Tuesday, April 8, 2025

Easycall Communications Phils., Inc. vs. Edward King, G.R. No. 145901, December 15, 2005

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Easycall Communications Phils., Inc. vs. Edward King

G.R. No. 145901, December 15, 2005

THIRD DIVISION, CORONA J. 

 

Corporate Office; Distinction between corporate officer and employee, and the proper jurisdiction

 

Corporate officers in the context of Revised Corporation Code are those officers of a corporation who are given that character either by the Corporation Code or by the corporation’s by-laws.

 

Edward King was initially hired by Easycall Communications as Assistant to the General Manager and later promoted to Vice President for Nationwide Expansion. His appointment and compensation were determined by the General Manager, not the Board of Directors. Due to alleged poor sales performance and excessive time spent in the field, the company asked for his resignation. When King refused, he was issued a notice of termination, citing loss of confidence. King filed a complaint for illegal dismissal before the NLRC. The Labor Arbiter ruled that his termination was valid due to loss of trust and confidence, which the NLRC affirmed. However, the NLRC also dismissed the case on jurisdictional grounds, holding that King was a corporate officer, and thus, his dismissal was an intra-corporate controversy within the jurisdiction of the SEC (under PD 902-A). 

King elevated the case to the Court of Appeals, which reversed the NLRC’s findings. The CA ruled that King was not a corporate officer as defined by the Corporation Code and that the NLRC had jurisdiction over his complaint. The appellate court further held that King was illegally dismissed, as there was no sufficient factual basis for loss of confidence and the requirements of due process were not complied with. The case was then brought before the Supreme Court via a petition for review on certiorari. 

 

Whether or not Edward King was a corporate officer or an employee for jurisdictional purposes. 

NO.  The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court ruled that Edward King was not a corporate officer within the purview of the Corporation Code or the company’s by-laws. Citing Section 25 of the Corporation Code, the Court emphasized that corporate officers are those who are either expressly mentioned in the Code—namely, the president, secretary, and treasurer—or those created by the corporation’s by-laws. Since Easycall failed to prove that the position of Vice President for Nationwide Expansion was created by its by-laws, and because King was appointed by the General Manager rather than elected by the Board of Directors, he could not be considered a corporate officer. As such, his removal did not fall under the jurisdiction of the SEC (as provided under PD 902-A) but under the NLRC, pursuant to the Labor Code.

 

Whether or not Edward King is illegally dismissed. 

YES. On the matter of the dismissal, the Court found that the alleged loss of trust and confidence was not supported by clearly established facts. The grounds cited by Easycall—King’s sales performance and time spent in the field—were found insufficient to justify dismissal. In fact, the company had previously praised his performance for the same period it later criticized, even promoting him twice during that time. This inconsistency weakened the credibility of Easycall’s claim of loss of confidence. Moreover, the company failed to observe due process, as King was given only one notice—of his termination—and was not given the opportunity to respond to specific charges in a formal setting. The mere existence of internal dialogues did not satisfy the requirement for notice and hearing.

Since petitioner failed to satisfy the burden of proof that was required of it, we cannot sanction its claim that respondent was a ‘corporate officer’ whose removal was cognizable by the SEC under PD 902-A and not by the NLRC under the Labor Code.




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Monday, April 7, 2025

Villanueva v. Domingo, G.R. No. 144274, September 20, 2004

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Villanueva v. Domingo

G.R. No. 144274, September 20, 2004

THIRD DIVISION, CORONA J. 

 

Registered owner rule; Liability of Registered Owner of Motor Vehicles 

We have consistently ruled that the registered owner of any vehicle is directly and primarily responsible to the public and third persons while it is being operated.

 

Priscilla R. Domingo was the registered owner of a silver Mitsubishi Lancer (Plate No. NDW 781), which was involved in a vehicular collision along South Superhighway while being driven by her son Leandro Luis R. Domingo. The other vehicle involved was a green Mitsubishi Lancer (Plate No. PHK 201), driven by Renato Ocfemia, who was drunk and unlicensed at the time. This vehicle was registered in the name of petitioner Nostradamus Villanueva, who claimed he had already swapped it with another vehicle and that the actual owner at the time was Albert Jaucian of Auto Palace Car Exchange. Villanueva contended that he was no longer liable since he no longer had possession or control of the vehicle, and Ocfemia was not his employee. The trial court and the Court of Appeals both found Villanueva liable, prompting the petition before the Supreme Court.

 


Whether the registered owner of a motor vehicle can be held liable for damages resulting from an accident even if the vehicle was already transferred to another person and operated without the registered owner's knowledge or consent.


Yes. The Supreme Court affirmed the ruling of the Court of Appeals and held that the registered owner is directly and primarily liable for damages caused by the operation of the vehicle, regardless of actual ownership or driver authorization. The Supreme Court have consistently ruled that the registered owner of any vehicle is directly and primarily responsible to the public and third persons while it is being operated.
 

To allow a registered owner to escape liability by claiming that the driver was not authorized by the new (actual) owner results in the public detriment the law seeks to avoid. The main purpose of vehicle registration is the easy identification of the owner who can be held responsible for any accident, damage or injury caused by the vehicle... The protection that the law aims to extend... would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership.

 


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Friday, March 14, 2025

Security Bank Savings Corporation v. Singson G.R. No. 214230, February 10, 2016

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Security Bank Savings Corporation v. Singson

G.R. No. 214230, February 10, 2016

FIRST DIVISION, PERLAS-BERNABE, J.

 

Separation pay a form of Financial Assistance 

A separation pay may be awarded as a form of financial assistance based given in light of social justice be allowed only when the dismissal: (a) was not for serious misconduct; and (b) does not reflect on the moral character of the employee or would involve moral turpitude.

 

Charles M. Singson was employed by Security Bank Savings Corporation (formerly Premiere Development Bank) for over 23 years, rising to the position of Customer Service Operations Head (CSOH) at the Quezon Avenue Branch. He was responsible for the safekeeping of checkbooks and other bank forms. In 2008, he was charged with violating the bank’s Code of Conduct after mishandling 41 pre-encoded checkbooks, allowing his Branch Manager to take them out of the bank without authorization. Despite his claims that this was a marketing strategy, the bank found him grossly negligent and dismissed him for habitual neglect of duty. 

Singson challenged his dismissal, and while the Labor Arbiter (LA) upheld the validity of his termination, it still awarded him separation pay as financial assistance. The NLRC and Court of Appeals (CA) affirmed, ruling that his dismissal was not due to serious misconduct or moral turpitude, and thus, he was entitled to separation pay under social justice principles. The bank contested this, arguing that gross negligence is a serious offense that disqualifies an employee from separation pay. 

 

Whether an employee dismissed for gross neglect of duty is entitled to separation pay as financial assistance under social justice principles. 

No. The Supreme Court ruled in favor of the bank, holding that Singson was not entitled to separation pay because his dismissal was due to gross and habitual neglect of duty, a just cause under Article 297 (formerly Article 282) of the Labor Code. The Court emphasized:

  1. Separation pay is generally not awarded when dismissal is due to the employee’s fault – Employees dismissed for serious misconduct, willful disobedience, gross neglect, fraud, or crimes against the employer are not entitled to separation pay, as this would reward wrongful conduct.
  2. Exception under social justice principles – Separation pay may be granted only if the dismissal was for reasons other than serious misconduct or moral turpitude. However, habitual neglect of duty is a serious offense that reflects poor moral character and a disregard for responsibilities, thus disqualifying Singson from receiving financial assistance.
  3. Banks require extraordinary diligence – Given the fiduciary nature of banking, employees like Singson—who are entrusted with sensitive financial documents—must exercise the highest degree of care. His failure to safeguard checkbooks and repeated violations posed a risk to the bank’s credibility, justifying his dismissal without separation pay.

 

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San Miguel Corp. v. Teodosio G.R. No. 163033 | October 2, 2009

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San Miguel Corp. v. Teodosio

G.R. No. 163033 | October 2, 2009

THIRD DIVISION, PERALTA, J.

 

When Reinstatement is No Longer Possible 

Although the instant case calls for the reinstatement of the respondent to his former position as forklift operator or any equivalent position, the fact that his former position was already given to another regular employee; the length of time that this case has been pending; and the likely possibility that the protracted litigation may have seriously marred the relationship of the parties beyond reconciliation, may well have rendered reinstatement impossible. Accordingly, petitioner shall be awarded separation pay in lieu of reinstatement, if the latter is no longer possible. 

Eduardo L. Teodosio was hired by San Miguel Corporation (SMC) in 1991 as a forklift operator under multiple short-term contracts until he signed an Employment with a Fixed Period contract in 1993. Despite working continuously for four years, he was transferred to the bottling section in 1995 and later terminated, with his position as forklift operator given to another regular employee. He challenged his dismissal, arguing he had attained regular status and that his termination was illegal. The Labor Arbiter and NLRC ruled in favor of SMC, but the Court of Appeals (CA) reversed the decision, ordering Teodosio’s reinstatement with full backwages and benefits.

 

Whether an illegally dismissed employee should be reinstated if his former position has been permanently filled and no substantially equivalent position is available. 

No. The Supreme Court ruled that reinstatement was no longer possible and awarded separation pay instead, holding that, Teodosio was a regular employee – his repeated short-term contracts were a ploy to circumvent security of tenure, and he was engaged in an essential and continuous role in SMC’s business. But, reinstatement was not feasible. His former position had already been taken over by another regular employee, and no substantially equivalent position was available. Thus, separation pay was the proper remedy. In cases where reinstatement is impossible, separation pay must be awarded in addition to full backwages.

 


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Planters’ Products, Inc. vs. NLRC G.R. No. 78524, January 20, 1989.

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Planters’ Products, Inc. vs. NLRC  

G.R. No. 78524, January 20, 1989.

THIRD DIVISION, GUTIERREZ, JR., J.

 

Inclusion of Regular Allowances in Separation Pay Computation 

The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an employee has been receiving.

 

Planters Products, Inc. (PPI) implemented a Retirement and Pension Plan (RPP) in 1984, which was approved by the Bureau of Internal Revenue. In 1985, PPI retrenched several employees due to operational downsizing, providing them with separation benefits calculated based on their basic salary, excluding regular allowances. The retrenched employees contested this computation, arguing that their separation pay should include regular allowances, and filed a complaint before the Labor Arbiter. The Labor Arbiter ruled in favor of the employees, a decision later affirmed by the National Labor Relations Commission (NLRC). PPI challenged this ruling, asserting that the computation was correct and that the NLRC lacked jurisdiction over the case.

 

Whether the computation of separation pay should include regular allowances in addition to the basic salary. 

Yes. The Supreme Court upheld the Labor Arbiter and NLRC’s decision, ruling that separation pay must be computed based on both basic salary and regular allowances. It held that the salary base for computing separation pay should not be limited to basic salary alone but must include all regular allowances an employee has been receiving. The Court also affirmed that the Labor Arbiter and NLRC had proper jurisdiction over the case, as it arose from an employer-employee relationship. Consequently, PPI was ordered to recompute the retrenched employees' separation pay to include regular allowances.




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Gaco vs. The Hon. NLRC G. R. No. 104690, Feb. 23, 1994

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Gaco vs. The Hon. NLRC

G. R. No. 104690, Feb. 23, 1994

SECOND, NOCON, J.

 

Separation pay awarded due to impossibility of reinstatenent 

Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle complainant to reinstatement and payment of backwages. However, where reinstatement is no longer viable due to strained relations, separation pay shall be granted in lieu of reinstatement, computed at one (1) month salary for every year of service.

 

Petitioner Zenaida Gaco was hired by Orient Leaf Tobacco Corporation in 1974 as a Picker and was later promoted to Production Recorder in 1975. She held this position for 14 years until the end of the 1989 working season. When she reported back to work in April 1990, she discovered that her position had been given to another employee, and she was demoted to a Picker without due process. 

Believing that her demotion was constructive dismissal, she refused the position and filed a complaint seeking separation pay. The Labor Arbiter ruled in her favor, declaring her demotion unjustified and awarding backwages and separation pay. However, on appeal, the NLRC modified the ruling, removing backwages and reducing separation pay to one-half month’s pay per year of service instead of the one-month rate awarded by the Labor Arbiter. 

Gaco challenged the NLRC ruling before the Supreme Court.

 

Whether separation pay is warranted when reinstatement is impossible due to constructive dismissal, and how it should be computed. 

Yes. The Supreme Court ruled in favor of Gaco, ordering full separation pay and backwages, affirming that when reinstatement is no longer possible, separation pay must be computed at the standard rate of one month per year of service. 

The Supreme Court reinstated the Labor Arbiter’s decision, ruling that:

  1. Gaco was constructively dismissed – The demotion was unjustified and amounted to a forced resignation, making reinstatement no longer a viable option.
  2. Separation pay was properly awarded – Since reinstatement was impossible due to strained relations, separation pay must be granted instead of reinstatement.
  3. Computation of separation pay – The NLRC’s reduction of separation pay to one-half month’s pay per year of service was incorrect. The Court reinstated the Labor Arbiter’s ruling, granting one (1) month’s pay per year of service, which is the standard computation in cases of illegal dismissal.
  4. Backwages entitlement – The Court held that Gaco was entitled to backwages from April 1990 until the finality of the decision, since she was illegally terminated through unjust demotion.

 


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Bani Rural Bank Inc. v. De Guzman G.R. No.170904, November 13, 2013

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Bani Rural Bank Inc. v. De Guzman

G.R. No.170904, November 13, 2013

SECOND, NOCON, J.

 

Separation pay awarded due to impossibility of reinstatement

 By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieu of reinstatement." Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no longer possible, in cases where the dismissed employee’s position is no longer available; (b) the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and (c) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.

 

Respondents Teresa De Guzman and Edgar C. Tan were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II. They were dismissed from their employment and subsequently filed a complaint for illegal dismissal. Initially, the Labor Arbiter dismissed their complaint, but the National Labor Relations Commission (NLRC) reversed the ruling, finding that they were illegally dismissed. 

In its March 17, 1995 decision, the NLRC ordered their reinstatement with backwages. However, during the execution phase, neither party took active steps to implement the reinstatement order. The NLRC Sheriff reported that respondents, through a representative, indicated that they were only interested in the monetary award and not reinstatement. In a July 31, 1998 decision, the NLRC modified its ruling, awarding separation pay in lieu of reinstatement, citing strained relations between the parties. This decision became final and executory on January 29, 1999. 

Despite this, the petitioners challenged the computation of backwages, arguing that it should only be computed until August 25, 1995, when the respondents allegedly waived reinstatement. The NLRC ruled otherwise, holding that backwages should be computed until January 29, 1999, the finality of the decision awarding separation pay. The Court of Appeals affirmed the NLRC’s ruling, prompting petitioners to elevate the case to the Supreme Court.

 

 

Whether separation pay is warranted when reinstatement is impossible due to strained relations, and how it should be computed. 

Yes. The Supreme Court upheld the CA and NLRC’s ruling, affirming that respondents were entitled to separation pay, as their termination was involuntary and not due to their fault. The Court emphasized:

  1. Reinstatement was no longer feasible due to strained relations – The prolonged delay in execution and the lack of efforts from both parties to enforce reinstatement indicated that resuming employment would be impractical and detrimental to both sides.
  2. Separation pay was properly awarded – Since reinstatement was no longer viable, separation pay must be granted instead. The Court ruled that the computation should follow the standard rate of one (1) month’s salary per year of service, as awarded by the NLRC in its final decision.
  3. Backwages must be computed until the finality of the decision awarding separation pay – The petitioners’ claim that backwages should stop at August 25, 1995, when respondents allegedly waived reinstatement, was rejected. The Court held that since reinstatement was replaced with separation pay, backwages continued to accrue until January 29, 1999, when the decision granting separation pay became final.
  4. Legal interest applies – The total monetary award, including backwages and separation pay, shall accrue a 6% legal interest per annum from January 29, 1999, until fully satisfied.

 

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Thursday, January 30, 2025

Philippine Contractors Accreditation Board v. Manila Water Company, Inc. G.R. No. 217590 | March 10, 2020

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Philippine Contractors Accreditation Board v. Manila Water Company, Inc.

G.R. No. 217590 | March 10, 2020

EN BANC, GESMUNDO, J.

 

Unconstitutionality of PCAB’s Implementing Rules; Limits of Administrative Rule-Making

 

The clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. 

 

Manila Water Company, Inc. sought accreditation for its foreign contractors to undertake construction projects for its waterworks and sewerage systems. The Philippine Contractors Accreditation Board (PCAB) denied the request, citing Section 3.1, Rule 3 of the Revised Rules and Regulations Governing Licensing and Accreditation of Constructors, which reserved Regular Licenses for Filipino-owned firms (at least 60% Filipino equity participation) while allowing foreign firms only a Special License for a single specific project. 

Manila Water filed a Petition for Declaratory Relief, arguing that the rule was unconstitutional as it imposed foreign ownership restrictions without Congressional authority. The Regional Trial Court (RTC) ruled in favor of Manila Water, declaring Section 3.1, Rule 3 void for exceeding PCAB’s delegated powers under Republic Act No. 4566 (Contractors’ License Law). 

PCAB appealed, asserting that it had the authority to regulate the construction industry and that the rule was consistent with the 1987 Constitution’s policy on professions and national economic protectionism. The case reached the Supreme Court.

 

 

Whether Section 3.1, Rule 3 of PCAB’s Implementing Rules, which imposes nationality restrictions on contractor licensing, is unconstitutional. 

YES. The Supreme Court struck down the nationality-based licensing requirement as unconstitutional, ruling that: 

1.    PCAB exceeded its delegated powers – The Contractors’ License Law (R.A. No. 4566) does not impose nationality restrictions on contractor licensing, and PCAB had no authority to create such a limitation. Administrative rules cannot go beyond the law they seek to implement. 

2.    Contracting is not a profession – PCAB wrongly classified construction as a profession subject to nationality restrictions under Section 14, Article XII of the 1987 Constitution. The Court clarified that construction is an industry, not a profession, and thus, should not be subject to restrictions on professional practice. 

3.    The restriction violates economic competition principles – The nationality-based rule unfairly restricted market entry, discouraging foreign investment in the construction industry, and contradicting economic policies promoting open competition. 

4.    The rule lacked basis in the Constitution or law – The Court emphasized that only Congress can impose nationality restrictions on economic activities under Section 10, Article XII of the Constitution, and there was no law reserving the construction industry exclusively for Filipinos.

 

Since Republic Act No. 4566 does not impose nationality-based restrictions, PCAB had no authority to create them through its rules. The Court affirmed the RTC ruling and declared void the nationality-based restrictions under Section 3.1, Rule 3 of PCAB’s Implementing Rules.

 

 

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Gaspar v. M.I.Y. Real Estate Corp. [G.R. No. 239385 | April 17, 2024]

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Gaspar v. M.I.Y. Real Estate Corp.

G.R. No. 239385 | April 17, 2024

FIRST DIVISION, HERNANDO, J.

 

Illegal Dismissal; Control Test; Employer-employee relationship; Kasambahay

 

The power to control is the most significant among the four factors. Under this test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. 

 

Petitioner Flordivina Gaspar filed a complaint for illegal dismissal and money claims against M.I.Y. Real Estate Corporation (M.I.Y.) and its director, Melissa Ilagan Yu. Gaspar alleged that she was employed by M.I.Y. as Facilities Maintenance and Services (FM&S) personnel at Goldrich Mansion, where she performed cleaning, maintenance, and monitoring tasks for various establishments within the building, including Yu's office and residence. 

Gaspar claimed that M.I.Y. forced her to sign resignation letters every six months to prevent her from attaining regular employment status. She further alleged that she was dismissed on July 2, 2014, when she was barred from entering the building and was pressured to sign a notice of termination in exchange for her final salary. 

M.I.Y. denied that Gaspar was its employee, asserting that she was a domestic worker (kasambahay) of Yu, initially hired to perform household tasks in Yu’s Pasig residence before being transferred to her penthouse in Goldrich Mansion. The company presented documentary evidence, including payroll records, which did not include Gaspar’s name. The Labor Arbiter, NLRC, and the Court of Appeals all ruled that Gaspar was not an employee of M.I.Y. but a domestic worker of Yu, dismissing her claims for illegal dismissal and labor benefits.

  

Whether Gaspar was an employee of M.I.Y. or a domestic worker of Yu, and consequently, whether she was illegally dismissed. 

NO. The Supreme Court upheld the rulings of the lower tribunals and dismissed the petition. It ruled that Gaspar failed to establish an employer-employee relationship with M.I.Y. under the four-fold test, which requires: 

  • 1.    Selection and engagement – No evidence showed that M.I.Y. hired Gaspar.
  • 2.    Payment of wages – M.I.Y.’s payroll and government contributions did not include Gaspar’s name.
  • 3.    Power to dismiss – The alleged notice of termination was unsigned and unverified.
  • 4.    Power to control – M.I.Y. did not control the manner and means of Gaspar’s work.

Gaspar was found to be a domestic worker of Yu under Republic Act No. 10361 (Batas Kasambahay), as she was primarily engaged in cleaning and maintaining Yu’s private residence, regardless of its location within a commercial building. He was not an employee of M.I.Y. Since Gaspar did not establish an employment relationship with M.I.Y., her claims for illegal dismissal and labor benefits were denied.




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FLB Construction v. Trinidad G.R. No. 194931 | October 6, 2021

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FLB Construction v. Trinidad

G.R. No. 194931 | October 6, 2021

THIRD DIVISION, ZALAMEDA, J.

 

Illegal Dismissal; Failure to substantiate its business closure; Backwages


An employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and/or separation pay in order to have the separation pay be computed until the date of actual closure of business. Otherwise, the separation pay shall be computed until the finality of the resolution or decision of the Court. 

 

FLB Construction, operated by spouses Fidel and Marlyn Bermudez, hired respondents Susana Trinidad, Alicia Perdido, and Daniel Sebastian in various capacities. In 2006, the respondents claimed they were instructed to stop reporting for work and subsequently filed complaints for unpaid wages and benefits. The company contended it was suffering financial losses, resulting in periodic work schedules, which respondents allegedly refused, eventually abandoning their jobs. However, no documentary evidence was provided to support payment or proper business closure. 

The Labor Arbiter found for the respondents, awarding unpaid salaries and 13th-month pay, but did not grant separation pay due to the company’s closure. The NLRC affirmed this decision, emphasizing the employer's burden to prove payment. The Court of Appeals modified this ruling, declaring the respondents illegally dismissed since the company’s closure was not properly substantiated.

 

Whether the respondents were illegally dismissed due to FLB Construction’s failure to substantiate its business closure. 

YES. The Supreme Court upheld the CA’s finding that the employees were not properly dismissed. The Supreme Court ruled that FLB Construction failed to prove a bona fide closure of its business. The company did not provide necessary documentation, such as financial statements or proper notices to the Department of Labor and Employment (DOLE), to substantiate its claims of financial losses and closure. 

Petitioners failed to show proof it served written notices to its workers and to the DOLE at least one (1) month before the intended date of closure of its business establishment. Moreover, petitioners failed to substantiate its claim that their closure was due to heavy financial losses. They did not submit financial statements prepared by independent auditors, balance sheets showing profit and loss, or annual income tax returns. 

Thus, the closure of the business without compliance with statutory requirements (notice to DOLE and proof of financial losses) rendered the dismissal illegal. The Court ruled that employees are entitled to separation pay but not backwages due to the closure of operations.



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Easycall Communications Phils., Inc. vs. Edward King, G.R. No. 145901, December 15, 2005

 CASE DIGEST Easycall Communications Phils., Inc. vs. Edward King G.R. No. 145901, December 15, 2005 THIRD DIVISION, CORONA J.     C...