF THE RESPONDENT TO ESTABLISH JUST CAUSE.

SECOND

GRANTING, ARGUENDO, THAT THE PETITIONER WAS LIABLE IN SOME RESPECT, THE COURT OF APPEALS
SERIOUSLY ERRED IN UPHOLDING THE APPLICATION OF THE PENALTY OF DISMISSAL AS A LESS GRAVE
PENALTY WOULD HAVE BEEN MORE APPROPRIATE UNDER THE CIRCUMSTANCES.[26]

Petitioner's Arguments

Praying that the assailed CA dispositions be set aside and the NLRC dispositions be reinstated instead,
petitioner maintains in his Petition and Reply[27] that the CA should not have disregarded Dr. Cruz's July 7,
2005 Medical Certificate; that the CA's reliance on Filfex Industrial & Manufacturing Corporation v.
National Labor Relations Commission[28] is misplaced because the declaration therein, to the effect that if
the medical certificate fails to refer to the specific period of the employee's absence, then such absence
is not supported by competent proof, is mere obiter dicta, and thus not persuasive; that throughout the
proceedings, respondents did not dispute the fact that he was ill during the period covering June 22-28,
2005; that there is no valid cause to fire him, as he was able to prove his illness through the
documentary evidence he submitted; and that even assuming that he was liable for his absences, the
dismissal was not the proper penalty, but rather suspension instead.

Respondent's Arguments

In their joint Comment,[29] respondents maintain that the Petition raises factual issues which are not the
proper subject of a current remedy sought; that, as correctly held by the CA, the medical certificate in
issue is not credible evidence that may be considered to justify petitioner's June 22-28, 2005 absences;
and that petitioner's plea for a lesser penalty is unavailing, considering that in the past, he was treated
with considerable leniency, yet in spite of this, he continues to flout the cooperative's policies and
regulations.

Our Ruling

The Court denies the Petition.

First off, it must be noted that there is no issue relative to the observance of procedural due process;
while it has been raised during the proceedings below, it was not made an issue in the present Petition.
Petitioner merely questions the propriety of his dismissal on the ground of excessive unauthorized
absences; he argues that his June 22-28, 2005 absences are excusable as they are justified by his illness,
which in turn was duly proved by substantial evidence. On the other hand, respondents contend that
petitioner's illness is fabricated, as is the documentary evidence presented to support it.

The evidence shows that prior to his June 22-28, 2005 absences, petitioner already incurred several
unauthorized absences for 2005, specifically on January 26, February 28, and May 24, 2005, for which
written warnings were issued against him. While FARMCOOP opted not to penalize petitioner with
suspension for the February 28 and May 24 absences, as mandated under the AWOL and AWOP Rules of
FARMCOOP's Personnel Policies and Procedures, this does not take away the fact that these prior
absences are nonetheless infractions - three in all, to be exact. This being the case, petitioner's June 22-
28, 2005 absences become significant because if it is found to be unauthorized and thus inexcusable; it
would constitute a fourth infraction which merits the penalty of dismissal under the AWOL Rule, as well
as an infraction that merits dismissal under the AWOP Rule, for being an unauthorized absence of at
least six consecutive days.

The Court agrees with the CA's pronouncement that Dr. Cruz's July 7, 2005 Medical Certificate does not
constitute reliable proof of petitioner's claimed illness during the period June 22-28, 2005. The said
document states, as follows:

MEDICAL CERTIFICATE

TO WHOM IT MAY CONCERN:

THIS IS TO CERTIFY that I, the undersigned, personally saw and examined Virgilio Japos, 22 y/o, of LF,
Impasugong, Bukidnon and I found him to have acute respiratory tract infection. He was given
medication.

THIS CERTIFICATION is issued this 7th day of July 2005 at Impasugong, Bukidnon.

(signed)
 CAROLYN R. CRUZ, MD
Medical Officer IV[30]

The certificate does not indicate the period during which petitioner was taken ill. It does not show when
he consulted with and was diagnosed by Dr. Cruz. And it does not specify when and how petitioner
underwent treatment, and for how long. Without these relevant pieces of information, it cannot be
reliably concluded that indeed, petitioner was taken ill on June 22-28, 2005. All that can be assumed
from a reading of the document is that on July 7, 2005, Dr. Cruz issued a certification that she treated
petitioner for a respiratory tract infection. She might have done so in 1995, or maybe even earlier, but
not necessarily on June 22-28, 2005. The document is open to interpretation in every manner, in which
case this Court cannot be sufficiently convinced that petitioner became ill and was treated specifically on
June 22-28, 2005.

One may argue that in the interest of justice and in order to uphold the rights of labor, this Court must
simply accept the medical certificate as proof that indeed, petitioner became ill and required rest and
treatment during the questioned period. But this cannot be done without lowering the standards
required for the presentation of proof in courts of justice and even in administrative bodies such as the
labor tribunals. We cannot dignify the July 7, 2005 Medical Certificate simply because it is too broad and
sweeping that it borders on prevarication and forgery; it goes against the basic common sense, logic,
experience, and precision required and expected of every trained physician who, apart from saving
human lives on a daily basis, must issue such important document with full realization that they are to
be utilized in key proceedings. To put it more bluntly, evidence, to be believed, must be credible in itself.
"We have no test of the truth of human testimony, except its conformity to our knowledge, observation
and experience. Whatever is repugnant to these belongs to the miraculous and is outside judicial
cognizance."[31]

With the finding that Dr. Cruz's certification is of doubtful veracity, petitioner's claim of illness is left with
no leg to stand on. Besides, the Court notes that while petitioner claims to have been ill until June 28,
2005, still he reported for work only on July 5, 2005, thus making him absent for several more days.
Knowing, by his receipt on June 28, 2005 of an interoffice memorandum giving him until July 4, 2005 to
explain his absence since June 22, that he was already on the verge of being fired from work for his
unexplained and prolonged absence, he could have made an effort to report back to work on June 29,
2005 if only to show good faith, sincerity, and concern for his employer, if not contrition for not timely
informing the latter of his illness so that substitute workers may be obtained in his stead. But he did not.
His actions betray an utter lack of concern for his work which, needless to say, is fundamentally inimical
to his employer's interest.

The Court thus concludes that petitioner's June 22 to July 5, 2005 absences are unauthorized and
inexcusable. Consequently, under FARMCOOP policy, petitioner is deemed to have committed a fourth
infraction, which merits the penalty of dismissal under the AWOL Rule, as well as an infraction that
merits dismissal under the AWOP Rule, for being an unauthorized absence of at least six consecutive
days without prior notice.

Next, there is no truth to petitioner's claim that respondents did not dispute his claim of illness. On the
contrary, they precisely contend that such claim is a lie, and that the medical certificate submitted to
corroborate it was manufactured.
Finally, petitioner's contention that, if at all, he should be penalized only with suspension, considering
that he was not punished for his January 26, February 28, and May 24, 2005 unauthorized absences.
Quite the contrary, he was penalized with written warnings for these infractions. The fact that he was
not suspended is of no moment; FARMCOOP management merely exercised its prerogative to choose
which penalty to impose upon him. Respondents' explanation that they took care not to impose severe
penalties upon petitioner out of respect for his father, who was a founding member of the cooperative,
is well taken. Nonetheless, as elsewhere stated herein, while FARMCOOP opted not to penalize
petitioner with suspension for his February 28 (second infraction) and May 24 (third infraction) absences
as mandated under the AWOL and AWOP Rules of FARMCOOP's Personnel Policies and Procedures,
these prior absences remain to be infractions that may be considered in treating his unauthorized June
22 to July 5, 2005 absences as his fourth infraction.

WHEREFORE, the Petition is DENIED. The July 29, 2011 Decision and September 18, 2012 Resolution of
the Court of Appeals in CA G.R. SP No. 03319-MIN are AFFIRMED in toto.

SO ORDERED.

G.R. No. 192998 April 2, 2014

BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G. ENDRACA, Petitioners,

vs.

R. VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS, Respondents.

DECISION

REYES, J.:

This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing the
Decision2 dated March 11, 2010 and Resolution3 dated June 28, 2010 of the Court of Appeals (CA) in CA-
G.R. SP No. 111150, which affirmed with modification the Decision4 dated June 23, 2009 of the National
Labor Relations Commission (NLRC) in NLRC LAC Case No. 07-002648-08.

The Antecedent Facts

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for
illegal dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas
(Andy) (respondents). At that time, a similar case had already been filed by Isidro G. Endraca (Endraca)
against the same respondents. The two (2) cases were subsequently consolidated.5

In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and
dismissed by the respondents on the following dates:

Name Date of Hiring Date of Dismissal Salary

Bernard A. Tenazas 10/1997 07/03/07 Boundary System

Jaime M. Francisco 04/10/04 06/04/07 Boundary System

Isidro G. Endraca 04/2000 03/06/06 Boundary System7

Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to
him was sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost
of repair for the damage was estimated at ₱500.00. Upon reporting the incident to the company, he was
scolded by respondents Romualdo and Andy and was told to leave the garage for he is already fired. He
was even threatened with physical harm should he ever be seen in the company’s premises again.
Despite the warning, Tenazas reported for work on the following day but was told that he can no longer
drive any of the company’s units as he is already fired.8
Francisco, on the other hand, averred that his dismissal was brought about by the company’s unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit
of procedural due process, on June 4, 2007.9

Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the
required boundary for his taxi unit. He related that before he was dismissed, he brought his taxi unit to
an auto shop for an urgent repair. He was charged the amount of ₱700.00 for the repair services and the
replacement parts. As a result, he was not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his driver’s license was confiscated and
was told to settle the deficiency in his boundary first before his license will be returned to him. He was
no longer allowed to drive a taxi unit despite his persistent pleas.10

For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to drive one of the company’s units at
any point in time.11

The respondents further alleged that Tenazas was never terminated by the company. They claimed that
on July 3, 2007, Tenazas went to the company garage to get his taxi unit but was informed that it is due
for overhaul because of some mechanical defects reported by the other driver who takes turns with him
in using the same. He was thus advised to wait for further notice from the company if his unit has
already been fixed. On July 8, 2007, however, upon being informed that his unit is ready for release,
Tenazas failed to report back to work for no apparent reason.12

As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They
allow him to drive a taxi unit whenever their regular driver will not be able to report for work. In July
2003, however, Endraca stopped reporting for work without informing the company of his reason.
Subsequently, the respondents learned that a complaint for illegal dismissal was filed by Endraca against
them. They strongly maintained, however, that they could never have terminated Endraca in March 2006
since he already stopped reporting for work as early as July 2003. Even then, they expressed willingness
to accommodate Endraca should he wish to work as a spare driver for the company again since he was
never really dismissed from employment anyway.13

On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence.14
They alleged that after diligent efforts, they were able to discover new pieces of evidence that will
substantiate the allegations in their position paper. Attached with the motion are the following: (a) Joint
Affidavit of the petitioners;15 (2) Affidavit of Good Faith of Aloney Rivera, a co-driver;16 (3) pictures of
the petitioners wearing company shirts;17 and (4) Tenazas’ Certification/Record of Social Security System
(SSS) contributions.18

The Ruling of the Labor Arbiter

On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which pertinently states, thus:

In the case of complainant Jaime Francisco, respondents categorically denied the existence of an
employer-employee relationship. In this situation, the burden of proof shifts to the complainant to prove
the existence of a regular employment. Complainant Francisco failed to present evidence of regular
employment available to all regular employees, such as an employment contract, company ID, SSS,
withholding tax certificates, SSS membership and the like.

In the case of complainant Isidro Endraca, respondents claim that he was only an extra driver who
stopped reporting to queue for available taxi units which he could drive. In fact, respondents offered him
in their Position Paper on record, immediate reinstatement as extra taxi driver which offer he refused.

In case of Bernard Tenazas, he was told to wait while his taxi was under repair but he did not report for
work after the taxi was repaired. Respondents[,] in their Position Paper, on record likewise, offered him
immediate reinstatement, which offer he refused.

We must bear in mind that the complaint herein is one of actual dismissal. But there was no formal
investigations, no show cause memos, suspension memos or termination memos were never issued.
Otherwise stated, there is no proof of overt act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case at bar.

The situations contemplated by law for entitlement to separation pay does [sic] not apply.

WHEREFORE, premises considered, instant consolidated complaints are hereby dismissed for lack of
merit.

SO ORDERED.20
The Ruling of the NLRC

Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009,
the NLRC rendered a Decision,21 reversing the appealed decision of the LA, holding that the additional
pieces of evidence belatedly submitted by the petitioners sufficed to establish the existence of employer-
employee relationship and their illegal dismissal. It held, thus:

In the challenged decision, the Labor Arbiter found that it cannot be said that the complainants were
illegally dismissed, there being no showing, in the first place, that the respondent [sic] terminated their
services. A portion thereof reads:

"We must bear in mind that the complaint herein is one of actual dismissal. But there were no formal
investigations, no show cause memos, suspension memos or termination memos were never issued.
Otherwise stated, there is no proof of overt act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case at bar."

Issue: [W]hether or not the complainants were illegally dismissed from employment.

It is possible that the complainants’ Motion to Admit Additional Evidence did not reach the Labor
Arbiter’s attention because he had drafted the challenged decision even before they submitted it, and
thereafter, his staff attended only to clerical matters, and failed to bring the motion in question to his
attention. It is now up to this Commission to consider the complainants’ additional evidence. Anyway, if
this Commission must consider evidence submitted for the first time on appeal (Andaya vs. NLRC, G.R.
No. 157371, July 15, 2005), much more so must it consider evidence that was simply overlooked by the
Labor Arbiter.

Among the additional pieces of evidence submitted by the complainants are the following: (1) joint
affidavit (records, p. 51-52) of the three (3) complainants; (2) affidavit (records, p. 53) of Aloney Rivera y
Aldo; and (3) three (3) pictures (records, p. 54) referred to by the complainant in their joint affidavit
showing them wearing t-shirts bearing the name and logo of the respondent’s company.

xxxx
WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Rom[u]aldo Villegas doing
business under the name and style Villegas Taxi Transport is hereby ordered to pay the complainants the
following (1) full backwages from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for
Francisco, and March 6, 2006 for Endraca[)] up to the date of the finality of this decision[;] (2) separation
pay equivalent to one month for every year of service; and (3) attorney’s fees equivalent to ten percent
(10%) of the total judgment awards.

SO ORDERED.22

On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution23 dated September 23, 2009.

The Ruling of the CA

Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA
rendered a Decision,24 affirming with modification the Decision dated June 23, 2009 of the NLRC. The
CA agreed with the NLRC’s finding that Tenazas and Endraca were employees of the company, but ruled
otherwise in the case of Francisco for failing to establish his relationship with the company. It also
deleted the award of separation pay and ordered for reinstatement of Tenazas and Endraca. The
pertinent portions of the decision read as follows:

At the outset, We declare that respondent Francisco failed to prove that an employer-employee
relationship exists between him and R. Transport. If there is no employer-employee relationship in the
first place, the duty of R. Transport to adhere to the labor standards provisions of the Labor Code with
respect to Francisco is questionable.

xxxx

Although substantial evidence is not a function of quantity but rather of quality, the peculiar
environmental circumstances of the instant case demand that something more should have been
proffered. Had there been other proofs of employment, such as Francisco’s inclusion in R.R.
Transport’s payroll, this Court would have affirmed the finding of employer-employee
relationship.1âwphi1 The NLRC, therefore, committed grievous error in ordering R. Transport to answer
for Francisco’s claims.

We now tackle R. Transport’s petition with respect to Tenazas and Endraca, who are both admitted to be
R. Transport’s employees. In its petition, R. Transport puts forth the theory that it did not terminate the
services of respondents but that the latter deliberately abandoned their work. We cannot subscribe to
this theory.

xxxx

Considering that the complaints for illegal dismissal were filed soon after the alleged dates of dismissal,
it cannot be inferred that respondents Tenazas and Endraca intended to abandon their employment. The
complainants for dismissal are, in themselves, pleas for the continuance of employment. They are
incompatible with the allegation of abandonment. x x x.

For R. Transport’s failure to discharge the burden of proving that the dismissal of respondents Tenazas
and Endraca was for a just cause, We are constrained to uphold the NLRC’s conclusion that their
dismissal was not justified and that they are entitled to back wages. Because they were illegally
dismissed, private respondents Tenazas and Endraca are entitled to reinstatement and back wages x x x.

xxxx

However, R. Transport is correct in its contention that separation pay should not be awarded because
reinstatement is still possible and has been offered. It is well[-]settled that separation pay is granted only
in instances where reinstatement is no longer feasible or appropriate, which is not the case here.

xxxx

WHEREFORE, the Decision of the National Labor Relations Commission dated 23 June 2009, in NLRC LAC
Case No. 07-002648-08, and its Resolution dated 23 September 2009 denying reconsideration thereof
are AFFIRMED with MODIFICATION in that the award of Jaime Francisco’s claims is DELETED. The
separation pay granted in favor of Bernard Tenazas and Isidro Endraca is, likewise, DELETED and their
reinstatement is ordered instead.
SO ORDERED.25 (Citations omitted)

On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the
CA in its Resolution26 dated June 28, 2010.

Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15,
2010.

The Ruling of this Court

The petition lacks merit.

Pivotal to the resolution of the instant case is the determination of the existence of employer-employee
relationship and whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had
varying assessment on the matters at hand. The LA believed that, with the admission of the respondents,
there is no longer any question regarding the status of both Tenazas and Endraca being employees of the
company. However, he ruled that the same conclusion does not hold with respect to Francisco whom the
respondents denied to have ever employed or known. With the respondents’ denial, the burden of proof
shifts to Francisco to establish his regular employment. Unfortunately, the LA found that Francisco failed
to present sufficient evidence to prove regular employment such as company ID, SSS membership,
withholding tax certificates or similar articles. Thus, he was not considered an employee of the company.
Even then, the LA held that Tenazas and Endraca could not have been illegally dismissed since there was
no overt act of dismissal committed by the respondents.27

On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of
the company. The NLRC premised its conclusion on the additional pieces of evidence belatedly submitted
by the petitioners, which it supposed, have been overlooked by the LA owing to the time when it was
received by the said office. It opined that the said pieces of evidence are sufficient to establish the
circumstances of their illegal termination. In particular, it noted that in the affidavit of the petitioners,
there were allegations about the company’s practice of not issuing employment records and this was not
rebutted by the respondents. It underscored that in a situation where doubt exists between evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
employee. It awarded the petitioners with: (1) full backwages from the date of their dismissal up to the
finality of the decision; (2) separation pay equivalent to one month of salary for every year of service;
and (3) attorney’s fees.
On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that there
was indeed an illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco who
failed to present substantial evidence, proving that he was an employee of the respondents. The CA
likewise dismissed the respondents’ claim that Tenazas and Endraca abandoned their work, asseverating
that immediate filing of a complaint for illegal dismissal and persistent pleas for continuance of
employment are incompatible with abandonment. It also deleted the NLRC’s award of separation pay
and instead ordered that Tenazas and Endraca be reinstated.28

"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under Rule
45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual
findings complained of are completely devoid of support from the evidence on record, or the assailed
judgment is based on a gross misapprehension of facts."29 The Court finds that none of the mentioned
circumstances is present in this case.

In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to
support the conclusion that Francisco was an employee of the respondents and accordingly modified the
NLRC decision. It stressed that with the respondents’ denial of employer-employee relationship, it
behooved Francisco to present substantial evidence to prove that he is an employee before any question
on the legality of his supposed dismissal becomes appropriate for discussion. Francisco, however, did not
offer evidence to substantiate his claim of employment with the respondents. Short of the required
quantum of proof, the CA correctly ruled that the NLRC’s finding of illegal dismissal and the monetary
awards which necessarily follow such ruling lacked factual and legal basis and must therefore be deleted.

The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et
al.,30 where the Court reiterated:

[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is
confined only to issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the
NLRC. The CA does not assess and weigh the sufficiency of evidence upon which the LA and the NLRC
based their conclusions. The issue is limited to the determination of whether or not the NLRC acted
without or in excess of its jurisdiction, or with grave abuse of discretion in rendering the resolution,
except if the findings of the NLRC are not supported by substantial evidence.31 (Citation omitted and
emphasis ours)

It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings,
"the quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion."32 "[T]he burden of proof rests upon
the party who asserts the affirmative of an issue."33 Corollarily, as Francisco was claiming to be an
employee of the respondents, it is incumbent upon him to proffer evidence to prove the existence of
said relationship.

"[I]n determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control
the employee on the means and methods by which the work is accomplished. The last element, the so-
called control test, is the most important element."34

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security
registration, appointment letters or employment contracts, payrolls, organization charts, and personnel
lists, serve as evidence of employee status.35

In this case, however, Francisco failed to present any proof substantial enough to establish his
relationship with the respondents. He failed to present documentary evidence like attendance logbook,
payroll, SSS record or any personnel file that could somehow depict his status as an employee. Anent his
claim that he was not issued with employment records, he could have, at least, produced his social
security records which state his contributions, name and address of his employer, as his co-petitioner
Tenazas did. He could have also presented testimonial evidence showing the respondents’ exercise of
control over the means and methods by which he undertakes his work. This is imperative in light of the
respondents’ denial of his employment and the claim of another taxi operator, Emmanuel Villegas
(Emmanuel), that he was his employer. Specifically, in his Affidavit,36 Emmanuel alleged that Francisco
was employed as a spare driver in his taxi garage from January 2006 to December 2006, a fact that the
latter failed to deny or question in any of the pleadings attached to the records of this case. The utter
lack of evidence is fatal to Francisco’s case especially in cases like his present predicament when the law
has been very lenient in not requiring any particular form of evidence or manner of proving the presence
of employer-employee relationship.

In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:

No particular form of evidence is required to prove the existence of an employer-employee relationship.

Any competent and relevant evidence to prove the relationship may be admitted. For, if only
documentary evidence would be required to show that relationship, no scheming employer would ever
be brought before the bar of justice, as no employer would wish to come out with any trace of the
illegality he has authored considering that it should take much weightier proof to invalidate a written
instrument.38
Here, Francisco simply relied on his allegation that he was an employee of the company without any
other evidence supporting his claim. Unfortunately for him, a mere allegation in the position paper is not
tantamount to evidence.39 Bereft of any evidence, the CA correctly ruled that Francisco could not be
considered an employee of the respondents.

The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also
well in accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines,40
the Court reiterated, thus:

[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.1âwphi1 The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.41 (Emphasis supplied)

Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered
in lieu thereof. For instance, if reinstatement would only exacerbate the tension and strained relations
between the parties, or where the relationship between the employer and the employee has been
unduly strained by reason of their irreconcilable differences, it would be more prudent to order payment
of separation pay instead of reinstatement.42

This doctrine of strained relations, however, should not be used recklessly or applied loosely43 nor be
based on impression alone. "It bears to stress that reinstatement is the rule and, for the exception of
strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of
antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of
the employee concerned."44

Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace
Builders v. Talde,45 the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence—
substantial evidence to show that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.46 (Citations omitted and emphasis ours)

After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation
pay to the petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is
no longer a feasible option that could have justified the alternative relief of granting separation pay
instead.

The petitioners themselves likewise overlooked to allege circumstances which may have rendered their
reinstatement unlikely or unwise and even prayed for reinstatement alongside the payment of
separation pay in their position paper.47 A bare claim of strained relations by reason of termination is
insufficient to warrant the granting of separation pay. Likewise, the filing of the complaint by the
petitioners does not necessarily translate to strained relations between the parties. As a rule, no strained
relations should arise from a valid and legal act asserting one’s right.48 Although litigation may also
engender a certain degree of hostility, the understandable strain in the parties’ relation would not
necessarily rule out reinstatement which would, otherwise, become the rule rather the exception in
illegal dismissal cases.49 Thus, it was a prudent call for the CA to delete the award of separation pay and
order for reinstatement instead, in accordance with the general rule stated in Article 27950 of the Labor
Code.

Finally, the Court finds the computation of the petitioners' backwages at the rate of ₱800.00 daily
reasonable and just under the circumstances. The said rate is consistent with the ruling of this Court in
Hyatt Taxi Services, Inc. v. Catinoy,51 which dealt with the same matter.

WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is DENIED. The
Decision dated March 11, 2010 and Resolution dated June 28, 2010 of the Court of Appeals in CA-G.R. SP
No. 111150 are AFFIRMED.

SO ORDERED.

G.R. No. 202015, July 13, 2016 - ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v. SKYCABLE
CORPORATION, Respondent.:
G.R. No. 202015, July 13, 2016 - ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v. SKYCABLE
CORPORATION, Respondent.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 202015, July 13, 2016

ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v. SKYCABLE CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

By this Petition for Review on Certiorari,1 Antonio Valeroso and Allan Legatona (petitioners) assail the
November 11, 2011 Decision2 and May 18, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 116296, which reversed the May 24, 2010 Decision4 of the National Labor Relations Commission
(NLRC) and consequently dismissed their Complaint for illegal dismissal and money claims against
Skycable Corporation (respondent).

Antecedent Facts

This case arose from a Complaint5 for illegal dismissal, non-payment of 13th month pay, separation pay
and illegal deduction filed by petitioners against respondent on February 25, 2009 before the Labor
Arbiter, docketed as NLRC NCR Case No. 02-03439-09. The Complaint was subsequently amended to
include regularization and payment of moral and exemplary damages as additional causes of
action.6ChanRoblesVirtualawlibrary
Petitioners Valeroso and Legatona alleged that they started working on November 1, 1998 and July
13,1998, respectively, as account executives tasked to solicit cable subscriptions for respondent, as
evidenced by Certifications7 issued by Michael T. De la Cuesta (De la Cuesta), respondent's Sales
Territory Manager. As shown in their payslips8 for the years 2001 to 2006, they received commissions
ranging from P15,000.00 to 530,000.00 each upon reaching a specific quota every month and an
allowance of P6,500.00 to P7,000.00 per month. From being direct hires of respondent, they were
transferred on January 1, 2007 to Skill Plus Manpower Services sans any agreement for their transfer. In
February 2009, they were informed that their commissions would be reduced due to the introduction of
prepaid cards sold to cable subscribers resulting in lower monthly cable subscriptions. Dismayed, they
notified their manager, Marlon Pasta (Pasta), of their intention to file a labor case with the NLRC, which
they did on February 25, 2009. Pasta then informed them that they will be dropped from the roster of its
account executives, which act, petitioners claimed, constitutes unfair labor practice.

Further, petitioners claimed that they did not receive 13th month pay for 2006 and were underpaid of
such benefit for the years 2007 and 2008; and that in January 2008, petitioner Legatona signed a Release
and Quitclaim9 in consideration of the amount of P25,000.00 as loyalty bonus from respondent.

Respondent, on the other hand, claimed that it did not terminate the services of petitioners for there
was never an employer-employee relationship to begin with. It averred that in 1998, respondent (then
Central CATV, Inc.) engaged petitioners as independent contractors under a Sales Agency Agreement.10
In 2007, respondents decided to streamline its operations and instead of contracting with numerous
independent account executives such as petitioners, respondent engaged the services of an independent
contractor, Armada Resources & Marketing Solutions, Inc. (Armada, for brevity; formerly Skill Plus
Manpower Services) under a Sales Agency Agreement.11 As a result, petitioners' contracts were
terminated but they, together with other sales account executives, were referred for transfer to Armada.
Petitioners then became employees of Armada. In 2009, respondent and Armada again entered into a
Sales Agency Agreement,12 wherein petitioners were again tasked to solicit accounts/ generate sales for
respondent.

Respondent insisted that in hiring petitioners and Armada as independent contractors, it engaged in
legitimate job contracting where no employer-employee relation exists between them. In an affidavit,13
De la Cuesta stated that the certifications he issued are not employment certifications but are mere
accommodations, requested by petitioners themselves, for their credit card and loan applications.
Moreover, Armada's President, Francisco Navasa (Navasa), in his affidavit,14 verified that Armada is an
independent contractor which selected and engaged the services of petitioners, paid their
compensation, exercised the power to control their conduct and discipline or dismiss them. Therefore,
when petitioners filed their Complaint in February 2009, they were employees of Armada and as such,
had no cause of action against respondent.

Petitioners, however, assailed the allegation that they were employees of Armada, claiming that they
were directly hired, paid and dismissed by respondent. They cited the following as indicators that they
are under the direct control and supervision of respondent: 1) respondent's officers supervise their area
of work, monitor them daily, update them of new promos and installations they need to work on, inform
them of meetings and penalize them for non-attendance, ask them to train new agents/account
executives, and inform them of new prices and expiration dates of product promos; 2) respondent's
supervisors delegate to them authority to investigate, campaign against and legalize unlawful cable
connections; 3) respondent's supervisors monitor their quota production and impose guaranteed
charges as penalty for failing to meet their quota; and 4) respondent consistently gives trophies to award
them of their outstanding performance.

Ruling of the Labor Arbiter

In a Decision15 dated August 26, 2009, the Labor Arbiter dismissed the Complaint since petitioners failed
to establish by substantial evidence that respondent was their employer. The Labor Arbiter observed
that petitioners failed to identify and specify the person who allegedly hired them, paid their wages and
exercised supervision and control over the manner and means of performing their work. There was
neither any evidence to prove that Pasta, who allegedly dismissed them, is an officer of respondent with
an authority to dismiss them. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the complaint filed in the instant case is dismissed as discussed in
the body hereof.

SO ORDERED.16

Ruling of the National Labor Relations Commission

Petitioners filed an appeal with the NLRC attributing reversible error on the Labor Arbiter in dismissing
their Complaint on the ground of no employer-employee relationship.

In a Decision17 dated May 24, 2010, the NLRC reversed the Labor Arbiter's ruling. It found that
petitioners are regular employees of respondent having performed their job as account executives for
more than one year, even if not continuous and merely intermittent, and considering the indispensability
and continuing need of petitioners' tasks to the business. The NLRC observed that there was no evidence
that petitioners have substantial capitalization or investment to consider them as independent
contractors. On the other hand, the certifications and the payslips presented by petitioners constitute
substantial evidence of employer-employee relationship. The NLRC held that upon termination of the
Sales Agency Agreement with Armada in 2009, petitioners were considered dismissed without just cause
and due process. The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED and the assailed Decision of Labor
Arbiter Gaudencio P. Demaisip, Jr. dated August 26, 2009, is REVERSED and SET ASIDE, and a new one
entered declaring complainants to have been illegally dismissed. Accordingly, respondent Skycable
Corporation/Central CATV Inc. is hereby directed to immediately reinstate complainants to their former
positionfs] and to pay each of the complainants their full backwages reckoned from February 25,2009 up
to the actual payroll reinstatement, (tentatively computed at P607,200.00), in addition to the amount of
P58,500.00 representing 13th month pay differentials and pro-ratal 3th month pay for 2009.

SO ORDERED.18cralawred

With the NLRC s ruling in favor of petitioners, respondent filed a motion for reconsideration. This motion
was, however, denied by the NLRC in its Resolution19 of July 27, 2010.

Riding of the Court of Appeals

Respondent filed a Petition for Certiorari20 with the CA, attributing grave abuse of discretion on the part
of the NLRC in holding it liable for the alleged illegal dismissal of petitioners.

The CA rendered a Decision21 on November 11, 2011 granting respondent's Petition for Certiorari and
reversing the NLRC Decision. The CA sustained the Labor Arbiter's finding that there was no evidence to
substantiate the bare allegation of employer-employee relationship between the parties. The dispositive
portion of the CA Decision reads:

WHEREFORE, premises considered, the instant petition is GRANTED and the Decision dated May 24,
2010 of the National Labor Relations Commission in NLRC NCR Case No. 02-03439-09 is hereby
REVERSED and SET ASIDE.

SO ORDERED.22cralawred

Petitioners moved for reconsideration which was denied by the CA in its Resolution23 dated May 18,
2012.
Issues

Hence, this Petition raising the following issues:

I.

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RENDERING ITS DECISION DATED NOVEMBER 11,
2011.

II.

WHETHER THE PETITIONERS WERE RESPONDENT'S REGULAR EMPLOYEES, WHOSE DISMISSAL FROM
EMPLOYMENT WAS ILLEGAL.24cralawred

Petitioners maintain that respondent failed to discharge the burden of disproving the employer-
employee relationship through competent evidence of independent contractorship. They assert that the
nature of their work and length of service with respondent made them regular employees as defined in
Article 28025 of the Labor Code. Consequently, the CA gravely erred in dismissing their Complaint for
illegal dismissal against respondent.

Our Ruling

The Petition has no merit.

The pivotal issue to be resolved in this case is whether petitioners were employees of respondent.

Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a

question of fact and that the findings thereon by the Labor Arbiter and NLRC shall be accorded not only
respect but even finality when supported by substantial evidence.26 However, considering the
conflicting findings of fact by the Labor Arbiter, the NLRC and the CA, the Court is impelled to re-examine
the records and resolve this factual issue.
To prove the claim of an employer-employee relationship, the following should be established by
competent evidence: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the employer's power to control the employee with respect to the means
and methods by which the work is to be accomplished.27 Among the four, the most determinative factor
in ascertaining the existence of employer-employee relationship is the "right of control test."28 Under
this control test, the person for whom the services are performed reserves the right to control not only
the end to be achieved, but also the means by which such end is reached.29ChanRoblesVirtualawlibrary

We rule that an employer-employee relationship is absent in this case. The evidence presented by
petitioners did not prove their claim that they were employees of respondent. The certifications issued
by De la Cuesta are not competent evidence of employer-employee relation as these merely certified
that respondent had engaged the services of petitioners without specifying the true nature of such
engagement. These documents did not certify that petitioners were employees but were only issued to
accommodate petitioners' request for loan applications, which fact was not refuted by petitioners. As for
the payslips presented, it appears that only the payslips for the years 2001 to 2006 were submitted. No
payslips for the years material to this case (2007 to 2009) were submitted. It is undisputed that
petitioners were transferred to Armada in 2007, thus, we cannot give much credence to the payslips
issued before this period.

We, further, find no merit in petitioners' assertion that respondent's control over them was
demonstrated. "[Guidelines indicative of labor law 'control' do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating the
means and methods to be� employed in attaining the result."30 Here, we find that respondent's act of
regularly updating petitioners of new promos, new price listings, meetings and trainings of new account
executives; imposing quotas and penalties; and giving commendations for meritorious performance do
not pertain to the means and methods of how petitioners were to perform and accomplish their task of
soliciting cable subscriptions. At most, these indicate that respondent regularly monitors the result of
petitioners' work but in no way dictate upon them the manner in which they should perform their
duties. Absent any intrusion by respondent into the means and manner of conducting petitioners' tasks,
bare assertion that petitioners' work was supervised and monitored does not suffice to establish
employer-employee relationship.

Reliance by petitioners on the case of Francisco v. National Labor Relations Commission31 is misplaced.
In that case, the Court adopted a two-tiered test in order to determine the true relationship between the
employer and employee. This two-tiered test, which involves: "(1) the putative employer's power to
control the employee with respect to the means and methods by which the work is to be accomplished;
and (2) the underlying economic realities of the activity or relationship," has been made especially
appropriate in cases where there is no written agreement to base the relationship on and where the
various tasks performed by the worker brings complexity to the relationship with the employer.32 Thus,
in addition to the control test, the totality of the economic circumstances of the worker is taken into light
to determine the existence of employment relationship.

In the present case, there is a written contract, i.e., the Sales Agency Agreement, which served as the
primary evidence of the nature of the parties' relationship. In this duly executed and signed agreement,
petitioners and respondent unequivocally agreed that petitioners' services were to be engaged on an
agency basis as sales account executives and that no employer-employee relationship is created but an
independent contractorship. It is therefore clear that the intention at the time of the signing of the
agreement is not to be bound by an employer-employee relationship. At any rate, even if we are to apply
the two-tiered test pronounced in the Francisco case, there can still be no employer-employee
relationship since, as discussed, the element of control is already absent.

Indeed, "[t]he presence of [the] power of control is indicative of an employment relationship while the
absence thereof is indicative of independent contractorship."33 Moreover, evidence on record reveal the
existence of independent contractorship between the parties. As mentioned, the Sales Agency
Agreement provided the primary evidence of such relationship. "While the existence of� employer-
employee relationship is a matter of� law, the characterization made by the parties in their contract as
to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the
parties' written contract unequivocally states their intention"34 to be strictly bound by independent
contractorship. Petitioner Legatona, in fact, in his Release and Quitclaim, acknowledged that he was
performing sales activities as sales agent/independent contractor and not an employee of respondent. In
the same token, De la Cuesta and Navasa, made sworn testimonies that petitioners are employees of
Armada which is an independent contractor engaged to provide marketing services for respondent.

Neither can we subscribe to petitioners' contention that they are considered regular employees of
respondent for they perform functions necessary and desirable to the business operation of respondent
in consonance with Article 280 of the Labor Code. We have held that "Article 280 is not the yardstick for
determining the existence of an employment relationship because it merely distinguishes between two
kinds of employees, i.e., regular employees and casual employees, for purposes of determining [their
rights] to certain benefits, [such as] to join or form a union, or to security of tenure. Article 280 does not
apply where the existence of an employment relationship is in dispute,"35 as in this case.

Evidently, the legal relation of petitioners as sales account executives to respondent can be that of an
independent contractor. There was no showing that respondent had control with respect to the details
of how petitioners must conduct their sales activity of soliciting cable subscriptions from the public. In
the case of Abante, Jr. v. Lamadrid Bearing & Parts Corporation,36 Empermaco Abante, Jr., a commission
salesman who pursued his selling activities without interference or supervision from respondent
company and relied on his own resources to perform his functions, was held to be an independent
contractor. Similarly, in Sandigan Savings & Loan Bank, Inc. v. National Labor Relations Commission,37
Anita Javier was also held to be an independent contractor as the Court found that Sandigan Realty
Development Corporation had no control over her conduct as a realty sales agent since its only concern
or interest was in the result of her work and not in how it was achieved.

All told, we sustain the CA's factual findings and conclusion and accordingly, find no cogent reason to
overturn the dismissal of petitioners' Complaint against respondent.

WHEREFORE, the Petition is DENIED. The November 11, 2011 Decision and May 18, 2012 Resolution of
the Court of Appeals in CA-G.R. SP No. 116296 are AFFIRMED.

SO [Link]

G.R. No. 170087 August 31, 2006

ANGELINA FRANCISCO, Petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO

ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the
Decision and Resolution of the Court of Appeals dated October 29, 2004 1 and October 7, 2005, 2
respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein
petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National
Labor Relations Commission (NLRC) dated April 15, 2003, 3 in NLRC NCR CA No. 032766-02 which
affirmed with modification the decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR Case No.
30-10-0-489-01, finding that private respondents were liable for constructive dismissal.

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company. 5

Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any
legal document and never represented the company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for the company. 6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant
in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees
and perform management administration functions; represent the company in all dealings with
government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS)
and in the city government of Makati; and to administer all other matters pertaining to the operation of
Kasei Restaurant which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary
was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. 8

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all
employees of Kasei Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.
9

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her
mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did
not receive her salary from the company. She made repeated follow-ups with the company cashier but
she was advised that the company was not earning well. 10

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected with the company. 11

Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that
petitioner was hired in 1995 as one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own
discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and
she came to the office any time she wanted. The company never interfered with her work except that
from time to time, the management would ask her opinion on matters relating to her profession.
Petitioner did not go through the usual procedure of selection of employees, but her services were
engaged through a Board Resolution designating her as technical consultant. The money received by
petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax
on professionals, and that she was not one of those reported to the BIR or SSS as one of the company’s
employees. 12

Petitioner’s designation as technical consultant depended solely upon the will of management. As such,
her consultancy may be terminated any time considering that her services were only temporary in
nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among
the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which
included petitioner. SSS records were also submitted showing that petitioner’s latest employer was Seiji
Corporation. 13

The Labor Arbiter found that petitioner was illegally dismissed, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. finding complainant an employee of respondent corporation;

2. declaring complainant’s dismissal as illegal;

3. ordering respondents to reinstate complainant to her former position without loss of seniority rights
and jointly and severally pay complainant her money claims in accordance with the following
computation:

a. Backwages 10/2001 – 07/2002 275,000.00

(27,500 x 10 mos.)

b. Salary Differentials (01/2001 – 09/2001) 22,500.00

c. Housing Allowance (01/2001 – 07/2002) 57,000.00

d. Midyear Bonus 2001 27,500.00

e. 13th Month Pay 27,500.00

f. 10% share in the profits of Kasei

Corp. from 1996-2001 361,175.00

g. Moral and exemplary damages 100,000.00

h. 10% Attorney’s fees 87,076.50

P957,742.50

If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with
additional backwages that would accrue up to actual payment of separation pay.

SO ORDERED. 14

On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive
portion of which reads:

PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:

1) Respondents are directed to pay complainant separation pay computed at one month per year of
service in addition to full backwages from October 2001 to July 31, 2002;

2) The awards representing moral and exemplary damages and 10% share in profit in the respective
accounts of P100,000.00 and P361,175.00 are deleted;

3) The award of 10% attorney’s fees shall be based on salary differential award only;

4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay
are AFFIRMED.
SO ORDERED. 15

On appeal, the Court of Appeals reversed the NLRC decision, thus:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations
Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered
dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive
dismissal.

SO ORDERED. 16

The appellate court denied petitioner’s motion for reconsideration, hence, the present recourse.

The core issues to be resolved in this case are (1) whether there was an employer-employee relationship
between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether
petitioner was illegally dismissed.

Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission
on one hand, and the Court of Appeals on the other, there is a need to reexamine the records to
determine which of the propositions espoused by the contending parties is supported by substantial
evidence. 17

We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniform test to
determine the existence of an employer-employee relation. Generally, courts have relied on the so-
called right of control test where the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in reaching such end. In addition
to the standard of right-of-control, the existing economic conditions prevailing between the parties, like
the inclusion of the employee in the payrolls, can help in determining the existence of an employer-
employee relationship.

However, in certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been
held by the worker. There are instances when, aside from the employer’s power to control the employee
with respect to the means and methods by which the work is to be accomplished, economic realities of
the employment relations help provide a comprehensive analysis of the true classification of the
individual, whether as employee, independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s
power to control the employee with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties. This is
especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latter’s employment.

The control test initially found application in the case of Viaña v. Al-Lagadan and Piga, 19 and lately in
Leonardo v. Court of Appeals, 20 where we held that there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.

In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services performed
are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. 23

The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. 24 In the United States, the touchstone
of economic reality in analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25 By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical
Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing business permits
and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18,
2000. 26 When petitioner was designated General Manager, respondent corporation made a report to
the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the
SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of
her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation. 27

It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latter’s line of business.

In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an

identification card is provided not only as a security measure but mainly to identify the holder thereof as
a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioner’s
salaries for the months stated therein, these matters constitute substantial evidence adequate to
support a conclusion that petitioner was an employee of private respondent.

We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is
proof that the latter were the former’s employees. The coverage of Social Security Law is predicated on
the existence of an employer-employee relationship.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner
never acted as Corporate Secretary and that her designation as such was only for convenience. The
actual nature of petitioner’s job was as Kamura’s direct assistant with the duty of acting as Liaison Officer
in representing the company to secure construction permits, license to operate and other requirements
imposed by government agencies. Petitioner was never entrusted with corporate documents of the
company, nor required to attend the meeting of the corporation. She was never privy to the preparation
of any document for the corporation, although once in a while she was required to sign prepared
documentation for the company. 30

The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit
has been allegedly withdrawn by Kamura himself from the records of the case. 31 Regardless of this fact,
we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an
employee of Kasei Corporation.

Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look
with favor on any retraction or recanted testimony, for it could have been secured by considerations
other than to tell the truth and would make solemn trials a mockery and place the investigation of the
truth at the mercy of unscrupulous witnesses. 32 A recantation does not necessarily cancel an earlier
declaration, but like any other testimony the same is subject to the test of credibility and should be
received with caution. 33

Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent
Kasei Corporation. She was selected and engaged by the company for compensation, and is economically
dependent upon respondent for her continued employment in that line of business. Her main job
function involved accounting and tax services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause. More importantly, respondent corporation had
the power to control petitioner with the means and methods by which the work is to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from
January to September 2001. This amounts to an illegal termination of employment, where the petitioner
is entitled to full backwages. Since the position of petitioner as accountant is one of trust and
confidence, and under the principle of strained relations, petitioner is further entitled to separation pay,
in lieu of reinstatement. 34

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation
arises which creates an adverse working environment rendering it impossible for such employee to
continue working for her employer. Hence, her severance from the company was not of her own making
and therefore amounted to an illegal termination of employment.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex,
race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between
employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor
Code to a greater number of employees. This would enable employees to avail of the benefits accorded
to them by law, in line with the constitutional mandate giving maximum aid and protection to labor,
promoting their welfare and reaffirming it as a primary social economic force in furtherance of social
justice and national development.

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated
October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET
ASIDE. The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA
No. 032766-02, is REINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of
petitioner Angelina Francisco’s full backwages from the time she was illegally terminated until the date
of finality of this decision, and separation pay representing one-half month pay for every year of service,
where a fraction of at least six months shall be considered as one whole year.

SO ORDERED.

G.R. No. 129076 November 25, 1998

ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO AÑOVER, petitioner,

vs.

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT,
ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO, REBECCA MOREN, MARCELINA
HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE ORDONO, ERNIE COLON, EUSTIQUIO GELDO, DANNY
SAM, JOEL PIAMONTE, FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN,
JR. and BERNARDO OPERIO, respondents.

ROMERO, J.:

It is a settled doctrine that an employer-employee relationship can be deduced from the existence of the
following elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the employee's conduct.

The principal issue to be resolved in the instant petition is whether or not an unregistered association
may be an employer independent of the respective members it represents.

The evidence reveals the ensuing facts:

Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añover as its President, is an
association of landowners engaged in the production of export quality bananas located in Kinamayan,
Sto. Tomas, Davao del Norte, established for the sole purpose of dealing collectively with Stanfilco on
matters concerning technical services, canal maintenance, irrigation and pest control, among others.
Respondents, on the other hand, were hired as farm workers by several member-landowners but;
nonetheless, were made to perform functions as packers and harvesters in the plantation of petitioner
association.

After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several
complaints were filed against petitioner for illegal dismissal and monetary benefits. Based on similar
grounds, the same were consolidated in the office of Labor Arbiter Newton R. Sancho who, in a decision
dated September 6, 1995, ordered their reinstatement, viz:

WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 above-named complainants
ILLEGAL, and ordering respondents Orlando Farms Growers Association/Glicerio Anover to REINSTATE
them immediately to their former or equivalent positions, and to PAY individual complainants their
respective backwages and other benefits (wage differentials, 13th month pay and holiday pay) appearing
opposite their names above set forth, including moral damages and attorney's fees, in the total amount
of P1,047,720.92 only.

All other claims are dismissed for lack of merit.

As becoming a collective association, respondents liabilities to complainants are joint and solidary, with
its responsible officers.

The case of Loran Paquit and Lovilla Dorlones1 is dropped for having been amicably settled.

In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3 years, without
any qualification or deduction.

SO ORDERED. 2

On appeal, the National Labor Relations Commission (NLRC) affirmed the same in toto in a decision
dated December 26, 1996. Its motion for reconsideration having been denied on February 25, 1997,
petitioner filed the instant petition for certiorari.

Petitioner alleged that the NLRC erred in finding that respondents were its employees and not of the
individual landowners which fact can easily be deduced from the payments made by the latter of
respondent's Social Security System (SSS) contributions. Moreover, it could have never exercised the
power of control over them with regard to the manner and method by which the work was to be
accomplished, which authority remain vested with the landowners despite becoming members thereof.

The arguments adduced before us do not warrant the nullification of the findings made by the Labor
Arbiter and the NLRC as the determination of the existence of an employer-employee relationship
between the party-litigants, being a question of fact, is amply supported by substantial evidence, as can
be gathered from a perfunctory reading, not only of the pleadings submitted, but from the assailed
decision, as well. Thus, the authority of this Court to review the findings of the NLRC is limited to
allegations of lack of jurisdiction or grave abuse of discretion.
The contention that petitioner, being an unregistered association and having been formed solely to serve
as an effective medium for dealing collectively with Stanfilco, does not exist in law and, therefore, cannot
be considered an employer, is misleading. This assertion can easily be dismissed by reference to Article
212 (e) of the Labor Code, as amended, which defines an employer as any person acting in the interest
of an employer, directly or indirectly. Following a careful scrutiny of the said provision, the Court
concludes that the law does not require an employer to be registered before he may come within the
purview of the Labor Code, consistent with the established rule in statutory construction that when the
law does not distinguish, we should not distinguish. To do otherwise would bring about a situation
whereby employees are denied, not only redress of their grievances, but, more importantly, the
protection and benefits accorded to them by law if their employer happens to be an unregistered
association.

To reiterate, as held in the case of Filipinas Broadcasting Network, Inc. v. NLRC, 3 the following are
generally considered in the determination of the existence of an employer-employee relationship; (1)
the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the
power of dismissal; and (4) the presence or absence of the power of control; of these four, the last one
being the most important.

In the instant case, the following circumstances which support the existence of employer-employee
relations cannot be denied. During the subsistence of the association, several circulars and memoranda
were issued concerning, among other things, absences without formal request, loitering in the work area
and disciplinary measures with which every worker is enjoined to comply. Furthermore, the employees
were issued identification cards which the Court, in the case of Domasig v. NLRC,4 construed, not only as
a security measure but mainly to identify the holder as a bonafide employee of the firm. However, what
makes the relationship explicit is the power of the petitioner to enter into compromise agreements
involving money claims filed by three of its employees, namely: Lorna Paquit, Lovella Dorlones and
Jasmine Espanola. If petitioner's disclaimer were to be believed, what benefit would accrue to it in
settling an employer-employee dispute to which it allegedly lay no claim?

In spite of the overwhelming evidence sufficient to justify a conclusion that respondents were indeed
employees of petitioner, the latter, nevertheless, maintain the preposterous claim that the ID card,
circulars and memoranda were issued merely to facilitate the efficient use of common resources, as well
as to promote uniform rules in the work establishment. On this score, we defer to the observations
made by the NLRC when it ruled that, while the original purpose of the formation of the association was
merely to provide the landowners a unified voice in dealing with Stanfilco, petitioner however exceeded
its avowed intentions when its subsequent actions reenforced only too clearly its admitted role of
employer. As reiterated all too often, factual findings of the NLRC, particularly when they coincide with
those of the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as
such findings are supported by substantial evidence. 5
Prescinding from the foregoing, we now address the issue of whether or not petitioner had a valid
ground to dismiss respondents from their respective employment.

It is settled that in termination disputes, the employer bears the burden of proving that the dismissal is
for just cause, failing which it would mean that the dismissal is not justified and the employer is entitled
to reinstatement.6 The dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fair play.7 In Brahm Industries, Inc. v. NLRC,8 the Court
explained that there are two (2) facets of valid termination of employment; (a) the legality of the act of
dismissal, i.e., the dismissal must be under any of the just causes provided under Art. 2829 of the Labor
Code; and (b) the legality of the manner of dismissal, which means that there must be observance of the
requirements of due process, otherwise known as the two-notice rule. Thus, "the employer is required
to furnish the employee with a written notice containing a statement of the cause for termination and to
afford said employee ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires. The employer is also required to notify the worker in writing of the
decision to dismiss him, stating clearly the reasons therefore." 10

In the instant case, petitioner severed employment relations when it whimsically dismissed the
respondents in utter disregard of the safeguards underscored in the Constitution, as well as in the Labor
Code. Petitioner failed to controvert the allegation that it was responsible for the dismissal of the
employees. Instead of denying the same or otherwise imputing liability on its member-landowner by
naming the employees allegedly in his employ, petitioner was silent on the issue and harped on the non-
existence of employer-employee relationship between the parties, which contention we find to be
tangential. However related the issue might seem, it would have been more relevant for the petitioner
to have presented ample evidence before the NLRC and this Court to justify its exoneration from liability.
Having failed in this respect, we deem it fatal to its defense.

For having been dismissed without a valid cause and for non-observance of the due process
requirement, respondents, consistent with recent jurisprudence laid down in the case of Bustamante v.
NLRC, 11 are entitled to receive full backwages from the date of their dismissal up to the time of their
reinstatement. The order, therefore, of the labor arbiter limiting backwages to a period of three (3) years
in the event of an appeal, is erroneous.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National
Labor Relations Commission dated September 6, 1995 is AFFIRMED subject to the deletion of the award
of moral damages and attorney's fees. The Court, however, is remanding this case to Labor Arbiter
Newton R. Sancho to specify in the dispositive portion of his decision the names of the respondents and
the amount that each is entitled to.

SO ORDERED.
[G.R. No. L-52824. March 16, 1988.]

REYNALDO BAUTISTA, Petitioner, v. HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor
and ASSOCIATED LABOR UNIONS (ALU), Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP; HOW DETERMINED. — In

determining the existence of en employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called ‘control test’ that is
the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).

2. REMEDIAL LAW; FINDINGS OF FACT OF THE DEPUTY MINISTER OF LABOR; GENERALLY BINDING ON
APPEAL; CASE AT BAR, AN EXCEPTION. — In the case at bar, the Regional Director correctly found that
the petitioner was an employee of the respondent union as reflected in the latter’s individual payroll
sheets and shown by the petitioner’s membership with the Social Security System (SSS) and the
respondent union’s share of remittances in the petitioner’s favor. Even more significant, is the
respondent union’s act of filing a clearance application with the MOL to terminate the petitioner’s
services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the
power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of
Bautista as one of its organizers. There is absolutely no factual or legal basis for Deputy Minister Inciong’s
decision.

3. LABOR AND SOCIAL LEGISLATIONS; ILLEGAL DISMISSAL, SEVERANCE PAY PROPER WHERE
REINSTATEMENT IS NO LONGER POSSIBLE. — The records show that antipathy and antagonism between
the petitioner and the respondent union militate against the former’s reinstatement. ALU would not
want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize
commercial and industrial establishments. Severance pay, therefore, is more proper and in order. As we
have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, Et Al., (G.R. No. 56398, July
23, 1987).

DECISION
GUTIERREZ, JR., J.:

This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein
petitioner principally on the ground that no employer-employee relationship existed between the
petitioner and respondent Associated Labor Unions (ALU).

The facts as found by the National Capital Region Director of the then Ministry of Labor (MOL) Region IV
are as follows:jgc:[Link]

"Complainant (petitioner) was employed by ALU as ‘Organizer’ in 1972 with a starting salary of P250.00 a
month. As such he paid his monthly SSS contributions, with the respondent as his employer. On March
15, 1979, He was left in the office of ALU while his other co-organizers were in Cainta, Rizal attending a
certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On
March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit application form signed
by ALU’s physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported
back for work upon expiration of his leave but was informed by ALU’s Area Vice-President for Luzon of
his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18,
1979, however, ALU filed a clearance application to terminate complainant’s services effective March 16,
1979 on the ground of abandonment of work." (p. 48, Rollo)

Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union
to reinstate the petitioner to his former position with full backwages and to pay him emergency
allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P370.00.

Respondent ALU appealed to the Ministry of Labor. On October 23, 1979, the respondent Deputy
Minister set aside the order of the Director and dismissed the petitioner’s complaint for lack of merit. In
his order, the Deputy Minister found that the petitioner was merely accommodated by the respondent
union after he was dismissed by his former employer sometime in 1972 and that his membership
coverage with the SSS which shows that respondent ALU is the one paying the employer’s share in the
premiums is not conclusive proof that respondent is the petitioner’s employer because such payments
were performed by the respondent as a favor for all those who were performing full time union activities
with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an
employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not
an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona
fide organization units where it is certified as such.

In this petition, the petitioner contends that the respondent Deputy Minister committed grave abuse of
discretion in holding that there was no employer-employee relationship between him and the
respondent union so much so that he is not entitled to the benefits that he is praying for.

We agree with the petitioner.

There is nothing in the records which support the Deputy Minister’s conclusion that the petitioner is not
an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that
it cannot be considered an employer of the persons who work for it. Much less should it be exempted
from the very labor laws which it espouses as a labor organization. In the case of Brotherhood Labor
Unity Movement in the Philippines v. Zamora, (147 SCRA 49, 54), we outlined the factors in ascertaining
an employer-employee relationship:jgc:[Link]

"In determining the existence of en employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called `control test’ that is
the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)."cralaw
virtua1aw library

"In the case at bar, the Regional Director correctly found that the petitioner was an employee of the
respondent union as reflected in the latter’s individual payroll sheets and shown by the petitioner’s
membership with the Social Security System (SSS) and the respondent union’s share of remittances in
the petitioner’s favor. Even more significant, is the respondent union’s act of filing a clearance application
with the MOL to terminate the petitioner’s services. Bautista was selected and hired by the Union. He
was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And
definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely
no factual or legal basis for Deputy Minister Inciong’s decision.

We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the
records show that antipathy and antagonism between the petitioner and the respondent union militate
against the former’s reinstatement. ALU would not want to have a union organizer whom it does not
trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance
pay, therefore, is more proper and in order. As we have ruled in the case of Asiaworld Publishing House,
Inc. v. Hon. Blas Ople, Et Al., (G.R. No. 56398, July 23, 1987) quoting the case of Balaquezon EWTU v.
Zamora, (97 SCRA 5, 8):jgc:[Link]

"It should be underscored that the backwages are being awarded on the basis of equity or in the nature
of severance pay. This means that a monetary award is to be paid to the striking employees as an
alternative to reinstatement which can no longer be effected in view of the long passage of time or
because of the realities of the situation. (Italics supplied)

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is
ANNULLED and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and
ordered executed but instead of returning the petitioner to his former position, the private respondent is
ordered to pay him an amount equal to his backwages for only three years and the separation pay to
which he may be entitled as of the end of the three-year period under the applicable law or collective
bargaining agreement.

SO ORDERED.

G.R. No. 170388, September 04, 2013 - COLEGIO DEL SANTISIMO ROSARIO AND SR. ZENAIDA S.
MOFADA, OP, Petitioners, v. EMMANUEL ROJO,* Respondent.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 170388, September 04, 2013

COLEGIO DEL SANTISIMO ROSARIO AND SR. ZENAIDA S. MOFADA, OP, Petitioners, v. EMMANUEL ROJO,*
Respondent.

DECISION
DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the August 31, 2005 Decision2 and the November 10, 2005
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 85188, which affirmed the July 31, 2003
Decision4 of the National Labor Relations Commission (NLRC). Said NLRC Decision affirmed with
modification the October 7, 2002 Decision5 of the Labor Arbiter (LA) which, in turn, granted respondent
Emmanuel Rojo�s (respondent) Complaint6 for illegal dismissal.

Factual Antecedents

Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary
basis for the school years 1992-1993, 1993-19947 and 1994-1995.8cralaw virtualaw library

On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew
respondent�s services.9cralaw virtualaw library

Thus, on July 13, 1995, respondent filed a Complaint10 for illegal dismissal. He alleged that since he had
served three consecutive school years which is the maximum number of terms allowed for probationary
employment, he should be extended permanent employment. Citing paragraph 75 of the 1970 Manual
of Regulations for Private Schools (1970 Manual), respondent asserted that �full- time teachers who
have rendered three (3) consecutive years of satisfactory services shall be considered
permanent.�11cralaw virtualaw library

On the other hand, petitioners argued that respondent knew that his Teacher�s Contract for school
year 1994-1995 with CSR would expire on March 31, 1995.12 Accordingly, respondent was not dismissed
but his probationary contract merely expired and was not renewed.13 Petitioners also claimed that the
�three years� mentioned in paragraph 75 of the 1970 Manual refer to �36 months,� not three
school years.14 And since respondent served for only three school years of 10 months each or 30
months, then he had not yet served the �three years� or 36 months mentioned in paragraph 75 of
the 1970 Manual.15cralaw virtualaw library

Ruling of the Labor Arbiter

The LA ruled that �three school years� means three years of 10 months, not 12 months.16
Considering that respondent had already served for three consecutive school years, then he has already
attained regular employment status. Thus, the non-renewal of his contract for school year 1995-1996
constitutes illegal dismissal.17cralaw virtualaw library

The LA also found petitioners guilty of bad faith when they treated respondent�s termination merely
as the expiration of the third employment contract and when they insisted that the school board actually
deliberated on the non-renewal of respondent�s employment without submitting admissible proof of
his alleged regular performance evaluation.18cralaw virtualaw library

The dispositive portion of the LA�s Decision19 reads:chanrobles virtua1aw 1ibrary

WHEREFORE, premises considered, judgment is hereby rendered ordering the [petitioners]:

1. To pay [respondent] the total amount of P39,252.00 corresponding to his severance compensation
and 13th month pay, moral and exemplary damages.

2. To pay 10% of the total amount due to [respondent] as attorney�s fees.

All other claims are dismissed for lack of merit.

SO ORDERED.20

Ruling of the National Labor Relations Commission�

On appeal, the NLRC affirmed the LA�s Decision with modification. It held that after serving three
school years, respondent had attained the status of regular employment21 especially because CSR did
not make known to respondent the reasonable standards he should meet.22 The NLRC also agreed with
the LA that respondent�s termination was done in bad faith. It held that respondent is entitled to
reinstatement, if viable; or separation pay, if reinstatement was no longer feasible, and backwages,
viz:chanrobles virtua1aw 1ibrary

WHEREFORE, premises considered, the appealed Decision is hereby, AFFIRMED with MODIFICATION only
insofar as the award of separation pay is concerned. Since [respondent] had been illegally dismissed,
[petitioner] Colegio Del Santisimo Rosario is hereby ordered to reinstate him to his former position
without loss of seniority rights with full backwages until he is actually reinstated. However, if
reinstatement is no longer feasible, the respondent shall pay separation pay, in [addition] to the payment
of his full backwages.
The Computation Division is hereby directed to compute [respondent�s] full backwages to be attached
and to form part of this Decision.

The rest of the appealed Decision stands.

SO ORDERED.23

Petitioners moved for reconsideration which the NLRC denied in its April 28, 2004 Resolution24 for lack
of merit.

Ruling of the Court of Appeals

Petitioners filed a Petition for Certiorari25 before the CA alleging grave abuse of discretion on the part of
the NLRC in finding that respondent had attained the status of a regular employee and was illegally
dismissed from employment.

In a Decision26 dated August 31, 2005, the CA denied the Petition for lack of merit. Citing Cagayan
Capitol College v. National Labor Relations Commission,27 it held that respondent has satisfied all the
requirements necessary to acquire permanent employment and security of tenure viz:chanrobles
virtua1aw 1ibrary

1. The teacher is a full-time teacher;

2. The teacher must have rendered three (3) consecutive years of service; and

3. Such service must be satisfactory.28

According to the CA, respondent has attained the status of a regular employee after he was employed
for three consecutive school years as a full-time teacher and had served CSR satisfactorily. Aside from
being a high school teacher, he was also the Prefect of Discipline, a task entailing much responsibility.
The only reason given by Mofada for not renewing respondent�s contract was the alleged expiration
of the contract, not any unsatisfactory service. Also, there was no showing that CSR set performance
standards for the employment of respondent, which could be the basis of his satisfactory or
unsatisfactory performance. Hence, there being no reasonable standards made known to him at the
time of his engagement, respondent was deemed a regular employee and was, thus, declared illegally
dismissed when his contract was not renewed.
Petitioners moved for reconsideration. However, the CA denied the motion for lack of merit in its
November 10, 2005 Resolution.29cralaw virtualaw library

Hence, the instant Petition. Incidentally, on May 23, 2007, we issued a Resolution30 directing the parties
to maintain the status quo pending the resolution of the present Petition.

Issue

WHETHER THE COURT OF APPEALS [AS WELL AS THE NATIONAL LABOR RELATIONS COMMISSION]
COMMITTED GRIEVOUS AND REVERSIBLE ERROR WHEN IT RULED THAT A BASIC EDUCATION
(ELEMENTARY) TEACHER HIRED FOR THREE (3) CONSECUTIVE SCHOOL YEARS AS A PROBATIONARY
EMPLOYEE AUTOMATICALLY AND/OR BY LAW BECOMES A PERMANENT EMPLOYEE UPON COMPLETION
OF HIS THIRD YEAR OF PROBATION NOTWITHSTANDING [A] THE PRONOUNCEMENT OF THIS
HONORABLE COURT IN COLEGIO SAN AGUSTIN V. NLRC, 201 SCRA 398 [1991] THAT A PROBATIONARY
TEACHER ACQUIRES PERMANENT STATUS �ONLY WHEN HE IS ALLOWED TO WORK AFTER THE
PROBATIONARY PERIOD� AND [B] DOLE-DECS-CHED-TESDA ORDER NO. 01, S. 1996 WHICH PROVIDE
THAT TEACHERS WHO HAVE SERVED THE PROBATIONARY PERIOD �SHALL BE MADE REGULAR OR
PERMANENT IF ALLOWED TO WORK AFTER SUCH PROBATIONARY PERIOD.�31

Petitioners maintain that upon the expiration of the probationary period, both the school and the
respondent were free to renew the contract or let it lapse. Petitioners insist that a teacher hired for
three consecutive years as a probationary employee does not automatically become a regular employee
upon completion of his third year of probation. It is the positive act of the school � the hiring of the
teacher who has just completed three consecutive years of employment on probation for the next
school year � that makes the teacher a regular employee of the school.

Our Ruling

We deny the Petition.

In Mercado v. AMA Computer College-Para�aque City, Inc.,32 we had occasion to rule that cases
dealing with employment on probationary status of teaching personnel are not governed solely by the
Labor Code as the law is supplemented, with respect to the period of probation, by special rules found in
the Manual of Regulations for Private Schools (the Manual). With regard to the probationary period,
Section 92 of the 1992 Manual33 provides:chanrobles virtua1aw 1ibrary

Section 92. Probationary Period. � Subject in all instances to compliance with the Department and
school requirements, the probationary period for academic personnel shall not be more than three (3)
consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are
offered on a trimester basis. (Emphasis supplied)

In this case, petitioners� teachers who were on probationary employment were made to enter into a
contract effective for one school year. Thereafter, it may be renewed for another school year, and the
probationary employment continues. At the end of the second fixed period of probationary
employment, the contract may again be renewed for the last time.

Such employment for fixed terms during the teachers� probationary period is an accepted practice in
the teaching profession. In Magis Young Achievers� Learning Center v. Manalo,34 we noted
that:chanrobles virtua1aw 1ibrary

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 teacher�s 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.
(Emphases supplied)

However, this scheme �of fixed-term contract is a system that operates during the probationary period
and for this reason is subject to Article 281 of the Labor Code,�35 which provides:chanrobles
virtua1aw 1ibrary

x x x 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. [Emphasis supplied]

In Mercado, we held that �[u]nless this reconciliation is made, the requirements of [Article 281] on
probationary status would be fully negated as the school may freely choose not to renew contracts
simply because their terms have expired.�36 This will have an unsettling effect in the equilibrium vis-a-
vis the relations between labor and management that the Constitution and Labor Code have worked
hard to establish.
That teachers on probationary employment also enjoy the protection afforded by Article 281 of the
Labor Code is supported by Section 93 of the 1992 Manual which provides:chanrobles virtua1aw 1ibrary

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made
regular or permanent. Full-time teachers who have satisfactorily completed their probationary period
shall be considered regular or permanent. (Emphasis supplied)

The above provision clearly provides that full-time teachers become regular or permanent employees
once they have satisfactorily completed the probationary period of three school years.37 The use of the
term satisfactorily necessarily connotes the requirement for schools to set reasonable standards to be
followed by teachers on probationary employment. For how else can one determine if probationary
teachers have satisfactorily completed the probationary period if standards therefor are not provided?

As such, �no vested right to a permanent appointment shall accrue until the employee has completed
the prerequisite three-year period necessary for the acquisition of a permanent status. [However, it must
be emphasized that] mere rendition of service for three consecutive years does not automatically ripen
into a permanent appointment. It is also necessary that the employee be a full-time teacher, and that
the services he rendered are satisfactory.�38cralaw virtualaw library

In Mercado, this Court, speaking through J. Brion, held that:chanrobles virtua1aw 1ibrary

The provision on employment on probationary status under the Labor Code is a primary example of the
fine balancing of interests between labor and management that the Code has institutionalized pursuant
to the underlying intent of the Constitution.

On the one hand, employment on probationary status affords management the chance to fully scrutinize
the true worth of hired personnel before the full force of the security of tenure guarantee of the
Constitution comes into play. Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary period to reject hirees who fail to
meet its own adopted but reasonable standards. These standards, together with the just and authorized
causes for termination of employment [which] the Labor Code expressly provides, are the grounds
available to terminate the employment of a teacher on probationary status. x x x

Labor, for its part, is given the protection during the probationary period of knowing the company
standards the new hires have to meet during the probationary period, and to be judged on the basis of
these standards, aside from the usual standards applicable to employees after they achieve permanent
status. Under the terms of the Labor Code, these standards should be made known to the teachers on
probationary status at the start of their probationary period, or at the very least under the circumstances
of the present case, at the start of the semester or the trimester during which the probationary
standards are to be applied. Of critical importance in invoking a failure to meet the probationary
standards, is that the school should show � as a matter of due process � how these standards have
been applied. This is effectively the second notice in a dismissal situation that the law requires as a due
process guarantee supporting the security of tenure provision, and is in furtherance, too, of the basic
rule in employee dismissal that the employer carries the burden of justifying a dismissal. These rules
ensure compliance with the limited security of tenure guarantee the law extends to probationary
employees.

When fixed-term employment is brought into play under the above probationary period rules, the
situation � as in the present case � may at first blush look muddled as fixed-term employment is in
itself a valid employment mode under Philippine law and jurisprudence. The conflict, however, is more
apparent than real when the respective nature of fixed-term employment and of employment on
probationary status are closely examined.

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.

x x x 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.39 (Emphasis supplied; italics in
the original)

In the same case, this Court has definitively pronounced 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.�40cralaw
virtualaw library

An example given of a fixed-term contract specifically used for the fixed term it offers is a replacement
teacher or a reliever contracted for a period of one year to temporarily take the place of a permanent
teacher who is on leave. The expiration of the reliever�s fixed-term contract does not have
probationary status implications as he or she was never employed on probationary basis. This is because
his or her employment is for a specific purpose with particular focus on the term. There exists an intent
to end his or her employment with the school upon expiration of this term.41cralaw virtualaw library

However, for teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same 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. The specific details of this finding of just cause must be
communicated to the affected teachers as a matter of due process.42 Corollarily, should the teachers not
have been apprised of such reasonable standards at the time specified above, they shall be deemed
regular employees.

In Tamson�s Enterprises, Inc. v. Court of Appeals,43 we held that �[t]he law is clear that in all cases
of probationary employment, the employer shall [convey] to the employee the standards under which
he will qualify as a regular employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular employee.

In this case, glaringly absent from petitioners� evidence are the reasonable standards that respondent
was expected to meet that could have served as proper guidelines for purposes of evaluating his
performance. Nowhere in the Teacher�s Contract44 could such standards be found.45 Neither was it
mentioned that the same were ever conveyed to respondent. Even assuming that respondent failed to
meet the standards set forth by CSR and made known to the former at the time he was engaged as a
teacher on probationary status, still, the termination was flawed for failure to give the required notice to
respondent.46 This is because Book VI, Rule I, Section 2 of the IRR of the Labor Code
provides:chanrobles virtua1aw 1ibrary

Section 2. Security of Tenure. � (a) In cases of regular employment, the employer shall not terminate
the services of an employee except for just or authorized causes as provided by law, and subject to the
requirements of due process.

(b) The foregoing shall also apply in cases of probationary employment; provided, however, that in such
cases, termination of employment due to failure of the employee to qualify in accordance with the
standards of the employer made known to the former at the time of engagement may also be a ground
for termination of employment.
xxxx

(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:

xxxx

If the termination is brought about by the completion of a contract or phase thereof, or by failure of an
employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time from the effective date
of termination. (Emphasis supplied)

Curiously, despite the absence of standards, Mofada mentioned the existence of alleged performance
evaluations47 in respondent�s case. We are, however, in a quandary as to what could have been the
basis of such evaluation, as no evidence were adduced to show the reasonable standards with which
respondent�s performance was to be assessed or that he was informed thereof. Notably too, none of
the supposed performance evaluations were presented. These flaws violated respondent�s right to
due process. As such, his dismissal is, for all intents and purposes, illegal.

As a matter of due process, teachers on probationary employment, just like all probationary employees,
have the right to know whether they have met the standards against which their performance was
evaluated. Should they fail, they also have the right to know the reasons therefor.

It should be pointed out that absent any showing of unsatisfactory performance on the part of
respondent, it can be presumed that his performance was satisfactory, especially taking into
consideration the fact that even while he was still more than a year into his probationary employment,
he was already designated Prefect of Discipline. In such capacity, he was able to uncover the existence of
a drug syndicate within the school and lessen the incidence of drug use therein. Yet despite
respondent�s substantial contribution to the school, petitioners chose to disregard the same and
instead terminated his services; while most of those who were involved in drug activities within the
school were punished with a slap on the wrist as they were merely made to write letters promising that
the incident will not happen again.48cralaw virtualaw library

Mofada would also have us believe that respondent chose to resign as he feared for his life, thus, the
school�s decision not to renew his contract. However, no resignation letter was presented. Besides,
this is contrary to respondent�s act of immediately filing the instant case against petitioners.
WHEREFORE, the Petition is hereby DENIED. The August 31, 2005 Decision and the November 10, 2005
Resolution of the Court of Appeals in CA-G.R. SP No. 85188 are AFFIRMED. The status quo order of this
Court is [Link]

SO ORDERED.