NOTES

1. BURDEN OF PROOF. In termination cases, the burden of proof rests upon

the employer to show that the dismissal is for just and valid cause; failure to do so
would necessarily mean that the dismissal was illegal. The employer's case succeeds or
fails on the strength of its evidence and not on the weakness of the employee's defense.
If doubt exists between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. Moreover, the quantum of proof
required in determining the legality of an employee's dismissal is only substantial
evidence. Substantial evidence is more than a mere scintilla of evidence or relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other minds, equally reasonable, might conceivably opine otherwise. 1

2. MISCONDUCT. Misconduct is improper or wrong conduct. It is the

transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. The misconduct, to be serious within the meaning of the Labor Code must be
of such grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless be in connection with the employee’s
work to constitute just cause for his separation.2

3. NO APPLICATION OF BURDEN OF PROOF. The rule is that one who

alleges a fact has the burden of proving it; thus, in one case, petitioners were burdened
to prove their allegation that respondents dismissed them from their employment. 3 It
must be stressed that the evidence to prove this fact must be clear, positive and
1
PLDT v. Tiamson, G.R. Nos. 164684-85, November 11, 2005, 474 SCRA 761.
2
Philippine Long Distance Telephone Company v. Bolso, G.R. No. 159701, 17 August 2007, 530 SCRA 550, 560.
3
Salvador v. Court of Appeals, G.R. No. 124899, March 30, 2004, 426 SCRA 433, 446 citing Luxuria Homes, Inc. v.
Court of Appeals, 361 Phil. 991 (1999).
convincing.4 It has been held in another case that the rule that the employer bears the
burden of proof in illegal dismissal cases finds no application here because the
respondents deny having dismissed the petitioners. 5

5. ABANDONMENT. Abandonment is a matter of intention and cannot lightly be

inferred or legally presumed from certain equivocal acts. For abandonment to exist, two
requisites must concur: first, the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and second, there must have been
a clear intention on the part of the employee to sever the employer-employee
relationship as manifested by some overt acts. The second element is the more
determinative factor. Abandonment as a just ground for dismissal thus requires clear,
willful, deliberate, and unjustified refusal of the employee to resume employment. Mere
absence or failure to report for work, even after notice to return, is not tantamount to
abandonment.6 (Emphasis and underscoring supplied)

The burden of proof to show a deliberate and unjustified refusal of an employee

to resume his employment without any intention of returning rests on the employer. 7

6. OVERTIME PAY. Entitlement to overtime pay and rest day pay must first be
established by proof that said overtime work was actually performed, before an
employee may avail of said benefit.8

4
Asia Traders Insurance Corporation v. Court of Appeals, G.R. No. 152537, February 16, 2004, 423 SCRA 114, 120
citing R.F. Navarro & Co. v. Vailoces, 361 SCRA 139 (2001).
5
Machica vs. Roosevelt Service Center, G.R. No. 168664, May 4, 2006.

6
Seven Star Textile Company v. Dy, G.R. No. 166846, January 24, 2007, 512 SCRA 486, 499.
7
Labor, et al. v. National Labor Relations Commission, G.R. No. 110388, 14 September 1995, 248 SCRA 183, 198.
8
See ruling in Lagatic v. NLRC, G.R. No. 121004 January 28, 1998.
 7. BURDEN OF PROOF. It is a basic rule of evidence that each party must
prove his affirmative allegation.9 If he claims a right granted by law, he must prove his
claim by competent evidence, relying on the strength of his own evidence and not upon
the weakness of that of his opponent. 10 The test for determining on whom the burden of
proof lies is found in the result of an inquiry as to which party would be successful if no
evidence of such matters were given.11

8. MONEY CLAIMS. It is settled that once the employee has set out with
particularity in his complaint, position paper, affidavits and other documents the labor
standard benefits he is entitled to, and which he alleged that the employer failed to pay
him, it becomes the employer’s burden to prove that it has paid these money claims.
One who pleads payment has the burden of proving it, and even where the employees
must allege nonpayment, the general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove nonpayment. 12

9. LOSS OF CONFIDENCE. Loss of confidence as a just cause for termination

of employment is premised from the fact that an employee concerned holds a position
of trust and confidence.13 This situation holds where a person is entrusted with
confidence on delicate matters, such as the custody, handling, or care and protection of
the employer's property. 14 But, in order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to
be unfit to continue working for the employer. 15

10. PREVENTIVE SUSPENSION. Sections 3 and 4, Book V, Rule XIV of the

rules implementing the Labor Code of the Philippines govern the law on preventive
suspension, to wit:

9
Martinez v. National Labor Relations Commission, 339 Phil. 176, 183 (1997).
10
Rufina Patis Factory v. Alusitain, G.R. No. 146202, July 14, 2004, 434 SCRA 418, 428.
11
Imperial Victory Shipping Agency v. National Labor Relations Commission, G.R. No. 84672, August 5, 1991, 200
SCRA 178,185.
12
Solidbank Corporation v. CA, G.R. No. 151026, August 25, 2003, 409 SCRA 554, 560-561 citing Nagusara v. NLRC,
G.R. Nos. 117936-37, May 20, 1998, 290 SCRA 245.
13
Quezon Electric Cooperative v. NLRC, 172 SCRA 88 (1989) at p. 94.
14
Panday v. NLRC, 209 SCRA 122 (1992) at p. 125.
15
Aris Philippines, Inc. v. NLRC, 238 SCRA 59 (1994) at p. 62.
 Section 3. Preventive suspension. – The employer may place the
worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of
the employer or of his co-workers.

Section 4. Period of suspension. – No preventive suspension shall

last longer than 30 days. The employer shall thereafter reinstate the
worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the
period of extension, he pays the wages and other benefits due to the
worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

11. AUTHORIZED CAUSES. The law in point is Article 283 of the Labor Code,
the full text of which reads:

ART. 283. Closure of establishment and reduction of personnel. --

The employer may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the
worker and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the
installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one
(1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-
half (½) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.

It is neither the function of the law nor its intent to supplant the prerogative of
management in running its business, such as, to compel the latter to operate at a
continuing loss simply because it has to maintain its workers in employment. Such an
act would be tantamount to a taking of property without due process of law. 16

However, the burden of proving that the termination was for a valid or authorized
cause rests on the employer who must comply with certain substantive and procedural
requirements. For instance, the requirements for a valid retrenchment which must be
proved by clear and convincing evidence are: (1) that retrenchment is reasonably
necessary and likely to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer; (2) that
the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one
(1) month pay or at least one-half (½) month pay for every year of service, whichever is
higher; (4) that the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the employees’
right to security of tenure; and (5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.17

The condition of business losses justifying retrenchment is normally shown by

audited financial documents like yearly balance sheets and profit and loss statements
as well as annual income tax returns. Financial statements must be prepared and
signed by independent auditors. Otherwise, they may be assailed as self-serving. Since
the losses incurred must be substantial and actual or reasonably imminent, it is
necessary that the employer show that the losses increased through a period of time
and that the condition of the company is not likely to improve in the near future. 18

16
Industrial Timber Corporation vs. NLRC, 339 Phil. 395 [1997]; San Pedro Hospital of Digos, Inc. vs. Secretary of
Labor, et al., G.R. No. 104624, October 11, 1996
17
Asian Alcohol Corporation vs. NLRC, 364 Phil. 912 (1999).
18
Ibid.
 The same evidence is generally required when the termination of employees is
by reason of closure of the establishment or a division thereof for economic reasons,
although the more overriding consideration is, of course, good faith. The employer must
prove that the cessation of or withdrawal from business operations was bona fide in
character and not impelled by a motive to defeat or circumvent the tenurial rights of
employees.19

12. EMPLOYER-EMPLOYEE MUST FIRST BE ESTABLISHED. In an illegal

dismissal case, the onus probandi rests on the employer to prove that its dismissal of an
employee was for a valid cause. 20 However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be established. 21

It was held in another case that in filing a complaint before the Labor Arbiter for
illegal dismissal based on the premise that she was an employee of respondent, it is
incumbent upon petitioner to prove the employee-employer relationship by substantial
evidence.22

13. FOUR-FOLD TEST. To ascertain the existence of an employer-employee

relationship, jurisprudence has invariably applied the four-fold test, namely: (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 is the most important. The so-called "control test" is
commonly regarded as the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed

19
Reahs Corporation v. NLRC, 337 Phil. 698 (1997).
20
R.P. Dinglasan Construction, Inc. v. Atienza, G.R. No. 156104, June 29, 2004, 433 SCRA 263, 269.
21
Sy v. Court of Appeals, 446 Phil. 404, 413 (2003).
22
Martinez v. National Labor Relations Commission, 339 Phil. 176, 183 (1997).
reserves the right to control not only the end achieved, but also the manner and means
to be used in reaching that end.23

14. NOT THE YARDSTICK. 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 the right of an employee to certain benefits, 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.24

15. MANAGEMENT PREROGATIVE. The right of an employer to regulate all

aspects of employment is well settled. This right, aptly called management prerogative,
gives employers the freedom to regulate, according to their discretion and best
judgment, all aspects of employment, including work assignment, working methods,
processes to be followed, working regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and recall of workers. In general,
management has the prerogative to discipline its employees and to impose appropriate
penalties on erring workers pursuant to company rules and regulations. 25

16. DUE PROCESS. The procedure for terminating an employee is found in

Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. – In all cases of

termination of employment, the following standards of due process shall
be substantially observed:

I. For termination of employment based on just causes as defined

in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground

or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned,

with the assistance of counsel if the employee so desires, is given
23
Abante v. Lamadrid Bearing and Parts Corp.,G.R. No. 159890, May 28, 2004, 430 SCRA 368.
24
Singer Sewing Machine Company vs. Drilon, G.R. No. 91307, January 24, 1991.
25
Deles, Jr. v. National Labor Relations Commission, G.R. No. 121348, March 9, 2000, 327 SCRA 540, 547-548.
 opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and

(c) A written notice of termination served on the employee indicating

that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

In case of termination, the foregoing notices shall be served on the

employee's last known address.

17. CONSTRUCTIVE DISMISSAL. Constructive dismissal is a cessation of

work because continued employment is rendered impossible, unreasonable or unlikely;
when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.26 The test of constructive dismissal is whether a reasonable person in the
employee's position would have felt compelled to give up his job under the
circumstances.27

18. CONSTRUCTIVE DISMISSAL; BARE ALLEGATIONS OF. Bare allegations

of constructive dismissal, when uncorroborated by the evidence on record, cannot be
given credence.28

19. ALLOWING EMPLOYEE TO RESIGN Incidentally, there is nothing illegal

with the practice of allowing an employee to resign instead of being separated for just
cause, so as not to smear her employment record.29

20. ARTICLE 280

ART. 280. Regular and casual employment. - The provisions of

written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which
26
Chiang Kai Shek College v. Court of Appeals, G.R. No. 152988, 24 August 2004, 437 SCRA 171; Globe Telecom, Inc.
v. Florendo-Flores, 438 Phil. 757 (2002); Blue Dairy Corporation v. National Labor Relations Commission, 373 Phil.
179 (1999).

27
Aguilar v. Burger Machine Holdings Corporation, G.R. No. 172062, 30 October 2006, 506 SCRA 266.
28
Go v. Court of Appeals, G.R. No. 158922, May 28, 2004, 430 SCRA 358.
29
Sicangco vs. NLRC, 235 SCRA 96 (1994); Samaniego vs. NLRC, 198 SCRA 111 (1991).
 are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by

the preceding paragraph: Provided, That any employee who has rendered
at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exists.

21. SERIOUS MISCONDUCT. In National Labor Relations Commission v.

Salgarino,30 the Court stressed that “in order to constitute serious misconduct which will
warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor
Code, it is not sufficient that the act or conduct complained of has violated some
established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.”

22. REDUNDANCY. Redundancy is one of the authorized causes for the

dismissal of an employee.31 In the leading case of Wiltshire File Co. Inc., vs. NLRC,32
the Supreme Court explained the nature of redundancy as an authorized cause for
dismissal:

“x x x redundancy in an employer's personnel force necessarily or

even ordinarily refers to duplication of work. That no other person was
holding the same position that private respondent held prior to the
termination of his services, does not show that his position had not
become redundant. Indeed, in any well-organized business enterprise, it
would be surprising to find duplication of work and two (2) or more people
doing the work of one person. We believe that redundancy, for purposes of
30
G.R. No. 178520, 23 June 2009, 590 SCRA 633.
31
Labor Code of the Philippines, Article 283
32
193 SCRA665 (1991).
 the Labor Code, exists where the services of an employee are in excess
of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous,
and superfluity of a position or positions may be the outcome of a number
of factors, such as overhiring of workers, decreased volume of business,
or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.”

23. ARTICLE 34. Article 34 (i) of the Labor Code reads:

“(i) It shall be unlawful for “any individual, entity, licensee to alter

employment contract approved and verified by the department of labor
from the time of actual signing thereof by the parties up to and including
the period of expiration of the same without the approval of the Secretary
of Labor.”

24. WILLFUL DISOBEDIENCE. However, willful disobedience of the employer’s

lawful orders, as a just cause for dismissal of an employee, envisages the concurrence
of at least two requisites: (1) the employee’s assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated
must have been reasonable, lawful, made known to the employee and must pertain to
the duties which he had been engaged to discharge. 33

25. CANNOT BE RAISED ON APPEAL. The well-settled rule, which also

applied in labor cases, is that issues not raised below cannot be raised for the first time
on appeal. Points of laws, theories, issues and arguments not brought to the attention
of the lower court need not be, and ordinarily will not be, considered by the reviewing
court, as they cannot be raised for the first time at that late stage. Basic considerations
of due process impel the adoption of this rule. 34

26. POWER TO ADMIT ON APPEAL. It is now settled that the NLRC has the
power to admit on appeal additional evidence to show lawful cause for dismissal,

33
Dimabayao v. NLRC, 363 Phil. 279, 284 (1999)
34
Pag-Asa Steel Works v. Court of Appeals, G.R. No. 166647, March 31, 2006.
provided that the delay in the submission of said evidence is explained and the same
clearly proves the employer’s allegation of a valid cause for dismissing his employees. 35

27. SCHOOL OFFICERS. A distinction should thus be drawn between the

teaching staff or private educations institutions, on one hand – teachers, assistant
instructors, assistant professors, associate professors, full professors – and department
or administrtative heads or officials on the other – college or department secretaries,
principals, directors, assistant deans, deans. The teaching staff, the faculty members,
may and should acquire tenure in accordance with the rules and regulations of the
Department of Education and Cluture and the school’s own rules and standards. On th
other hand, teachers appointed to serve as administrative official do not noramally and
should not expect to acquire a second or additional tenure. The acquisition of such an
additional tenure is not normal, is the exception rather than the rule, and should
therefore be clearly and specifically provided by law or contract. 36

28. CAUSE OF ACTION. In Baliwag Transit, Inc. vs. Ople,37 the Supreme Court
held:

"Since a cause of action requires, as essential elements, not only a

legal right of the plaintiff and a correlative obligation of the defendant but
also an act or omission of the defendant in violation of said legal right, the
cause of action does not accrue until the party obligated refuses,
expressly or impliedly, to comply with its duty."

29. LACHES. Laches has been defined as the failure or neglect for an
unreasonable and unexplained length time to do that which, by exercising due diligence,
could or should have been done earlier, 38 thus giving rise to a presumption that the party
entitled to assert it either has abandoned or declined to assert it. 39
35
Anderson vs. NLRC, 252 SCRA 116
36
La Sallete of Santiago, Inc. v. NLRC, 195 SCRA 80
37
G.R. No. 57642, March 16, 1999, 171 SCRA 250, cited in Serrano vs. Court of Appeals, G.R. No. 139420, August 15,
2001, 363 SCRA 223, 230.
38
La Campana Food Products, Inc. v. Court of Appeals, 223 SCRA 151 (1993); Radio Communications of the
Philippines, Inc. v. National Labor Relations Commission, 223 SCRA 656 (1993); Marcelino v. Court of Appeals, 210
SCRA 444 (1992).
39
Bergado v. Court of Appeals, 173 SCRA 497 (1989).
 30. WILLFUL DISOBEDIENCE. Willful disobedience of the employer's lawful
orders, as a just cause for the dismissal of an employee, envisages the concurrence of
at least two (2) requisites: the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse attitude";
and the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge. 40

31. TREATMENT OF MANAGERIAL EMPLOYEES. The Supreme Court has

distinguished the treatment of managerial employees from that of rank-and-file
personnel, insofar as the application of the doctrine of loss of trust and confidence is
concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence
as ground for valid dismissal requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the employer will
not be sufficient.41 But, as regards a managerial employee, mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice for
his dismissal. Hence, in the case of managerial employees, proof beyond reasonable
doubt is not required, it being sufficient that there is some basis for such loss of
confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded by his
position.42

32. COOPERATIVES. It bears stressing, too, that a cooperative acquires

juridical personality upon its registration with the Cooperative Development Authority. 43
It has its Board of Directors, which directs and supervises its business; meaning, its
Board of Directors is the one in charge in the conduct and management of its affairs. 44

40
Batangas Laguna Tayabas Bus Company v. Court of Appeals, 71 SCRA 470 (1976).
41
Manila Midtown Commercial Corp v. Nuwhrain (Ramda Chapter), 159 SCRA 212 (1988) at p. 217.
42
Sajonas v. NLRC, 183 SCRA 182 (1990) at p. 188, citing Reyes v. Minister of Labor, et al., 170 SCRA 134 (1989).

43
ART. 16. Registration. - A cooperative formed or organized under this Code acquires juridical personality from the
date the Cooperative Development Authority issues a certificate of registration under its official seal. x x x.
(Republic Act No. 6938).

44
ART. 38. Composition of the Board of Directors. - The conduct and management of the affairs of a cooperative
shall be vested in a board of directors x x x.
With that, a cooperative can be likened to a corporation with a personality separate and
distinct from its owners-members. Consequently, an owner-member of a cooperative
can be an employee of the latter and an employer-employee relationship can exist
between them.45

33. FLOATING STATUS. Temporary "off-detail" or "floating status" is the period

of time when security guards are in between assignments or when they are made to
wait after being relieved from a previous post until they are transferred to a new one. It
takes place when the security agency’s clients decide not to renew their contracts with
the agency, resulting in a situation where the available posts under its existing contracts
are less than the number of guards in its roster. It also happens in instances where
contracts for security services stipulate that the client may request the agency for the
replacement of the guards assigned to it even for want of cause, such that the replaced
security guard may be placed on temporary "off-detail" if there are no available posts
under the agency’s existing contracts. During such time, the security guard does not
receive any salary or any financial assistance provided by law. It does not constitute a
dismissal, as the assignments primarily depend on the contracts entered into by the
security agencies with third parties, so long as such status does not continue beyond a
reasonable time. When such a "floating status" lasts for more than six (6) months, the
employee may be considered to have been constructively dismissed. 46

34. ATTORNEY’S FEES. In regard to the award of attorney’s fees, the Court
agrees with the Court of Appeals that respondent is entitled to the same under Article
2208 of the Civil Code:

Art. 2208. In the absence of stipulation, attorney’s fees and

expenses of litigation, other than judicial costs cannot be recovered,
except:
ART. 39. Powers of the Board of Directors. - The board of directors shall direct and supervise the business,
manage the property of the cooperative and may, by resolution, exercise all such powers of the cooperative as are
not reserved for the general assembly under this Code and the by-laws. (Id.).

45
Republic of the Philippines vs. Asiapro, G.R. No. 172101, November 23, 2007.
46
Megaforce Security and Allied Services, Inc. v. Lactao, supra, at 117; Pido v. National Labor Relations Commission,
G.R. No. 169812, February 23, 2007, 516 SCRA 609, 615-616; Phil. Industrial Security Agency Corp. v. Dapiton, 377
Phil. 951, 962 (1999); Sentinel Security Agency, Inc. v. NLRC, 356 Phil. 434, 443, 446 (1998).
 Xxxx

(2) When the defendant’s act or omission has compelled the

plaintiff to litigate with third persons or to incur expenses to protect his
interest;

Xxx

“(11) In any other case where the court deems it just and equitable
that attorney’s fees and expenses of litigation should be recovered.”

35. FORUM SHOPPING. As explained by the Supreme Court in First Philippine

International Bank v. Court of Appeals, 47 forum-shopping exists where the elements of
litis pendentia are present, and where a final judgment in one case will amount to res
judicata in the other. Thus, there is forum-shopping when, between an action pending
before this Court and another one, there exist: "a) identity of parties, or at least such
parties as represent the same interests in both actions, b) identity of rights asserted and
relief prayed for, the relief being founded on the same facts, and c) the identity of the
two preceding particulars is such that any judgement rendered in the other action, will,
regardless of which party is successful amount to res judicata in the action under
consideration; said requisites also constitutive of the requisites for auter action pendant
or lis pendens."48 Another case elucidates the consequence of forum-shopping:
"[W]here a litigant sues the same party against whom another action or actions for the
alleged violation of the same right and the enforcement of the same relief is/are still
pending, the defense of litis pendentia in one case is a bar to the others; and, a final
judgment in one would constitute res judicata and thus would cause the dismissal of the
rest."49

47
252 SCRA 259, January 24, 1996, per Panganiban, J.

48
Buan v. Lopez Jr., 145 SCRA 34, per Narvasa, CJ; citing Moran, Comments on the Rules, 1979 ed., Vol. 1, pp. 484-
485 and cases therein collated; Salacup v. Madela Jr., 91 SCRA 275, June 29, 1979; PNB v. CA, 98 SCRA 207, June 25,
1980; Punongbayan v. Pineda, 131 SCRA 496, August 30, 1984; Arceo v. Oliveros, 134 SCRA 308, January 31, 1985;
Laroza v. Guia, 134 SCRA 341, January 31, 1985.

49
First Philippine International Bank v. Court of Appeals, supra.
 36. BURDEN OF PROOF IN ULP. In Tiu vs. NLRC,50 the Supreme Court held that
it is the union who has the burden of proof to present substantial evidence to support its
allegations of unfair labor practices committed by management.

37. PREROGATIVE EXERCISED WITHOUT ABUSE OF DISCRETION. The

employer’s prerogative to discipline its employee must be exercised without abuse of
discretion. Its implementation should be tempered with compassion and understanding.
While an employer has the inherent right to discipline its employees, we have always
held that this right must always be exercised humanely, and the penalty it must impose
should be commensurate to the offense involved and to the degree of its infraction. The
employer should bear in mind that, in the exercise of such right, what is at stake is not
the employee’s position but her livelihood as well. The law regards the workers with
compassion. Even where a worker has committed an infraction, a penalty less punitive
may suffice, whatever missteps may be committed by labor ought not to be visited with
a consequence so severe. This is not only the law’s concern for workingman. There is,
in addition, his or her family to consider. Unemployment brings untold hardships and
sorrows upon those dependent on the wage-earner. 51

38. NUMBER OF YEARS. Jurisprudence has not laid down any rule specifying a
minimum number of years within which a company practice must be exercised in order
to constitute voluntary company practice.52 Thus, it can be six (6) years, 53 three (3)
years,54 or even as short as two (2) years.55

50
G.R. No. 123276, August 18, 1997, 277 SCRA 680, 687, cited in Samahang Manggagawa sa Sulpicio Lines, Inc. –
NAFLU, et al. vs. Sulpicio Lines, Inc., G.R. No. 140992, March 25, 2004 at 9-10.

51
De Guzman v. National Labor Relations Commissions, 371 Phil. 192 (1999).
52
Sevilla Trading Co. vs. Semana, G.R. No. 152456, 28 April 2004, 428 SCRA 239, 249.
53
Davao Fruits Corporation vs. Associated Labor Unions, G.R. No. 85073, 24 August 1993, 225 SCRA 562.

54
Tiangco vs. Hon. Leogardo, Jr., 207 Phil. 2235 (1983).
55
Sevilla Trading Co. vs. Semana, supra.
 39. DISHONESTY. In Janssen vs. Silayro,56 the Supreme Court ruled that despite
its disapproving stance against dishonesty, there have been instances when it found the
ultimate penalty of dismissal excessive, even for cases which bear the stigma of deceit.
The Supreme Court cited these instances:

In Philippine Long Distance Telephone Company v. National Labor

Relations Commission,57 an employee intervened in the anomalous
connection of four telephone lines. It was, likewise, established in Manila
Electric Company v. National Labor Relations Commission, 58 that the
employee was involved in the illegal installation of a power line. In both
cases, the violations were clearly prejudicial to the economic activity of his
employer. Finally, in National Labor Relations Commission v. Salgarino,59
a school teacher tampered with the grades of her students, an act which
was prejudicial to the school’s reputation. Notably, the Court stopped short
of dismissing these employees for offenses more serious than the present
case.

40. VERIFICATION. As regards the verification requirement, the Supreme Court

explained in Torres vs. Specialized Packaging Development Corporation 60 that such
requirement is deemed substantially complied with when, as in that case, two out of 25
real parties-in-interest, who undoubtedly have sufficient knowledge and belief to swear
to the truth of the allegations in the petition, signed the verification attached to it. Such
verification is deemed sufficient assurance that the matters alleged in the petition have
been made in good faith or are true and correct, not merely speculative.

The Supreme Court applied this principle in the case of Ateneo de Naga University
(ADNU) vs. Manalo.61 The High Tribunal found that, at the minimum, the lone signature
of one of the petitioners in that case, Fr. Tabora, is sufficient to fulfill the verification
requirement. Undoubtedly, Fr. Tabora, whose acts as president of petitioner ADNU are

56
G.R. No. 172528, February 26, 2008.

57
362 Phil. 352 (1999).
58
G.R. No. 78763, 12 July 1989, 175 SCRA 277.

59
National Labor Relations Commission v. Salgarino, G.R. No. 164376, 31 July 2006, 497 SCRA 361, 383.

60
G.R. No. 149634, 06 July 2004.
61
G.R. No. 160455, May 9, 2005
in issue, is a real party-in-interest. As ADNU’s president and himself a party to the
instant case, Fr. Tabora has sufficient knowledge to swear to the truth of the allegations
in their petition for certiorari filed with the Court of Appeals. His signature, therefore, is
sufficient assurance that the allegations in their petition have been made in good faith or
are true and correct, not merely speculative. In fact, the signature of Fr. Tabora is
sufficient to stand for petitioners ADNU and Bernal.

The High Court continued that “time and again, this Court has held that rules of
procedure are established to secure substantial justice. Being instruments for the
speedy and efficient administration of justice, they must be used to achieve such end,
not to derail it.62 In particular, when a strict and literal application of the rules on non-
forum shopping and verification will result in a patent denial of substantial justice, these
may be liberally construed.63

Moreover, as regards the certification against forum shopping, this Court has
relaxed, under justifiable circumstances, the rule requiring the submission of such
certification considering that although it is obligatory, it is not jurisdictional. 64

41. LEX LOCI CONTRACTUS. Preliminarily, it bears stressing that the

respondents who filed complaints for illegal dismissal against the petitioner were
overseas Filipino workers whose employment contracts were approved by the
Philippine and Overseas Employment Administration (POEA) and were entered into and
perfected here in the Philippines. As such, the rule lex loci contractus (the law of the
place where the contract is made) governs. Therefore, the Labor Code, its implementing
rules and regulations, and other laws affecting labor, apply in this case. 65

42. TEST OF PROJECT EMPLOYMENT. But the test for distinguishing a "project
employee" from a "regular employee" is whether or not he has been assigned to carry
62
Torres v. Specialized Packaging Development Corporation, supra., citing Far Eastern Shipping Co. v. Court of
Appeals, 357 Phil. 703, 720 (1998).
63
Bank of the Philippine Islands v. Court of Appeals, G.R. No. 146923, 30 April 2003, 402 SCRA 449.

64
Torres v. Specialized Packaging Development Corporation, supra, citing Robern Development Corporation v. Judge
Quitain, 373 Phil. 773, 786 (1999).

65
Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608 (1998).
out a "specific project or undertaking," with the duration and scope of his engagement
specified at the time his service is contracted. 66 Here, it is not disputed that petitioner
company contracted respondent Trinidad’s service by specific projects with the duration
of his work clearly set out in his employment contracts. He remained a project
employee regardless of the number of years and the various projects he worked for the
company.67

Generally, length of service provides a fair yardstick for determining when an

employee initially hired on a temporary basis becomes a permanent one, entitled to the
security and benefits of regularization. But this standard will not be fair, if applied to the
construction industry, simply because construction firms cannot guarantee work and
funding for its payrolls beyond the life of each project. And getting projects is not a
matter of course. Construction companies have no control over the decisions and
resources of project proponents or owners. There is no construction company that does
not wish it has such control but the reality, understood by construction workers, is that
work depended on decisions and developments over which construction companies
have no say.68

For this reason, the Court held in Caseres v. Universal Robina Sugar Milling
Corporation69 that the repeated and successive rehiring of project employees do not
qualify them as regular employees, as length of service is not the controlling
determinant of the employment tenure of a project employee, but whether the
employment has been fixed for a specific project or undertaking, its completion has
been determined at the time of the engagement of the employee.

43. QUESTION OF FACT VS. QUESTION OF LAW. Respecting the attribution of

error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF
FACT arises when the doubt or difference arises as to the truth or falsehood of alleged
66
ALU-TUCP v. National Labor Relations Commission, G.R. No. 109902, August 2, 1994, 234 SCRA 678, 685.

67
Alcatel Philippines, Inc. v. Relos, G.R. No. 164315, July 3, 2009.

68
William Uy Construction Co. vs. Trinidad, G.R. No. 183250, March 10, 2010.
69
G.R. No. 159343, September 28, 2007, 534 SCRA 356, 361.
facts,70 while a QUESTION OF LAW exists when the doubt or difference arises as to
what the law is on a certain set of facts.

44. CANNOT BE RE-OPENED. It has been held that a proceeding may not be
reopened upon grounds already available to the parties during the pendency of such
proceedings; otherwise, it may give way71 to vicious and vexatious proceedings.

45. MISCONDUCT. The Supreme Court defines misconduct as "a transgression of

some established and definite rule of action, more particularly, unlawful behavior or
gross negligence by a public officer." 72 The misconduct is grave if it involves any of the
additional elements of corruption, willful intent to violate the law, or to disregard
established rules, which must be established by substantial evidence. 73 As distinguished
from simple misconduct, the elements of corruption, clear intent to violate the law, or
flagrant disregard of established rule, must be manifest in a charge of grave
misconduct.74

46. LABOR-ONLY. Article 106 defines “labor-only” contracting, viz:

There is “labor-only” contracting where the person supplying

workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the

70
Philippine Veterans Bank v. Monillas, G.R. No. 167098, March 28, 2008.
71
San Pablo Oil Factory, Inc. and Schetelig v. CIR [Court of Industrial Relations] and Kapatirang Manggagawa Assn.,
116 Phil 941, 945 (1962).
72
Arcenio v. Pagorogon, A.M. Nos. MTJ-89-270 and MTJ-92-637, 5 July 1993, 224 SCRA 246, 254.

73
Roque v. Court of Appeals, G.R. No. 179245, 23 July 2008, 559 SCRA 660; Civil Service Commission v. Ledesma, 508
Phil. 569 (2005).
74
Vertudes v. Buenaflor, G.R. No. 153166, 16 December 2005, 478 SCRA 210, 233-234.
 workers in the same manner and extent as if the latter were directly
employed by him.

On the same vein, Rule VIII-A, Book III of the Omnibus Rules Implementing the
Labor Code, as amended by Department Order No. 18-02, pertinently provides:

Section 5. Prohibition against labor-only contracting. Labor only

contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and ANY of the following elements are
present:

i)The contractor or subcontractor does not have substantial capital

or investment which relates to the job, work or service to be performed
and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the
main business of the principal; OR

ii) [T]he contractor does not exercise the right to control over the
performance of the work of the contractual employee.

Therefore, the “control test” is merely one of the factors to consider. This is
clearly deduced from the above-provision which states that labor-only contracting exists
when any of the two elements is present. In our March 9, 2010 Decision, it was
established that SAPS has no substantial capitalization and it was performing
merchandising and promotional activities which are directly related to P&G's business.
Since SAPS met one of the requirements, it was enough basis for us to hold that it is a
labor-only contractor. Consequently, its principal, P&G, is considered the employer of its
employees. This is pursuant to our ruling in Aklan v. San Miguel Corporation75 where
we held that “[a] finding that a contractor is a ‘labor-only’ contractor, as opposed
to permissible job contracting, is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the
supposed contractor, and the ‘labor-only’ contractor is considered as a mere
agent of the principal, the real employer.”

75
G.R. No. 168537, December 11, 2008, 573 SCRA 675, 685.
 Corollarily, we also decreed in Coca-Cola Bottlers Phils., Inc. v. Agito76 that:

The law clearly establishes an employer-employee relationship

between the principal employer and the contractor's employee upon a
finding that the contractor is engaged in "labor-only" contracting. Article
106 of the Labor Code categorically states: "There is `labor-only'
contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and
placed by such persons are performing activities which are directly related
to the principal business of such employer." Thus, performing activities
directly related to the principal business of the employer is only one of the
two indicators that "labor-only" contracting exists; the other is lack of
substantial capital or investment. The Court finds that both indicators exist
in the case at bar.

47. SUBSTANTIAL EVIDENCE. Indeed, self-serving and unsubstantiated

declarations are insufficient to establish a case before quasi-judicial bodies where the
quantum of evidence required to establish a fact is substantial evidence. 77 Often
described as more than a mere scintilla, 78 substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other equally reasonable minds might conceivably opine otherwise. 79

48. POEA CONTRACT. When the language of the contract is explicit and leaves
no doubt as to the intention of its drafters, the rule is settled that courts may not read
into it any other intention that would contradict its plain import. 80

76
G.R. No. 179546, February 13, 2009, 579 SCRA 445, 460-461.
77
Uniwide Sales Warehouse Club v. National Labor Relations Commission, G.R. No. 154503, 29 February 2008, 547
SCRA 220, 238.
78
Spouses Aya-ay v. Arpahil Shipping Corporation, G.R. No. 155359, 31 January 2006, 481 SCRA 282, 294.
79
Oriental Shipmanagement Co., Inc. v. Bastol, G.R. No. 186289, 29 June 2010, 622 SCRA 352, 377.
80
German Marine Agencies, Inc. v. NLRC, 403 Phil. 572, 588 (2001).
 49. ESTOPPEL. It is well-settled that no question will be entertained on appeal
unless it has been raised in the proceedings below. Points of law, theories, issues and
arguments not brought to the attention of the lower court, administrative agency or
quasi-judicial body, need not be considered by a reviewing court, as they cannot be
raised for the first time at that late stage. Basic considerations of fairness and due
process impel this rule. Any issue raised for the first time on appeal is barred by
estoppel.81

50. LEGAL INTEREST. Nonetheless, it may not be amiss to reiterate the

prevailing rule as enunciated in the landmark case of Eastern Shipping Lines, Inc. v.
Court of Appeals82 thus:

I. When an obligation, regardless of its source, i.e., law,

contracts, quasi-contracts, delicts or quasi-delicts is breached, the
contravenor can be held liable for damages. The provisions under Title
XVIII on "Damages" of the Civil Code govern in determining the measure
of recoverable damages.

II. With regard particularly to an award of interest in the concept

of actual and compensatory damages, the rate of interest, as well as the
accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in

the payment of a sum of money, i.e., a loan or forbearance
of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest
shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.

81
Besana v. Mayor, G.R. No. 153837, July 21, 2010, 625 SCRA 203, 214.
82
G.R. No. 97412, July 12,1994, 234 SCRA 78.
 2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims
or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made
judicially or extrajudicially (Article 1169, Civil Code) but when
such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the
amount finally adjudged.

3. When the judgment of the court awarding a sum of

money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2 above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of credit.

51. CRIMINAL PROCEEDINGS. The purpose of the proceedings before the

fiscal is to determine if there is sufficient evidence to warrant the prosecution and
conviction of the accused. In assessing the evidence before him, the fiscal considers
the basic rule that to successfully convict the accused the evidence must be beyond
reasonable doubt and not merely substantial. On the other hand, to support findings and
conclusion of administrative bodies only substantial evidence is required. It does not
follow that once the fiscal dismisses the complaint for qualified theft, respondent officials
should also have decided in favor of petitioner. For one, the evidence presented before
the two bodies may not be necessarily identical. Secondly, the appreciation of the facts
and evidence presented is an exercise of discretion on the part of administrative officials
over which one cannot impose his conclusion on the other. As we have already ruled,
the conviction of an employee in a criminal case is not indispensable to warrant his
dismissal, and the fact that a criminal complaint against the employee has been
dropped by the fiscal is not binding and conclusive upon a labor tribunal.83

52. LOSS OF CONFIDENCE. The right of an employer to freely select or

discharge his employee is a recognized prerogative of management; an employer
cannot be compelled to continue employing one who has been guilty of acts inimical to
its interests. When this happens, the employer can dismiss the employee for loss of
confidence.84

At the same time, loss of confidence as a just cause of dismissal was never
intended to provide employers with a blank check for terminating employment. Loss of
confidence should ideally apply only (1) to cases involving employees occupying
positions of trust and confidence, or (2) to situations where the employee is routinely
charged with the care and custody of the employer’s money or property. To the first
class belong managerial employees, i.e., those vested with the powers and prerogatives
to lay down management polices and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees, or effectively recommend such managerial
actions. To the second class belong cashiers, auditors, property custodians, or those
who, in the normal and routine exercise of their functions, regularly handle significant
amounts of money or property.85

53. VOLUNTARY RESIGNATION. Resignation is the voluntary act of an

employee who is in a situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no other choice but to
dissociate oneself from employment. It is a formal pronouncement or relinquishment of
83
Lacorte vs. Inciong, G.R. No. L-52034, September 27, 1988, citing Sea-Land Service, Inc. v. NLRC, et al., G.R. No.
68212, May 24, 1985,136 SCRA 544.

84
Cesario Alverio Azucena, Jr., The Labor Code with Comments and Cases, Volume II, Sixth Edition (2007), p. 752
citing Tabacalera Insurance Co. v. NLRC, 236 Phil. 714 (1987).
85
Mabeza v. NLRC, 338 Phil. 386 (1997).
an office, with the intention of relinquishing the office accompanied by the act of
relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must
be considered in determining whether in fact, he or she intended to sever from his or
her employment.86

54. PRINCIPAL IS ALWAYS RIGHT. Service-oriented enterprises, such as

petitioner's business of providing security services, generally adhere to the business
adage that "the customer or client is always right". To satisfy the interests, conform to
the needs, and cater to the whims and wishes of its clients, along with its zeal to gain
substantial returns on its investments, employers adopt means designed towards these
ends. These are called management prerogatives in which the free will of management
to conduct its own affairs to achieve its purpose, takes from. Accordingly, an employer
can regulate, generally without restraint, according to its own discretion and judgment,
every aspect of business.87

55. FIXED PERIOD. In the case of St. Theresa's School of Novaliches

Foundation vs. NLRC,88 the Supreme Court held that Article 280 of the Labor Code
does not proscribe or prohibit an employment contract with a fixed period. It was
further pronounced that it does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the usual business of
the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee's duties.

86
Fortuny Garments vs. Castro, G.R. No. 150668, December 15, 2005, 478 SCRA 125, 130.
87
Castillo v. NLRC, G.R. No. 104319, June 17, 1999; Maya Farms Employees Organization v. NLRC, 239 SCRA 508, 514
(1994); National Federation of Labor Unions v. NLRC, 202 SCRA 346, 355 (1991).

88
G.R. No. 122955. April 15, 1998.
 This ruling finds roots in the leading case of Brent School Inc. v. Zamora 89 where
the High Tribunal laid down the guideline before a contract of employment may be held
as valid, to wit:

“…[S]tipulations in employment contracts providing for term

employment or fixed period employment are valid when the period were
agreed upon knowingly and voluntarily by the parties without force, duress
or improper pressure, being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter.”

56. VACATION AND SICK LEAVE. It is worth stressing that in the grant of
vacation and sick leave privileges to an employee, the employer is given leeway to
impose conditions on the entitlement to the same as the grant of vacation and sick
leave is not a standard of law, but a prerogative of management. It is a mere concession
or act of grace of the employer and not a matter of right on the part of the employee. 90
Thus, it is well within the power and authority of an employer to deny an employee’s
application for leave and the same cannot be perceived as discriminatory or
harassment.91

57. PAYROLLS. Moreover, one who pleads payment has the burden of proving
it. The reason for the rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents – which will show that overtime, differentials,
service incentive leave, and other claims of workers have been paid – are not in the
possession of the worker but in the custody and absolute control of the employer. Thus,
the burden of showing with legal certainty that the obligation has been discharged with
payment falls on the debtor, in accordance with the rule that one who pleads payment

89
G.R. No. 48494, February 5, 1990.
90
Sobrepeña v. Court of Appeals, G.R. No. 111148, October 10, 1997, 280 SCRA 476, 489-490.
91
Sugue vs. Triumph, G.R. No. 164804, January 30, 2009; Triumph vs. Suge, G.R No. 164784, January 30, 2009.
has the burden of proving it.92 Only when the debtor introduces evidence that the
obligation has been extinguished does the burden shift to the creditor, who is then under
a duty of producing evidence to show why payment does not extinguish the obligation. 93

58. NO FORM OF PROOF. It should be pointed out that no particular form of

proof is required to prove the existence of an employer-employee relationship. 94 Any
competent and relevant evidence may show the relationship. 95 If only documentary
evidence would be required to demonstrate that relationship, no scheming employer
would ever be brought before bar of justice. 96

59. NOT YET FINAL. In the landmark case of St. Martin Funeral Home v.
NLRC,97 we ruled that judicial review of decisions of the NLRC is sought via a petition
for certiorari under Rule 65 of the Rules of Court, and the petition should be filed before
the CA, following the strict observance of the hierarchy of courts. Under Rule 65,
Section 4,98 petitioners are allowed sixty (60) days from notice of the assailed order or
resolution within which to file the petition. Thus, although the petition was not filed within
the 10-day period, petitioners reasonably filed their petition for certiorari before the CA
within the 60-day reglementary period under Rule 65.

The CA, therefore, could grant the petition for certiorari if it finds that the NLRC,
in its assailed decision or resolution, committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence that is material to or
decisive of the controversy; and it cannot make this determination without looking into

92
Villar v. National Labor Relations Commission, 387 Phil. 706, 716 (2000).
93
G & M (Phil.), Inc. v. Batomalaque, G.R. No. 151849, June 23, 2005, 461 SCRA 111, 118.
94
Caurdanetaan Piece Workers Union vs. Laguesma, et al., 286 SCRA 401, 426 (1998).

95
Ibid.
96
Id., citing Opulencia Ice Plant and Storage vs. NLRC, 228 SCRA 473 (1993).

97
G.R. No. 130866, September 16, 1998, 295 SCRA 494.

98
SEC. 4. When and where position filed. – The petition shall be filed not later than sixty (60) days from notice of
the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such
motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.
the evidence of the parties. Necessarily, the appellate court can only evaluate the
materiality or significance of the evidence, which is alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on
record.99 Notably, if the CA grants the petition and nullifies the decision or resolution of
the NLRC on the ground of grave abuse of discretion amounting to excess or lack of
jurisdiction, the decision or resolution of the NLRC is, in contemplation of law, null and
void ab initio; hence, the decision or resolution never became final and executory. 100

60. LEGITIMATE CONTRACTING. A person is considered engaged in legitimate job

contracting or subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business and undertakes
the contract work on his account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in
all matters connected with the performance of his work except as to the results thereof;

(b) The contractor has substantial capital or investment; and

(c) The agreement between the principal and the contractor or subcontractor
assures the contractual employees' entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure, and
social welfare benefits.101

61. ECONOMIC REALITY TEST. Aside from the control test, this Court has also
used the economic reality test. The economic realities prevailing within the activity or
between the parties are examined, taking into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. 102
This is especially appropriate when, as in this case, there is no written agreement or
contract on which to base the relationship. In our jurisdiction, the benchmark of
99
Dole Philippines, Inc. v. Esteva, G.R. No. 161115, November 30, 2006, 509 SCRA 332, 363.

100
Tomas Claudio Memorial College, Inc. v. Court of Appeals, G.R. No. 152568, February 16, 2004, 423 SCRA 122,
130.

101
Vinoya v. National Labor Relations Commission, 381 Phil. 460, 472-473 (2000).
102
Francisco vs. NLRC, G.R. No. 170087, August 31, 2006, 500 SCRA 690, 697.
economic reality in analyzing possible employment relationships for purposes of
applying the Labor Code ought to be the economic dependence of the worker on his
employer.103

62. NOMINAL DAMAGES. It is now settled that where the dismissal of an

employee is in fact for a just and valid cause and is so proven to be but he is not
accorded his right to due process, i.e., he was not furnished the twin requirements of
notice and the opportunity to be heard, the dismissal shall be upheld but the employer
must be sanctioned for non-compliance with the requirements of or for failure to observe
due process. The sanction, in the nature of indemnification or penalty, depends on the
facts of each case and the gravity of the omission committed by the employer and has
ranged from P1,000.00 as in the cases of Wenphil vs. National Labor Relations
Commission,104 Seahorse Maritime Corp. vs. National Labor Relations Commission,105
Shoemart, Inc. vs. National Labor Relations Commission, 106 Rubberworld (Phils.), Inc.
vs. National Labor Relations Commission,107 Pacific Mills, Inc. vs. Alonzo,108 and Aurelio
vs. National Labor Relations Commission109 to P10,000.00 in Reta vs. National Labor
Relations Commission110 and Alhambra Industries, Inc. vs. National Labor Relations
Commission.111 More recently, in Worldwide Papermills, Inc. vs. National Labor
Relations Commission,112 the sum of P5,000.00 was awarded to the employee as
103
Id. at 699.

104
170 SCRA 69 [1989].

105
173 SCRA 390 [1989].

106
176 SCRA 385 [1989].
107
183 SCRA 421 [1990].
108
199 SCRA 617 [1991].

109
221 SCRA 432 [1993].

110
232 SCRA 613 [1994].

111
238 SCRA 232 [1994].

112
G.R. No. 113081, 12 May 1995.
indemnification for the employer's failure to comply with the requirements of procedural
due process.113

In Sebuguero vs. NLRC,114 the award was P2,000.00.

63. BONA FIDE SUSPENSION. We stress that Article 286 applies only when
there is a bona fide suspension of the employer's operation of a business or
undertaking for a period not exceeding six (6) months. In such a case, there is no
termination of employment but only a temporary displacement of employees, albeit the
displacement should not exceed six (6) months. The paramount consideration should
be the dire exigency of the business of the employer that compels it to put some of its
employees temporarily out of work.115

64. DEMOTION. There is demotion when an employee is appointed to a

position resulting to a diminution in duties, responsibilities, status or rank which may or
may not involve a reduction in salary.116

65. LONGER STAY. The longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms
of conduct and the code of discipline in the company. 117

66. HE WHO ASSERTS. He who asserts, not he who denies, must prove.118

67. GROSS NEGLIGENCE. Gross negligence implies a want or absence of or

failure to exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them. 119

113
Sebuguero vs. NLRC, G.R. No. 115394, September 27, 1995
114
Ibid.
115
Pido vs. NLRC, G.R. No. 169812, February 23, 2007
116
Omnibus Civil Service Rules and Regulations, Rule VII (Other Personnel Actions), Section 11.
117
Cruz v. Coca Cola, Inc., G.R. No. 165586, June 15, 2005, 460 SCRA 340; Central Pangasinan Electric Cooperative,
Inc. v. Macaraeg, 443 Phil. 866, 877 (2003); Citibank, N.A. v. Gatchalian, 310 Phil. 211, 220 (1995).
118
Kar Asia, Inc. v. Corona, G.R. No. 154985, 24 August 2004, 437 SCRA 184, 189.
119
65 C.J.S. 539-541.
 68. MEALS. On whether the value of the facilities should be included in the
computation of the "wages" received by private respondents, Section 1 of DOLE
Memorandum Circular No. 2 provides that an employer may provide subsidized meals
and snacks to his employees provided that the subsidy shall not be less that 30% of the
fair and reasonable value of such facilities. In such cases, the employer may deduct
from the wages of the employees not more than 70% of the value of the meals and
snacks enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.120

Moreover, before the value of facilities can be deducted from the employees’
wages, the following requisites must all be attendant: first, proof must be shown that
such facilities are customarily furnished by the trade; second, the provision of deductible
facilities must be voluntarily accepted in writing by the employee; and finally, facilities
must be charged at reasonable value. 121 Mere availment is not sufficient to allow
deductions from employees’ wages.122

69. QUITCLAIMS. Quitclaims executed by employees are commonly frowned

upon as contrary to public policy and ineffective to bar claims for the full measure of the
workers' legal rights.123

Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement, it is
binding on the parties and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was wrangled from an
unsuspecting or gullible person, or the terms of settlement are unconscionable on its
face, that the law will step in to annul the questionable transaction. But where it is
shown that the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as a valid and binding undertaking. 124
120
SLL International vs. NLRC, G.R. No. 172161, March 2, 2011.
121
Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, 492 Phil. 892 (2005); Mabeza v. NLRC, 338 Phil. 386
(1997).
122
Ibid.
123
See Fuentes vs. NLRC, et al., G.R. No. 76835, November 24, 1988, 167 SCRA 767.
124
Madriaga vs. Court of Appeals, G.R. No. 142001 July 14, 2005
 70. BACKWAGES. The backwages due respondents must be computed from
the time they were unjustly dismissed until actual reinstatement to their former positions.
Thus, until petitioners implement the reinstatement aspect, its obligation to respondents,
insofar as accrued backwages and other benefits are concerned, continues to
accumulate.125

71. RETIREMENT. Retirement is the result of a bilateral act of the parties, a

voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former. 126

Acceptance by the employees of an early retirement age option must be explicit,

voluntary, free, and uncompelled. While an employer may unilaterally retire an
employee earlier than the legally permissible ages under the Labor Code, this
prerogative must be exercised pursuant to a mutually instituted early retirement plan. In
other words, only the implementation and execution of the option may be unilateral, but
not the adoption and institution of the retirement plan containing such option. For the
option to be valid, the retirement plan containing it must be voluntarily assented to by
the employees or at least by a majority of them through a bargaining representative. 127

125
Cocomangas Hotel Beach Resort vs. Visca, G.R. No. 167045, August 29, 2008.
126
Magdadaro v. Philippine National Bank, supra note 12; Universal Robina Sugar Milling Corporation (URSUMCO) v.
Caballeda, supra note 12, at 132; Cainta Catholic School v. Cainta Catholic School Employees Union (CCSEU), supra
note 12, at 482
127
Cercado vs. Uniprom, G.R. No. 188154, October 13, 2010.
 Article 287 of the Labor Code, as amended by R.A. No. 7641, 128 pegs the age for
compulsory retirement at 65 years, while the minimum age for optional retirement is set
at 60 years. An employer is, however, free to impose a retirement age earlier than the
foregoing mandates. This has been upheld in numerous cases 129 as a valid exercise of
management prerogative.

In Pantranco North Express, Inc. v. NLRC, 130 the Court upheld the retirement of
private respondent pursuant to a Collective Bargaining Agreement (CBA) allowing
Pantranco to compulsorily retire employees upon completing 25 years of service to the
company. Interpreting Article 287, the Court ruled that the Labor Code permits
employers and employees to fix the applicable retirement age lower than 60 years of
age. The Court also held that there was no illegal dismissal involved, since it was the
CBA itself that incorporated the agreement between the employer and the bargaining
agent with respect to the terms and conditions of employment. Hence, when the private
respondent ratified the CBA, he concurrently agreed to conform to and abide by its
provisions. Thus, the Court stressed, "[p]roviding in a CBA for compulsory retirement of
employees after twenty-five (25) years of service is legal and enforceable so long as the
parties agree to be governed by such CBA."

128
ART. 287. Retirement. ¾ Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an
employee's retirement benefits under any collective bargaining and other agreements shall not be less than those
provided therein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being considered as one whole year. (Emphasis ours.)

129
Cainta Catholic School v. Cainta Catholic School Employees Union (CCSEU), G.R. No. 151021, May 4, 2006, 489
SCRA 468, 482; Pantranco North Express, Inc. v. NLRC, 328 Phil. 470, 482 (1996).

130
328 Phil. 470, 482 (1996).
 Similarly, in Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of the
Philippines (APAP),131 the retirement plan contained in the CBA between PAL and APAP
was declared valid. The Court explained that by their acceptance of the CBA, APAP and
its members are obliged to abide by the commitments and limitations they had agreed
to cede to management.

The foregoing pronouncements served as guiding principles in the recent Cainta

Catholic School v. Cainta Catholic School Employees Union (CCSEU), 132 wherein the
compulsory retirement of two teachers was upheld as valid and consistent with the CBA
provision allowing an employee to be retired by the school even before reaching the age
of 60, provided that he/she had rendered 20 years of service.

In Progressive Development Corporation v. NLRC, 133 although the retirement

plan was not embodied in a CBA, its provisions were made known to the employees’
union. The validity of the retirement plan was sustained on the basis of the finding of the
Director of the Bureau of Working Conditions of the Department of Labor and
Employment that it was expressly made known to the employees and accepted by
them.

72. GROSS NEGLIGENCE. Gross negligence connotes want of care in the

performance of one’s duties, while habitual neglect implies repeated failure to perform
one’s duties for a period of time, depending on the circumstances. 134 Gross negligence
has been defined as the want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. 135

73. The CA was correct in stating that when the violation of company policy or
breach of company rules and regulations is tolerated by management, it cannot serve

131
424 Phil. 356 (2002).

132
G.R. No. 151021, May 4, 2006.
133
398 Phil. 433 (2000).
134
AFI International Trading Corporation v. Lorenzo, G.R. No. 173256, October 9, 2007, 535 SCRA 347, 353-354,
citing Genuino Ice Co., Inc. v. Magpantay, G.R. No. 147740, June 27, 2006, 493 SCRA 195, 205-206.
135
Citibank v. Gatchalian, 310 Phil. 211, 217-218 (1995); National Bookstore v. CA, 428 Phil. 235, 245 (2002).
as a basis for termination.136 Such ruling, however, does not apply here. The principle
only applies when the breach or violation is one which neither amounts to nor involves
fraud or illegal activities. In such a case, one cannot evade liability or culpability based
on obedience to the corporate chain of command.

It does not speak well for a person to apparently blindly follow his superiors,
particularly when, with the exercise of ordinary diligence, one would be able to
determine that what he or she was being ordered to do was highly irregular, if not illegal,
and would, and did, work to the great disadvantage of his or her employer. 137

74. TECHNICAL RULES. Technical rules are not binding in labor cases and are
not to be applied strictly if the result would be detrimental to the working man. 138

75. SEPARATION PAY. Based on this Court’s ruling in Masagana Concrete

Products, et al. v. NLRC, et al.,139 the intervening period between the day an employee
was illegally dismissed and the day the decision finding him illegally dismissed becomes
final and executory shall be considered in the computation of his separation pay as a
period of “imputed” or “putative” service:

Separation pay, equivalent to one month's salary for every year of

service, is awarded as an alternative to reinstatement when the latter is no
longer an option. Separation pay is computed from the commencement of
employment up to the time of termination, including the imputed service
for which the employee is entitled to backwages, with the salary rate
prevailing at the end of the period of putative service being the basis for
computation.

136
Rollo (G.R. No. 180849), p. 7.
137
PNB vs. Padao, G.R. Nos. 180849 and 187143, November 16, 2011

138
Government Service Insurance System v. NLRC, G.R. No. 180045, November 17, 2010, 635 SCRA 258.
139
372 Phil 459 (1999).
 76. BACKWAGES. Backwages is a remedy affording the employee a way to
recover what he has lost by reason of the unlawful dismissal. 140 In awarding backwages,
the primordial consideration is the income that should have accrued to the employee
from the time that he was dismissed up to his reinstatement 141 and the length of service
prior to his dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,142 clarified in

no uncertain terms that if reinstatement is no longer possible, backwages should be
computed from the time the employee was terminated until the finality of the decision,
finding the dismissal unlawful.

Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
from the time their actual compensation was withheld on them up to the time of their
actual reinstatement.

77. SUBSTANTIAL CAPITAL; LABOR-ONLY CONTRACTING. We

have expostulated that once it is established that an entity such as in this case, HI has
substantial capital, it was no longer necessary to adduce further evidence to prove that
it does not fall within the purview of “labor-only” contracting. 143 There is even no need
for HI to refute the contention of petitioners that some of the activities they performed
such as those of messengerial services are directly related to the principal business of
E- PCIBank.144

78. COMPANY PRACTICE. To be considered a company practice, the giving of

the benefits should have been done over a long period of time, and must be shown to
have been consistent and deliberate. The test or rationale of this rule on long practice

140
De Guzman v. National Labor Relations Commission, 371 Phil 202 (1999).

141
Velasco v. NLRC, et al., 525 Phil 749, 761-762, (2006).

142
332 Phil 833 (1996).

143
Neri v. National Labor Relations Commission, G.R. Nos. 97008-09, 21 July 1993, 224 SCRA 717-721.
144
Sasan, Sr. vs. NLRC, G.R. 176240, October 17, 2008.
requires an indubitable showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law requiring payment
thereof.145

79. VOID JUDGMENT. Acts executed against the provisions of mandatory or

prohibitory laws shall be void, except when the law itself authorizes their validity. 146 The
Labor Arbiter's decision in this case is void ab initio, and therefore, non-existent.147 A
void judgment is in effect no judgment at all. No rights are divested by it nor obtained
from it. Being worthless in itself, all proceedings upon which the judgment is founded
are equally worthless. It neither binds nor bars anyone. All acts performed under it and
all claims flowing out of it are void. 148 In other words, a void judgment is regarded as a
nullity, and the situation is the same as it would be if there were no judgment. It
accordingly leaves the party-litigants in the same position they were in before the trial. 149

In fact, it is immaterial whether an appeal from the Labor Arbiter's decision was
perfected or not, since a judgment void ab initio is non-existent and cannot acquire
finality.150 The judgment is vulnerable to attack even when no appeal has been taken.
Hence, such judgment does not become final in the sense of depriving a party of his
right to question its validity.151

80. IMMUTABLE. As a general rule, final and executory judgments are

immutable and unalterable, except under these recognized exceptions, to wit: (a)

145
National Sugar Refineries Corporation v. NLRC, G.R. No. 101761, March 24, 1993, 220 SCRA 453, 463.
146
Article 5, The Civil Code; Buyco v. Philippine National Bank, 112 Phil. 588.
147
Barde v. Posiquit, G.R. No. L-29445, August 15, 1988, 164 SCRA 304.
148
Comia v. Nicolas, G.R. No. L-26079, September 30, 1969, 29 SCRA 492 citing Chavez v. Court of Appeals, 24 SCRA
663, 685 and Gomez v. Concepcion, 47 Phil 717, 712.

149
Metropolitan Waterworks & Sewerage System v. Sison, G.R. No. L-40309, August 31, 1983, 124 SCRA 394, 404
citing 31 Am. Jur., 91-92.

150
Lingkod Manggagawa sa Rubberworld, Adidas-Anglo vs. Rubberworld, G.R. No. 153882, 29 January 2007

151
David v. Aquilizan, G.R. No. L-49360, December 14, 1979, 94 SCRA 707, 714 citing Hatib Abbarn v. Longhan Chaw,
et al., G.R. No. L-24241, February 26, 1968, 22 SCRA 748, 754.
clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c)
void judgments.152

81. QUASHAL. As jurisprudentially settled, quashal of the writ of execution was

held to be proper in the following instances: (a) when it was improvidently issued, (b)
when it is defective in substance, (c) when it is issued against the wrong party, (d)
where the judgment was already satisfied, (e) when it was issued without authority, (f)
when a change in the situation of the parties renders execution inequitable, and (g)
when the controversy was never validly submitted to the court. 153

82. NOT NEGLECT OF DUTY. Unauthorized absence does not amount to

gross neglect of duty or abandonment. 154

83. NLRC DECISION REINSTATING AN EMPLOYEE NOT FINAL. Unlike then

the order for reinstatement of a Labor Arbiter which is self-executory, that of the NLRC
is not. There is still a need for the issuance of a writ of execution. 155

84. GENERAL GUIDELINES. Not all rules imposed by the hiring party on the
hired party indicate that the latter is an employee of the former. 156 Rules which serve as
general guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.157 Thus, the Supreme Court has explained:

It should, however, be obvious that not every form of control that

the hiring party reserves to himself over the conduct of the party hired in
relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal
or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor
is not to vanish altogether. Realistically, it would be a rare contract of
service that gives untrammelled freedom to the party hired and eschews
any intervention whatsoever in his performance of the engagement.

152
Briones-Vazquez v. Court of Appeals, 491 Phil. 81, 92 (2005).
153
Filipinas Palmoil vs. Dejapa, G.R. No. 167332, February 7, 2011.
154
Valladolid vs, Inciong, 121 SCRA 205.
155
Panuncillo vs. CAP, G.R. No. 161305, February 9, 2007.
156
Orozco vs. Court of Appeals, G.R. No. 155207, August 13, 2008.
157
Manila Electric Company v. Benamira, G.R. No. 145271, July 14, 2005, 463 SCRA 331, 352-353. (Citations
omitted.)
 Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it, and
those that control or fix the methodology and bind or restrict the party
hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which
address both the result and the means used to achieve it. x x x. 158

The main determinant therefore is whether the rules set by the employer are
meant to control not just the results of the work but also the means and method to be
used by the hired party in order to achieve such results. Thus, in this case, we are to
examine the factors enumerated by petitioner to see if these are merely guidelines or if
they indeed fulfill the requirements of the control test. 159

86. RES INTER ALIOS ACTA ALTERI NOCERE NON DEBET. The rights of a
party cannot be prejudiced by an act, declaration , or omission of another, except as
hereinafter provided.160

87. INHIBITION. Bare allegations of bias and prejudice are not enough in the
absence of clear and convincing evidence to overcome the presumption that a judge will
undertake his noble role to dispense justice according to law and evidence without fear
or favor.161

88. PROBATIONARY EMPLOYEE. A probationary employee, like a regular

employee, enjoys security of tenure. 162 However, in cases of probationary employment,
aside from just or authorized causes of termination, an additional ground is provided
under Article 281 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of the engagement.
Thus, the services of an employee who has been engaged on probationary basis may
158
Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, G.R. No. 84484, November 15, 1989, 179
SCRA 459, 464-465; Consulta v. Court of Appeals, G.R. No. 145443, March 18, 2005, 453 SCRA 732, 740-741; Manila
Electric Company v. Benamira, supra.
159
Supra, note 156.
160
Section 28, Rule 130, Rules of Court.
161
Kilosbayan Foundation v. Janolo, Jr., G.R. No. 180543, July 27, 2010, 625 SCRA 684, 697-698.

162
Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Sec. 6.
be terminated for any of the following: (1) a just or (2) an authorized cause; and (3)
when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.163

89. EQUITY. Equity jurisdiction aims to do complete justice in cases where a

court of law is unable to adapt its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal jurisdiction. 164 Equity is the principle by
which substantial justice may be attained in cases where the prescribed or customary
forms of ordinary law are inadequate. 165

90. ANTI-UNION. The test of whether an employer has interfered with and
coerced employees within the meaning of section (a) (1) is whether the employer has
engaged in conduct which it may reasonably be said tends to interfere with the free
exercise of employees' rights under section 3 of the Act, and it is not necessary that
there be direct evidence that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable inference that anti-union
conduct of the employer does have an adverse effect on self-organization and collective
bargaining.166

91. MOTION FOR RECONSIDERATION. The thrust of the rule on exhaustion of

administrative remedies is that courts must allow administrative agencies to carry out
their functions and discharge their responsibilities within the specialized areas of their
respective competence. To this end, administrative agencies are afforded a chance to
correct any previous error committed in its forum.167

163
Ibid.
164
Agcaoili v. Government Service Insurance System, G.R. No. L-30056, 30 August 1988, 165 SCRA 1; Air Manila, Inc.
v. Court of Industrial Relations, G.R. No. L-39742, 9 June 1978, 83 SCRA 579.
165
American Life Ins. Co. v. Stewart, 300 U.S. 203, 81 L. Ed. 605 (1936); Davis v. Wallace, 257 U.S. 478, 66 L. Ed. 325
(1921).
166
Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life Assurance Co., Ltd., 37 SCRA 244
(1971).
167
Gonzales v. Court of Appeals, 409 Phil. 684 (2001).
 92. GRANTING WHAT IS NOT ASKED FOR. It is settled that courts cannot
grant a relief not prayed for in the pleadings or in excess of what is being sought by the
party. They cannot also grant a relief without first ascertaining the evidence presented in
support thereof. Due process considerations require that judgments must conform to
and be supported by the pleadings and evidence presented in court. 168

93. PRESCRIPTION. When one is arbitrarily and unjustly deprived of his job or
means of livelihood, the action instituted to contest the legality of one's dismissal from
employment constitutes, in essence, an action predicated "upon an injury to the rights of
the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be
brought within four (4) years.169

94. SEPARATION PAY. Separation pay, equivalent to one month's salary for
every year of service, is awarded as an alternative to reinstatement when the latter is no
longer an option. Separation pay is computed from the commencement of employment
up to the time of termination, including the imputed service for which the employee is
entitled to backwages, with the salary rate prevailing at the end of the period of putative
service being the basis for computation.170

95. MORAL AND EXEMPLARY DAMAGES. Moral damages may be recovered

where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good
customs or public policy while exemplary damages are recoverable only if the dismissal
was done in a wanton, oppressive, or malevolent manner. 171

168
Diona vs. Balangue, G.R. No. 173559, January 7, 2013.
169
Callanta vs. Carnation, 229 Phil. 279, 289 (1986).
170
Masagana Concrete Products vs. NLRC, 372 Phil 459 (1999).
171
Norkis Trading Co., Inc. v. NLRC, 504 Phil 709, 719-720 (2005).
 96. NO WORK, NO PAY. The age-old rule governing the relation between labor
and capital or management and employee is that a "fair day's wage for a fair day's
labor." If there is no work performed by the employee there can be no wage or pay,
unless of course, the laborer was able, willing and ready to work but was illegally locked
out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or
litigate against his employer on the employer's time. 172

97. TOTALITY OF INFRACTIONS. The totality of infractions or the number of

violations committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee. The offenses
committed by him should not be taken singly and separately but in their totality. Fitness
for continued employment cannot be compartmentalized into tight little cubicles of
aspects of character, conduct, and ability separate and independent of each other. 173

172
Sugue vs. Triumph International, G.R. No. 164804, January 30, 2009.
173
National Service Corporation v. Leogardo, Jr., No. L-64296, 20 July 1984, 130 SCRA 502, 509.