ART.

95
1. SONGCO ET AL V NLRC
FACTS:
Zuelig filed an application for clearance to terminate the services of Songco, and
others, on the ground of retrenchment due to financial losses. During the hearing,
the parties agreed that the sole issue to be resolved was the basis of the separation
pay due. The salesmen received monthly salaries of at least P400.00 and
commission for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of which
Songco, et al. were members contained the following provision: "Any employee
who is separated from employment due to old age, sickness, death or permanent
lay-off, not due to the fault of said employee, shall receive from the company a
retirement gratuity in an amount equivalent to one (1) month's salary per year of
service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to
their one month salary (exclusive of commissions, allowances, etc.) for every year
of service with the company.
The National Labor Relations Commission sustained the Arbiter.
ISSUE:
Whether or not earned sales commissions and allowances should be included in the
monthly salary of Songco, et al. for the purpose of computing their separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not
only of the basic salary of the employee, but also of the transportation and
emergency living allowances.
Even if the commissions were in the form of incentives or encouragement, so that
the salesman would be inspired to put a little more industry on jobs particularly
assigned to them, still these commissions are direct remunerations for services
rendered which contributed to the increase of income of the employee. Commission
is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the principal. The
nature of the work of a salesman and the reason for such type of remuneration for
services rendered demonstrate that commissions are part of Songco, et al's wage or
salary.

The Court takes judicial notice of the fact that some salesmen do not receive any
basic salary, but depend on commissions and allowances or commissions alone,
although an employer-employee relationships exists.

If the opposite view is adopted, i.e., that commissions do not form part of the wage
or salary, then in effect, we will be saying that this kind of salesmen do not receive
any salary and, therefore, not entitled to separation pay in the event of discharge
from employment. This narrow interpretation is not in accord with the liberal spirit
of the labor laws, and considering the purpose of separation pay which is, to
alleviate the difficulties which confront a dismissed employee thrown to the streets
to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by
the employee (override commission plus net deposit incentive) are not properly
includible in such base figure since such commissions must be earned by actual
market transactions attributable to the petitioner [salesman]. Since the
commissions in the present case were earned by actual transactions attributable to
Song, et al., these should be included in their separation pay. In the computation
thereof, what should be taken into account is the average commission earned
during their last year of employment.

2. MILLRES ET AL V NLRC
3. SLL INTERNATIONAL ET AL V NLRC
4. OUR HAUS REALTY DEVELOPMENT CORP. V PARIAN

ART. 100
1. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION V.
AMERICAN WIRE AND CABLE CO.

FACTS:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of
wires and cables. There are two unions in this company, the American Wire andCable
Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated
Employees. An original action was filed before the NCMB of the Departmentof Labor
and Employment (DOLE) by the two unions for voluntary arbitration. Thepetitioner
submits that the withdrawal of the private respondent of the 35%premium pay for
selected days during the Holy Week and Christmas season, theholding of the Christmas

Party and its incidental benefits, and the giving of serviceawards, which they have long
enjoyed, violated Article 100 of the Labor Code.A decision was rendered by the
Voluntary Arbitrator in favor of the privaterespondent.On appeal, CA affirmed and
upheld the Arbitrators decision.

ISSUE:
Whether or not private respondent is guilty of violating Article 100 of the LaborCode, as
amended, when the benefits/entitlements given to the members of petitioner union were
withdrawn.

HELD:
The Court ruled that respondent is not guilty of violating Art. 100 of the Labor Code.
ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.
Nothing in this Book shall be construed to eliminate or in any way diminish supplements,
or other employee benefits being enjoyed at the time of promulgation of this Code.
The benefits and entitlements mentioned in the instant case are all considered bonuses
which were given by the private respondent out of its generosity and munificence. A
bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made possible the realization
of profits. The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is
not a demandable and enforceable obligation, except when it is made part of the wage,
salary or compensation of the employee.
For a bonus to be enforceable, it must have been promised by the employer and
expressly agreed upon by the parties or it must have had a fixed amount and had been
a long and regular practice on the part of the employer. The assailed benefits were
never subjects of any agreement between the union and the company. It was never
incorporated in the CBA. To be considered a regular practice, the giving of the bonus
should have been done over a long period of time, and must be shown to have been
consistent and deliberate. The downtrend in the grant of these two bonuses over the

years demonstrates that there is nothing consistent about it. To hold that an employer
should be forced to distribute bonuses which it granted out of kindness is to penalize
him for his past generosity.

2. TSPIC CORP V. TSPIC EMPLOYEES UNION (FFW)

3. LEPANTO CERAMICS V. LEPANTO CERAMICS EMPLOYEES ASSOCIATION
Facts:
Lepanto Ceramics, Inc. entered into a collective bargaining agreement (CBA) with Lepanto
Ceramics Employees Association which provides for, among others, the grant of a Christmas
gift package/bonus to the members of the respondent Association. The Christmas bonus was
one of the enumerated existing benefit, practice of traditional rights which shall remain in
full force and effect. This agreement shall become effective on September 1, 1999 and shall
remain in full force and effect without change for a period of four (4) years or up to August
31, 2004. In 2002, petitioner gave a year-end cash benefit of Six Hundred Pesos (P600.00)
and offered a cash advance to interested employees equivalent to one (1) month salary
payable in one year. The respondent Association objected to the P600.00 cash benefit and
argued that this was in violation of the CBA it executed with the petitioner. Upon failing to
settle amicably and conciliate, the complaint was filed to the Voluntary Arbitrator.
Petitioners contention:
The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had
no basis as the same was not a demandable and enforceable obligation. It argued that the
giving of extra compensation was based on the companys available resources for a given
year and the workers are not entitled to a bonus if the company does not make profits.
Respondents contention:
Respondent Association insisted that it has been the traditional practice of the company to
grant its members Christmas bonuses during the end of the calendar year, each in the
amount of P3,000.00 as an expression of gratitude to the employees for their participation in
the companys continued existence in the market. Hence, a violation of their CBA.
Issue:
W/N the employees is entitled to 3000 Christmas Bonus
Voluntary Arbitrator:
Declared that petitioner is bound to grant each of its workers a Christmas bonus of
P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA
between the parties and that the financial losses of the company is not a sufficient reason to
exempt it from granting the same. It stressed that the CBA is a binding contract and
constitutes the law between the parties.
CA:
As adverted to earlier, the Court of Appeals affirmed in toto the decision of the Voluntary
Arbitrator.

In the case at bar, it is indubitable that petitioner offered private respondent a Christmas
bonus/gift in 1998 or before the execution of the 1999 CBA which incorporated the said
benefit as a traditional right of the employees. Hence, the grant of said bonus to private
respondent can be deemed a practice as the same has not been given only in the 1999 CBA.
Apparently, this is the reason why petitioner specifically recognized the grant of a Christmas
bonus/gift as a practice or tradition as stated in the CBA.
SC:

Generally, a bonus is not a demandable and enforceable obligation. For a bonus to

be enforceable, it must have been promised by the employer and expressly agreed
upon by the parties. Given that the bonus in this case is integrated in the CBA, the
same partakes the nature of a demandable obligation. Verily, by virtue of its
incorporation in the CBA, the Christmas bonus due to respondent Association has
become more than just an act of generosity on the part of the petitioner but a
contractual obligation it has undertaken.
Doctrine:
It is a familiar and fundamental doctrine in labor law that the CBA is the law between
the parties and they are obliged to comply with its provisions.

4. EASTERN TELECOM PHILS V. EASTERN TELECOMS EMPLOYEES UNION

ART. 106
1. GSIS V. NLRC
2. ALIVIADO ET AL V. PROCTOR AND GAMBLE PHIL
3. MANDAUE V. ANDALES
FACTS:
Petitioner Mandaue Galleon Trade, Inc. (MGTI) and Gamallosons Traders, Inc. (GTI)
are business entities engaged in rattan furniture manufacturing for export.
Respondent Andales filed a complaint with LA against both petitioners for illegal
dismissal and non-payment of 13th moth pay and service incentive leave pay. His
other c0-workers numbering 260 filed a similar complaint against petitioner MGTI
only.
MGTI denied the existence of EER with complainants, claiming that they are workers
of independent contractors whose services were engaged temporarily and
seasonally when the demands for its products are high and could not be met by its
regular workforce; the independent contractors recruited and hired the complaints
prepared the payroll and paid their wages, supervised and directed their work, and
had authority to dismiss them.

LA rendered a Decision holding that 183 complaints are regular employees of MGTI
since they were made to perform functions which are necessary to contractors were
not properly identified.
NLRC affirmed the LAs decision. It held that labor-only contracting and not jobcontracting was present since the alleged contractors did not have substantial
capital in the form of equipment, machineries and work premises
The CA affirmed the findings of the NLRC.
ISSUE:
WON the CA committed grave abuse and irreversible error in considering the
respondents as employees of the petitioner.
HELD:
The Court sees no reason to disturb the findings of fact of the NLRC and the CA:
Based on ART 106 of the Labor Code and Sections 5 and 7 of the Implementing
Rules, labor-only contracting exists when the following criteria are present:
Where the contractor or subcontractor supplying workers to employer does not have
substantial capital or investment in form of tools, equipment, machineries, work
premises, among other things; and the workers recruited and places by the
contractor or subcontractor are performing activities which are directly related to
the principal business of such employer; or
Where the contractor does not exercise the right to control the performance of the
work of the contractual employee.
In the present case petitioners claim that their contractors are independent
contractors and therefore this case is one of permissible job contracting, is without
based.
First, respondents work as weavers, grinders, sanders and finishers is directly
related to MGTS principal business of rattan furniture manufacturing. Where the
employees are tasked to undertake activities usually desirable or necessary in the
usual business of the employer, the contractor is considered as a labor-only
contractor and such employees are considered as regular/employees of the
employer.
Second, MGTI was unable to present any proof that its contractors had substantial
capital. There was no evidence in tools, equipment of implement actually use in the
performance or completion of the job, work, or service that they were contacted to
render. The law casts the burden on the contractor to prove that it has substantial
capital, investment, tools, etc. Employees on the other hand need not prove that

the contractor does not have substantial capital, investment, and tools to engage in
job-contracting.
Thus, the contractors are labor-only contractors since they do not have
substantial capital or investment which relates to the service performed and
respondents performed activities which were directly related to MGTIs main
business.
MGTI, the principal employer is solitarily liable with the labor-only contractors, for
the rightful claims of the employees.
Under this set-up, labor-only contractors are deemed agents of the principal,
MGTI, and the law makes the principal responsible to the employees of the laboronly contractor as if the principal responsible to the employees of the labor-only
contractor as if the principal itself directly hired or employed the employees.
In prohibiting labor-only contracting and creating an employer-employee
relationship between the principal and the supposed contractors employees, the
law intends to prevent employers from circumventing labor laws intended to protect
employees.

4.
5.
6.
7.

SPIC N SPAM SERVICES V. PAJE

VIGILLA V. PCCI
BABAS V. LORENZO SHIPPING CORP.
FIRST INDUSTRIAL CORP. V. CALIMBAS

Facts:
Private respondent First Industrial Corporation (FPIC) is a domestic corporation
primarily engaged in the transportation of petroleum product by pipeline. Upon the other
hand, petitioners Raquel Calimbas and Luisa Mahilom were engaged by De Guzman
Manpower Services (DGMS) to perform secretarial and clerical jobs for FPIC. DGMS is
engaged in the business of supplying manpower. FPIC informed Calimbas and Mahilom
that their services to the company would no longer be needed as a result of the PaceSetting study conducted by an outside consultant.
Despite having executed the said quitclaims, the Calimbas and Mahilom still filed a
Complaint against FPIC for illegal dismissal and for the collection of monetary benefits,
damages and attorneys fees, alleging that they were regular employees of FPIC after
serving almost five years, and that they were dismissed without cause.
Upon the other hand, FPIC insisted that their true employer was DGMS considering that
the petitioners were hired by DGMS and assigned them to the company to render

services based on their contact; that the received their wages and other benefits from
DGMS; and that they executed quitclaims in favor of DGMS. Also, FPIC submitted that
the termination of the petitioners employment with their employer, DGMS, was valid
and lawful since they executed quitclaims with their employer.

Issues:
Whether or not Calimbas and Mahilom are employees of FPIC
Held:
Yes. The Supreme Court ruled that Calimbas and Mahilom are FPICs employees and
that DGMS is engaged in labor-only contracting.
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 workers in the same
manner and extent as if the latter were directly employed by him.
DGMS has not shown any serious reason to disregard the ruling in the aforementioned
case. Records likewise reveal that DGMS has no substantial equipment in the form of
tools and machinery. As a matter of fact, respondents were using office equipment and
materials owned by petitioner while they were rendering their services at its offices.
Second, petitioner exercised the power of control and supervision over the respondents.
It is axiomatic that the test to determine the existence of independent contractor ship is
whether one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subjected to the control of the
employer, except only to the results of the work. Obviously, petitioner cannot rightly
claim that DGMS was an independent job contractor in as much as respondent were
subjected to the control and supervision of petitioner while they were performing their
jobs. Thus, an employer-employee relationship exists between petitioner and
respondents and having served for almost five years at petitioners company,
respondents had already attained the status of regular employees.

8. ALILIN V. PETRON
9. FONERRA BRANDS PHIL. V. LAGARDO

Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing
and Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy
products. Pursuant to the contract, Zytron provided Fonterra with trade merchandising
representatives (TMRs ), including respondents Leonardo Largado (Largado) and Teotimo
Estrellado (Estrellado ). The engagement of their services began on September 15, 2003 and
May 27, 2002, respectively, and ended on June 6, 2006. After the termination of the
promotion contract, Fonterra then entered into an agreement for manpower supply with A.C.
Sicat Marketing and Promotional Services (A.C. Sicat). Desirous of continuing their work as
TMRs, respondents submitted their job applications with A.C. Sicat, which hired them for a
term of five (5) months, beginning June 7, 2006 up to November 6, 2006. When respondents
5-month contracts with A.C. Sicat were about to expire, they allegedly sought renewal
thereof, but were allegedly refused. This prompted respondents to file complaints for illegal
dismissal, regularization, non-payment of service incentive leave and 13th month pay, and
actual and moral damages, against petitioner, Zytron, and A.C. Sicat.
Issue:
W/N A.C. Sicat and Zytron were labor-only contractors, making Fonterra the employer of the
respondents and W/N the respondents were illegally dismissed.
Labor Arbiter:
Respondents were not illegally dismissed. As a matter of fact, they were the ones who
refused to renew their contract and that they voluntarily complied with the requirements for
them to claim their corresponding monetary benefits in relation thereto; and (2) they were
consecutively employed by Zytron and A.C. Sicat, not by Fonterra.
NLRC:
Affirmed LA
CA:
A.C. Sicat satisfies the requirements of legitimate job contracting, but Zytron does not on the
following grounds:
- Zytrons paid-in capital of _250,000 cannot be considered as substantial capital
- its Certificate of Registration was issued by the DOLE months after respondents
supposed employment ended
- its claim that it has the necessary tools and equipment for its business is
unsubstantiated
the CA held that respondents were illegally dismissed since Fonterra itself failed to prove
that their dismissal is lawful.
SC:

respondents voluntarily terminated their employment with Zytron by refusing to

renew their employment contracts with the latter, applying with A.C. Sicat, and
working as the latters employees, thereby abandoning their previous employment
with Zytron. Too, it is well to mention that for obvious reasons, resignation is
inconsistent with illegal

dismissal. This being the case, Zytron cannot be said to have illegally dismissed
respondents. A.C. Sicat is engaged in legitimate job contracting being proved by
providing pertinent evidence. Respondents, by accepting the conditions of the
contract with A.C. Sicat, were well aware of and even acceded to the condition that
their employment thereat will end on said pre-determined date of termination. They
cannot now argue that they were illegally dismissed by the latter when it refused to
renew their contracts after its expiration
Doctrine:
fixed-term employment contracts are not limited, as they are under the present
Labor Code, to those by nature seasonal or for specific projects with predetermined
dates of completion; they also include those to which the parties by free choice
have assigned a specific date of termination.
10.
11.

CASAP V. ADIDAS PHILS.

PETRON CORP V. CABERTE

ART. 110
1. DBP V. NLRC

ART. 113
1. SHS PERFORATED V. DIAZ
FACTS:
Petitioner SHS Perforated Materials, Inc.(SHS)is a start-up corporation organized and
existing under the laws of the Republic of thePhilippinesand registered with the
Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn(Hartmannshenn), a German national, is its president, in which
capacity he determines the administration and direction of the day-to-day business
affairs of SHS. Petitioner Hinrich Johann Schumacher(Schumacher),also a German
national, is the treasurer and one of the board directors. As such, he is authorized to
pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity.
Schumacher is also the Executive Vice-President of the European Chamber of
Commerce of thePhilippines(ECCP)which is a separate entity fromSHS.Both entities
have an arrangement where ECCP handles the payroll requirements of SHS to
simplify business operations and minimize operational expenses. Thus, the wages of
SHS employees are paid out by ECCP, through its Accounting Services Department
headed by Juliet Taguiang(Taguiang).

Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business
Development on probationary status from July 18, 2005toJanuary 18, 2006, with a
monthly salary ofP100,000.00. Respondents duties, responsibilities, and work hours
were described in the Contract of Probationary Employment.
Respondent was also instructed by Hartmannshenn to report to the SHS office and
plant at least two (2) days every work week to observe technical processes involved
in the manufacturing of perforated materials, and to learn about the products of the
company, which respondent was hired to market and sell.
During respondents employment, Hartmannshenn was often abroad and, because of
business exigencies, his instructions to respondent were either sent by electronic
mail or relayed through telephone or mobile phone. When he would be in
thePhilippines, he and the respondent held meetings. As to respondents work, there
was no close supervision by him.
During meetings with the respondent, Hartmannshenn expressed his dissatisfaction
over respondents poor performance.Respondent allegedly failed to make any
concrete business proposal or implement any specific measure to improve the
productivity of the SHS office and plant or deliver sales except for a
meagreP2,500.00 for a sample product. In numerous electronic mail messages,
respondent acknowledged his poor performance and offered to resign from the
company.
Respondent, however, denied sending such messages but admitted that he had
reported to the SHS office and plant only eight (8) times from July 18, 2005 to
November 30, 2005.
OnNovember 16, 2005, in preparation for his trip to thePhilippines, Hartmannshenn
tried to call respondent on his mobile phone, but the latter failed to answer.
OnNovember 18, 2005, Hartmannshenn arrived in thePhilippinesfromGermany, and
on November 22 and 24, 2005, notified respondent of his arrival through electronic
mail messages and advised him to get in touch with him.Respondent claimed that
he never received the messages.
OnNovember 29, 2005, Hartmannshenn instructed Taguiang not to release
respondents salary. Later that afternoon, respondent called and inquired about his
salary. Taguiang informed him that it was being withheld and that he had to
immediately communicate with Hartmannshenn. Again, respondent denied having
received such directive.
The next day, onNovember 30, 2005, respondent served on SHS a demand letter
and a resignation letter.

To settle the issue amicably, petitioners counsel advised respondents counsel by

telephone that a check had been prepared in the amount ofP50,000.00, and was
ready for pick-up onDecember 5, 2005. On the same date, a copy of the formal
reply letter relating to the prepared payment was sent to the respondents counsel
by facsimile transmission. Despite being informed of this, respondent never picked
up the check.
Respondent countered that his counsel received petitioners formal reply letter only
onDecember 20, 2005, stating that his salary would be released subsequent to the
turn-over of all materials owned by the company in his possession. Respondent
claimed that the only thing in his possession was a sample panels folder which he
had already returned and which was duly received by Taguiang onNovember 30,
2005.
OnDecember 9, 2005,respondent filed a Complaint against the petitioners for illegal
dismissal; non-payment of salaries/wages and 13thmonth pay with prayer for
reinstatement and full backwages; exemplary damages, and attorneys fees, costs of
suit, and legal interest.
OnJune 15, 2006, the LA rendered his decision declaring complainant as having
been illegally dismissed and further ordering his immediate reinstatement without
loss of seniority rights and benefits. It is also ordered that complainant be deemed
as a regular employee.
On appeal, the NLRCreversedthe decision of the LA in itsDecember 29,
2006Resolution.
OnJanuary 25, 2007, respondent filed a motion for reconsideration but the NLRC
subsequently denied it for lack of merit in itsMay 23, 2007Resolution.
The CAreversedthe NLRC resolutions in itsDecember 23, 2008Decision.
Aggrieved, the petitioners come to this Court praying for the reversal and setting
aside of the subject CA decision.
ISSUES:
Whether or not respondent was constructively dismissed by petitioners, which
determination is, in turn, hinged on finding out:
[1] Whether or not the temporary withholding of respondents salary/wages by
petitioners was a valid exercise of management prerogative; and
[2] Whether or not respondent voluntarily resigned.

HELD:
As a rule, the factual findings of the courts below are conclusive in a petition for
review oncertiorariwhere only errors of law should be reviewed. The case, however,
is an exception because the factual findings of the CA and the LA are contradictory
to that of the NLRC. Thus, a review of the records is necessary to resolve the factual
issues involved and render substantial justice to the parties.
Petitioners contend that withholding respondents salary from November 16 to
November 30, 2005, was justified because respondent was absent and did not show
up for work during that period. He also failed to account for his whereabouts and
work accomplishments during said period. When there is an issue as to whether an
employee has, in fact, worked and is entitled to his salary, it is within management
prerogative to temporarily withhold an employees salary/wages pending
determination of whether or not such employee did indeed work.
We disagree with petitioners.
LABOR LAW
Management prerogative refers to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of work.Although
management prerogative refers to the right to regulate all aspects of employment,
it cannot be understood to include the right to temporarily withhold salary/wages
without the consent of the employee. To sanction such an interpretation would be
contrary to Article 116 of the Labor Code, which provides:
ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker or
induce him to give up any part of his wages by force, stealth, intimidation, threat or
by any other means whatsoever without the workers consent.
Any withholding of an employees wages by an employer may only be allowed in the
form of wage deductions under the circumstances provided in Article 113 of the
Labor Code, as set forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a)In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;

(b)For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c)In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
As correctly pointed out by the LA, absent a showing that the withholding of
complainants wages falls under the exceptions provided in Article 113, the
withholding thereof is thus unlawful.
The Court finds petitioners evidence insufficient to prove that respondent did not
work from November 16 toNovember 30, 2005. As can be gleaned from respondents
Contract of Probationary Employment and the exchanges of electronic mail
messagesbetween Hartmannshenn and respondent, the latters duties as manager
for business development entailed cultivating business ties, connections, and clients
in order to make sales. Such duties called for meetings with prospective clients
outside the office rather than reporting for work on a regular schedule. In other
words, the nature of respondents job did not allow close supervision and monitoring
by petitioners. Neither was there any prescribed daily monitoring procedure
established by petitioners to ensure that respondent was doing his job. Therefore,
granting that respondent failed to answer Hartmannshenns mobile calls and to reply
to two electronic mail messages and given the fact that he admittedly failed to
report to work at the SHS plant twice each week during the subject period, such
cannot be taken to signify that he did not work from November 16 to November 30,
2005.
Furthermore, the electronic mail reports sent to Hartmannshenn and the receipt
presented by respondent as evidence of his having worked during the subject
period were not controverted by petitioners. The eight notarized letters of
prospective clients vouching for meetings they had with respondent during the
subject period may also be given credence. Although respondent only presented
such letters in support of his Motion for Reconsideration filed with the NLRC, they
may be considered by this Court in light of Section 10, Rule VII, of the 2005 New
Rules of Procedure of the NLRC, which provides in part that the rules of procedure
and evidence prevailing in courts of law and equity shall not be controlling and the
Commission shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of law or procedure,
all in the interest of due process. While administrative tribunals exercising quasijudicial functions are free from the rigidity of certain procedural requirements, they
are bound by law and practice to observe the fundamental and essential
requirements of due process in justiciable cases presented before them. In this
case, due process was afforded petitioners as respondent filed with the NLRC a
Motion to Set Case for Reception of Additional Evidence as regards the said letters,

which petitioners had the opportunity to, and did, oppose.

Although it cannot be determined with certainty whether respondent worked for the
entire period from November 16 to November 30, 2005, the consistent rule is that if
doubt exists between the evidence presented by the employer and that by the
employee, the scales of justice must be tilted in favor of the latter in line with the
policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor
and construe doubts in favor of labor.For petitioners failure to satisfy their burden of
proof, respondent is presumed to have worked during the period in question and is,
accordingly, entitled to his salary. Therefore, the withholding of respondents salary
by petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful.
LABOR LAW
The Court, however, agrees with the LA and the CA that respondent was forced to
resign and was, thus, constructively dismissed.InDuldulao v. Court of Appeals,it was
written:
There is constructive dismissal if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his continued employment.It
exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.
What made it impossible, unreasonable or unlikely for respondent to continue
working for SHS was the unlawful withholding of his salary. For said reason, he was
forced to resign. It is of no moment that he served his resignation letter
onNovember 30, 2005, the last day of the payroll period and a non-working holiday,
since his salary was already due him onNovember 29, 2005, being the last working
day of said period.In fact, he was then informed that the wages of all the other SHS
employees were already released, and only his was being withheld.What is
significant is that the respondent prepared and served his resignation letter right
after he was informed that his salary was being withheld.It would be absurd to
require respondent to tolerate the unlawful withholding of his salary for a longer
period before his employment can be considered as so impossible, unreasonable or
unlikely as to constitute constructive dismissal.Even granting that the withholding of
respondents salary onNovember 30, 2005, would not constitute an unlawful act, the
continued refusal to release his salary after the payroll period was clearly
unlawful.The petitioners claim that they prepared the check ready for pick-up
cannot undo the unlawful withholding.
It is worthy to note that in his resignation letter, respondent cited petitioners illegal
and unfair labor practiceas his cause for resignation. As correctly noted by the CA,

respondent lost no time in submitting his resignation letter and eventually filing a
complaint for illegal dismissal just a few days after his salary was withheld.These
circumstances are inconsistent with voluntary resignation and bolster the finding of
constructive dismissal.
In this case, the withholding of respondents salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty
that respondent did not work from November 16 toNovember 30, 2005.Hence, the
Court agrees with the LA and the CA that the unlawful withholding of respondents
salary amounts to constructive dismissal.
Respondent was constructively dismissed and, therefore, illegally
dismissed.Although respondent was a probationary employee, he was still entitled
to security of tenure.Section 3 (2) Article 13 of the Constitution guarantees the right
of all workers to security of tenure.In using the expression all workers, the
Constitution puts no distinction between a probationary and a permanent or regular
employee. This means that probationary employees cannot be dismissed except for
cause or for failure to qualify as regular employees.
This Court has held that probationary employees who are unjustly dismissed during
the probationary period are entitled to reinstatement and payment of full
backwages and other benefits and privileges from the time they were dismissed up
to their actual reinstatement. Respondent is, thus, entitled to reinstatement without
loss of seniority rights and other privileges as well as to full backwages, inclusive of
allowances, andother benefits or their monetary equivalent computed from the time
his compensation was withheld up to the time of actual reinstatement.Respondent,
however, is not entitled to the additional amount for 13thmonth pay, as it is clearly
provided in respondents Probationary Contract of Employment that such is deemed
included in his salary. Thus:
Employee will be paid a net salary of One Hundred Thousand (Php100,000.00) Pesos
per month payable every 15th day and end of the month.
The compensation package defined in this paragraph shall represent all that is due
and demandable under this Contract and includes all benefits required by law such
as the 13thmonth pay.No other benefits, bonus or allowance shall be due the
employee.
Respondents reinstatement, however, is no longer feasible as antagonism has
caused a severe strain in their working relationship. Under the doctrine of strained
relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable.Payment
liberates the employee from what could be a highly oppressive work environment,
and at the same time releases the employer from the obligation of keeping in its

employ a worker it no longer trusts.Therefore, a more equitable disposition would be

an award of separation pay equivalent to at least one month pay, in addition to his
full backwages, allowances and other benefits.
With respect to the personal liability of Hartmannshenn and Schumacher, this Court
has held that corporate directors and officers are only solidarily liable with the
corporation for termination of employment of corporate employees if effected with
malice or in bad faith.Bad faith does not connote bad judgment or negligence; it
imports dishonest purpose or some moral obliquity and conscious doing of wrong; it
means breach of unknown duty through some motive or interest or ill will; it
partakes of the nature of fraud. To sustain such a finding, there should be evidence
on record that an officer or director acted maliciously or in bad faith in terminating
the employee.
Petitioners withheld respondents salary in the sincere belief that respondent did not
work for the period in question and was, therefore, not entitled to it.There was no
dishonest purpose or ill will involved as they believed there was a justifiable reason
to withhold his salary.Thus, although they unlawfully withheld respondents salary, it
cannot be concluded that such was made in bad faith.Accordingly, corporate
officers, Hartmannshenn and Schumacher, cannot be held personally liable for the
corporate obligations of SHS.
ART. 124
1. P.I. MANUFACTURING INC. V. P.I. MANUFACTURING SUPERVISORS AND
FORMAN ASSOCIATION
2. BANKARD EMPLOYEES UNION WORKERS ALLIANCE TRADE UNIONS V.
NLRC
13TH MONTH PAY
1. CENTRAL AZUCARERA DE TARLAC V. CENTRAL AZUCARERA DE
TARLAC LABOR UNION