June 2009 Philippine Supreme Court Decisions on Commercial, Tax and Labor Laws

Here are selected June 2009 decisions of the Philippine Supreme Court on commercial, tax and labor laws.

Commercial Law

Derivative suits. The general rule is that where a corporation is an injured party, its power to sue is lodged with its board of directors or trustees. Nonetheless, an individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stocks in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party, with the corporation as the real party in interest. A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a third person in favor of the corporation. Similarly, if a corporation has a defense to an action against it and is not asserting it, a stockholder may intervene and defend on behalf of the corporation. By virtue of Republic Act No. 8799, otherwise known as the Securities Regulation Code, jurisdiction over intra-corporate disputes, including derivative suits, is now vested in the Regional Trial Courts designated by the Supreme Court pursuant to A.M. No. 00-11-03-SC promulgated on 21 November 2000.


The Supreme Court has recognized that a stockholder’s right to institute a derivative suit is not based on any express provision of the Corporation Code, or even the Securities Regulation Code, but is impliedly recognized when the said laws make corporate directors or officers liable for damages suffered by the corporation and its stockholders for violation of their fiduciary duties. Hence, a stockholder may sue for mismanagement, waste or dissipation of corporate assets because of a special injury to him for which he is otherwise without redress. In effect, the suit is an action for specific performance of an obligation owed by the corporation to the stockholders to assist its rights of action when the corporation has been put in default by the wrongful refusal of the directors or management to make suitable measures for its protection. The basis of a stockholder’s suit is always one in equity. However, it cannot prosper without first complying with the legal requisites for its institution.  Anthony S. Yu, et al., vs. Joseph S. Yukayguan, et al., G.R. No. 177549, June 18, 2009.

Illegal dismissal; liability of corporate officer. The general manager of a corporation should not be made personally answerable for the payment of an illegally dismissed employee’s monetary claims arising from the dismissal unless he had acted maliciously or in bad faith in terminating the services of the employee. The employer corporation has a separate and distinct personality from its officers who merely act as its agents.

The exception noted is where the official “had acted maliciously or in bad faith,” in which event he may be made personally liable for his own act. That exception is not applicable in the case at bar, because it has not been proven that Wiltschek was impleaded in his capacity as General Manager of petitioner corporation and there appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of respondent. His act, therefore, was within the scope of his authority and was a corporate act for which he should not be held personally liable for.   M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009; see also Bienvenido C. Gilles vs. Court of Appeals, Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009

Redemption of foreclosed property; General Banking Act. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to repurchase. In several cases decided by the Court where the right to repurchase was held to have been properly exercised, there was an unequivocal tender of payment for the full amount of the repurchase price. Otherwise, the offer to redeem  is ineffectual.

Bona fide redemption necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the redemption period fixed by law can easily be circumvented.  Allied Banking Corporation vs. Ruperto Jose H. Mateo, represented by Warlito Mateo, as Attorney-in-factG.R. No. 167420,  June 5, 2009.

Tax Law

Deposit on future subscription; stamp tax.  A deposit on future subscription is not subject to documentary stamp tax.   Commissioner of Internal Revenue vs. First Express Pawnshop Company, Inc., G.R. Nos. 172045-46, June 16, 2009.

Validity of regulations. Revenue Regulations Nos. 9-2003, 22-2003, and Revenue Memorandum Order No. 6-2003, as pertinent to cigarettes packed by machine, are invalid insofar as they grant the BIR the power to reclassify or update the classification of new brands every two years or earlier. Hon. Secretary of Finance, et al. vs. La Suerte Cigar and Cigarette Factory, et al.G.R. No. 166498.  June 11, 2009

Labor Law

Diminution of benefits;  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 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.

With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, jurisprudence has not laid down any hard and fast rule. In the case of Davao Fruits Corporation v. Associated Labor Unions, the company practice of including in the computation of the 13th-month pay the maternity leave pay and cash equivalent of unused vacation and sick leave lasted for six (6) years. In another case, Tiangco v. Leogardo, Jr., the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. While in Sevilla Trading v. Semana, the employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. In all these cases, the Supreme Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. The common denominator in these cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. Metropolitan Bank and Trust Company vs. National Labor Relations Commission, Felipe A. Patag and Bienvenido C. Flora, G.R. No. 152928, June 18, 2009.

Compensable illness.  A government employee, who suffers complete and permanent loss of sight in one eye, is entitled to income benefit from the GSIS beginning the first month of said employee’s disability, but no longer than the maximum period of 25 months.  Government Service Insurance System vs. Jaime K. Ibarra, G.R. No. 172925, June 18, 2009.

Compensable illness.   Although the Court commiserates with petitioner’s sufferings, the Court cannot close its eyes to the need to ensure that the workmen’s trust fund is protected from depletion due to claims for illnesses which may not be truly work-related. Rodolfo B. Arceño Vs. Government Service Insurance System, G.R. No. 162374, June 18, 2009.

Downsizing. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages. Redundancy, on the other hand, exists where the number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise. Both are forms of downsizing and are often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation. Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.

For a valid retrenchment, the following requisites must be complied with: (1) the retrenchment is necessary to prevent losses and such losses are proven; (2) written notice to the employees and to the DOLE at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one-month pay or at least one-half month pay for every year of service, whichever is higher.

In case of redundancy, the employer must prove that: (1) a written notice was served on both the employees and the DOLE at least one month prior to the intended date of retrenchment; (2) separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher, has been paid; (3) good faith in abolishing the redundant positions; and (4) adoption of fair and reasonable criteria in ascertaining which positions are to be declared redundant and accordingly abolished.

It is the employer who bears the onus of proving compliance with these requirements, retrenchment and redundancy being in the nature of affirmative defenses. Otherwise, the dismissal is not justified.  Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009.

Employer-employee relationship. There existed no employer-employee relationship between the parties. De Raedt is an independent contractor, who was engaged by SGV to render services to SGV’s client TMI, and ultimately to DA on the CECAP project, regarding matters in the field of her special knowledge and training for a specific period of time. Unlike an ordinary employee, De Raedt received retainer fees and benefits such as housing and subsistence allowances and medical insurance. De Raedt’s services could be terminated on the ground of end of contract between the DA and TMI, and not on grounds under labor laws. Though the end of the contract between the DA and TMI was not the ground for the withdrawal of De Raedt from the CECAP, De Raedt was disengaged from the project upon the instruction of SGV’s client, TMI. Most important of all, SGV did not exercise control over the means and methods by which De Raedt performed her duties as Sociologist. SGV did impose rules on De Raedt, but these were necessary to ensure SGV’s faithful compliance with the terms and conditions of the Sub-Consultancy Agreement it entered into with TMI. Sycip, Gorres, Velayo, & Company vs. Carol De Raedt, G.R. No. 161366, June 16, 2009.

Ground for dismissal; abandonment. The rule is that the burden of proof lies with the employer to show that the dismissal was for a just cause. In the present case, the petitioner claims that there was no illegal dismissal since the respondent abandoned his job. The petitioner points out that it wrote the respondent various memoranda requiring him to explain why he incurred absences without leave, and requiring him as well to report for work; the respondent, however, never bothered to reply in writing.

In evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent,manifested through overt acts, to sever the employer-employee relationship. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning. We agree with the CA that the petitioner failed to prove the charge of abandonment.  Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No. 174141,  June 26, 2009.

Ground for dismissal; gross negligence. Respondent’s actions, at their worse, reveal his negligence, but said negligence can hardly be deemed gross and habitual, as to constitute a just ground for his dismissal under Article 282(b) of the Labor Code.

Gross negligence under Article 282 of the Labor Code 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 upon the circumstances. Gross negligence has been defined as the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To constitute a just cause for termination of employment, the neglect of duties must not only be gross but habitual as well. The single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.  AMA Computer College-East Rizal, et al. vs. Allan Raymond R. IgnacioG.R. No. 178520.  June 23, 2009.

Ground for dismissal;  gross negligence. Gross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.

Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta, Manila without locking it despite clear, specific instructions to do so. His argument that he stayed inside the LBC office for only three to five minutes was of no moment. On the contrary, it only proved that he did not exercise even the slightest degree of care during that very short time. Mateo deliberately did not heed the employer’s very important precautionary measure to ensure the safety of company property. Regardless of the reasons advanced, the exact evil sought to be prevented by LBC (in repeatedly directing its customer associates to lock their motorcycles) occurred, resulting in a substantial loss to LBC.  LBC Express Metro Manila, Inc. and Lorenzo A. Niño  vs. James Mateo, G.R. No. 168215, June 9, 2009.

Ground for dismissal; lost of confidence. Recent decisions of this Court have distinguished the treatment of managerial employees from that of the 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. But as regards a managerial employee, the 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 is sufficient that there is some basis for the employer’s loss of trust and 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 of his position. Nonetheless, the evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the employer’s arbitrariness, whims, and caprices or suspicion. Triumph International (PHILS.), Inc., vs. Ramon L. Apostol, et al., G.R. No. 164423, June 16, 2009.

Ground for dismissal; loss of confidence.  To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Further, the act complained of must be work-related and must show that the employee concerned is unfit to continue working for the employer. Sarabia Optical and Vivian Sarabia-Orn vs. Jeanet B. Camacho, G.R. No. 155502,  June 18, 2009.

Ground for dismissal; loss of confidence. Nissan failed to prove that Tagulao and Serrano were responsible for the loss of two rolls of tint. The records of the case show that there was a discrepancy between the dates of pick up and delivery as alleged by Nissan and as alleged by Tagulao and Serrano. Even Catudio, Nissan’s employee, stated that she changed the dates on the delivery receipt of the two rolls of tint on the instruction of her boss.

Loss of trust and confidence, to be a valid ground for an employee’s dismissal, must be based on a willful breach and founded on clearly established facts. The burden of proof of dismissal rests entirely upon the employer. In the present case, Nissan illegally dismissed Tagulao and Serrano because Nissan failed to prove that Tagulao and Serrano were terminated for a valid cause. Tagulao and Serrano are thus entitled to reinstatement and to receive backwages. Nissan North Edsa Balintawak, Quezon City vs. Angelito Serrano, Jr. and Edwin TagulaoG.R. No. 162538, June 4, 2009

Ground for dismissal;  loss of confidence. The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence.

The second requisite of terminating an employee for loss of trust and confidence is that there must be an act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of confidence must be based on a willful breach of trust and founded on clearly established facts.

We find that it was not established that respondent used her authority to influence her subordinates to stage a “no work day”; and assuming that she performed this act as alleged by petitioners, it does not satisfy the jurisprudential requirements for valid termination due to loss of trust and confidence.

Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she influenced a single subordinate, without exerting any force or making any threats, not to report to work. This does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence.  M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. EnriquezG.R. No. 169173, June 5, 2009.

Grounds for dismissal; serious misconduct.  Under the circumstances, our conclusion can only be for Salon’s dismissal for two counts of valid causes – i.e., for serious violation of TIP’s Memorandum No. P-66, for unauthorized selling of examination papers, and for serious misconduct, for falsifying Manalo’s grade and violating the grading rules under the Manual of Regulations for Private Schools. Technological Institute of the Philippines Teachers and Employees Organization and its member Magdalena T. Salon vs. the Honorable Court of Appeals, et al., G.R. No. 158703, June 26, 2009.

Ground for dismissal; willful disobedience. Willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employee’s assailed conduct must have been willful, i.e., 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.

Gilles’ resignation from CBI and sudden departure from India was not approved by SKI. When he asked the company’s permission to return to Manila, the management instructed him to stay in India until a suitable replacement was found. He knew of the critical stage of the Project due to the accelerated period of its completion. Thus, when he left the Project, despite the clear and lawful instructions of the management for him to stay, his act constituted willful disobedience and gross neglect of duty under Article 282 of the Labor Code.

Gilles’ departure from India, despite the instruction of SKI for him to stay, was impelled by the financial difficulties he encountered thereat. The money given to him before he left for India was already spent. Rickie Sarque, the Chief Accountant of SKI, admitted on the witness stand that Gilles was paid his salaries for the 3 ½ months when he was already back in Manila. Added to this were the problems he encountered due to the acceleration of the job completion period, the obligations he had to meet at home for his aged mother at that time, now deceased, and the relatives who needed his financial support. Clearly, Gilles had a valid reason to leave India.

SKI’s failure to pay Gilles’ salary on time was intolerable. For neglecting its duties as an employer, SKI may, thus, be considered to have acted in bad faith. It may be deemed as utter disregard by SKI of the welfare and well-being of its employee, especially at a time when he was far away from home.

We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to the employee.

Invariably, the law recognizes and resolves such a situation in favor of the employees in order to protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary act; thus, an employee who is forced to relinquish his position due to the employer’s unfair or unreasonable treatment is deemed to have been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances.  Bienvenido C. Gilles vs. Court of Appeals, Schema Konsult and Edgardo AboresG.R. No. 149273, June 5, 2009.

Illegal dismissal; attorney’s fees. aAtorney’s fees may be awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer. In the case at bar, respondent’s unjustified and unwarranted dismissal prompted her to engage the professional services of a counsel and she is thus entitled to an award of attorney’s fees.  M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. EnriquezG.R. No. 169173, June 5, 2009.

Illegal dismissal; moral damages. There is sufficient basis to award moral damages and attorney’s fees to respondent. We have consistently ruled that in illegal dismissal cases, moral damages are recoverable only where the dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Such an award cannot be justified solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, i.e., that the act of dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety, and similar injury resulted therefrom.

In previous cases where moral damages and attorney’s fees were awarded, the manner of termination was done in a humiliating and insulting manner, such as in the case of Balayan Colleges v. National Labor Relations Commission where the employer posted copies of its letters of termination to the teachers inside the school campus and it also furnished copies to the town mayor and Parish Priest of their community for the purpose of maligning the teachers’ reputation. So also in the case of Chiang Kai Shek School v. Court of Appeals, this Court awarded moral damages to a teacher who was flatly, and without warning or a formal notice, told that she was dismissed.

In the case at bar, we see it fit to award moral damages to respondent because the manner in which respondent was treated upon petitioners’ suspicion of her involvement in drafting and in circulating the letter of appeal and the alleged staging of the “no work day” is contrary to good morals because it caused unnecessary humiliation to respondent.  M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. EnriquezG.R. No. 169173, June 5, 2009.

Illegal dismissal; liability of corporate officer. The general manager of a corporation should not be made personally answerable for the payment of an illegally dismissed employee’s monetary claims arising from the dismissal unless he had acted maliciously or in bad faith in terminating the services of the employee. The employer corporation has a separate and distinct personality from its officers who merely act as its agents.

The exception noted is where the official “had acted maliciously or in bad faith,” in which event he may be made personally liable for his own act. That exception is not applicable in the case at bar, because it has not been proven that Wiltschek was impleaded in his capacity as General Manager of petitioner corporation and there appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of respondent. His act, therefore, was within the scope of his authority and was a corporate act for which he should not be held personally liable for.   M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. EnriquezG.R. No. 169173, June 5, 2009; see also Bienvenido C. Gilles vs. Court of Appeals, Schema Konsult and Edgardo AboresG.R. No. 149273, June 5, 2009.

Illegal dismissal; procedural due process. Procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employer’s decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.  Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No. 165407, June 5, 2009.

Illegal dismissal;  reinstatement. The respondent’s illegal dismissal carries the legal consequence defined under Article 279 of the Labor Code: the illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. The imposition of this legal consequence is a matter of law that allows no discretion on the part of the decision maker, except only to the extent recognized by the law itself as expressed in jurisprudence.  Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No. 174141,  June 26, 2009.

Reinstatement; union shop steward. A shop steward leads to the conclusion that it is a position within the union, and not within the company. A shop steward is appointed by the union in a shop, department, or plant and serves as representative of the union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer. He is the representative of the union members in a building or other workplace. Black’s Law Dictionary defines a shop steward as a union official elected to represent members in a plant or particular department. His duties include collection of dues, recruitment of new members and initial negotiations for the settlement of grievances.

A judgment of reinstatement of the petitioner to the position of union Shop Steward would have no practical legal effect since it cannot be enforced. Based on the requirements imposed by law and the APCWU-ATI CBA, and in the nature of things, the subsequent separation of the petitioner from employment with respondent ATI has made his reinstatement to union Shop Steward incapable of being enforced.  Teodoro S. Miranda, Jr. vs. Asian Terminals, Inc. and Court of Appeals, G.R. No. 174316,  June 23, 2009.

Resignation; separation pay. No provision in the Labor Code grants separation pay to voluntarily resigning employees. Separation pay may be awarded only in cases when the termination of employment is due to (a) installation of labor-saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by established employer practice or policy.

Here, the primary consideration that impelled respondent to tender his resignation letter was the assurance that he would be paid his separation pay. It is thus unlikely for someone to just leave his employer for whom he has worked for twelve (12) years without any expectation of financial assistance. Hence, the former employee is entitled to receive separation pay.  “J” Marketing Corporation, represented by its Branch Manager Elmundo Dador, G.R. No. 163924, June 18, 2009.

Strike; requisites for validity. The requisites for a valid strike are: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7) days before the intended strike. The requirements are mandatory and failure of a union to comply therewith renders the strike illegal.   Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc.G.R. No. 165756, June 5, 2009.

Union security. “Union security” is a generic term, which is applied to and comprehends “closed shop,” “union shop,” “maintenance of membership” or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.

In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union’s decision to expel the employee from the union or company. Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No. 165407, June 5, 2009.

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