Labor Relations Case Digests (Finals) - Atty. R.Marquez (2A 2016-2017)

LABOR RELATIONS CASE DIGESTS (FINALS) - ATTY. R.
MARQUEZ (2A 2016-2017)

RIGHT TO SECURITY OF TENURE law which says that medical practitioners so engaged
be actually hired as employees, adding that the law, as
101 PHIL. GLOBAL COMMUNICATIONS V. DE VERA written, only requires the employer "to retain", not
(JUNE 7, 2005) employ, a part-time physician who needed to stay in
the premises of the non-hazardous workplace for two
GARCIA, J. (2) hours.

FACTS Respondent takes no issue on the fact that petitioner's
Petitioner Philippine Global Communications, Inc. business of telecommunications is not hazardous in
(PhilCom), is a corporation engaged in the business of nature. As such, what applies here is the last
communication services and allied activities, while paragraph of Article 157 which, to stress, provides
respondent Ricardo De Vera is a physician by that the employer may engage the services of a
profession whom petitioner enlisted to attend to the physician and dentist "on retained basis", subject to
medical needs of its employees under a such regulations as the Secretary of Labor may
RETAINERSHIP CONTRACT. prescribe. The successive "retainership" agreements
of the parties definitely hue to the very statutory
The turning point in the parties' relationship surfaced provision relied upon by respondent.
in December 1996 when Philcom, thru a letter bearing
on the subject boldly written as "TERMINATION – As it is, Article 157 of the Labor Code clearly and
RETAINERSHIP CONTRACT", informed De Vera of its unequivocally allows employers in non-hazardous
decision to discontinue the latter's "retainer's contract establishments to engage "on retained basis" the
with the Company effective at the close of business service of a dentist or physician. Nowhere does the law
hours of December 31, 1996" because management provide that the physician or dentist so engaged
has decided that it would be more practical to provide thereby becomes a regular employee. The very
medical services to its employees through accredited phrase that they may be engaged "on retained basis",
hospitals near the company premises. revolts against the idea that this engagement gives rise
to an employer-employee relationship.
On 22 January 1997, De Vera filed a complaint for
illegal dismissal before the National Labor Relations With the recognition of the fact that petitioner
Commission (NLRC), alleging that that he had been consistently engaged the services of respondent on a
actually employed by Philcom as its company retainer basis, as shown by their various "retainership
physician since 1981 and was dismissed without due contracts", so can petitioner put an end, with or
process. He averred that he was designated as a without cause, to their retainership agreement as
"company physician on retainer basis" for reasons therein provided.
allegedly known only to Philcom. He likewise
professed that since he was not conversant with labor
laws, he did not give much attention to the designation
as anyway he worked on a full-time basis and was paid
a basic monthly salary plus fringe benefits, like any
other regular employees of Philcom.

ISSUE
Was Dr. De Vera illegally dismissed?

HELD
NO. Had only respondent read carefully the very
statutory provision invoked by him, he would have
noticed that in non-hazardous workplaces, the
employer may engage the services of a physician "on
retained basis." As correctly observed by the
petitioner, while it is true that the provision requires
employers to engage the services of medical
practitioners in certain establishments depending on
the number of their employees, nothing is there in the
LABOR RELATIONS CASE DIGESTS (FINALS) - ATTY. R.MARQUEZ (2A 2016-2017)
102 SINGER SEWING MACHINE V. DRILON agreement may provide that one party shall render
(JANUARY 24, 1991) services for and in behalf of another for a considera-
tion (no matter how necessary for the latter's
GUTIERREZ, SR., J. business) even without being hired as an
employee. This is precisely true in the case of an
FACTS independent contractorship as well as in an agency
On February 15, 1989, the respondent union filed a agreement. The Court agrees with the petitioner's
petition for direct certification as the sole and argument that Article 280 is not the yardstick for
exclusive bargaining agent of all collectors of the determining the existence of an employment
Singer Sewing Machine Company, Baguio City branch relationship because it merely distinguishes between
(hereinafter referred to as "the Company”). They two kinds of employees, i.e., regular employees and
contend that since union members are employees casual employees, for purposes of determining the
under Article 280 of the LC, they are entitled to their right of an employee to certain benefits, to join or form
constitutional right to join or form a labor a union, or to security of tenure. Article 280 does not
organization for purposes of collective bargaining. apply where the existence of an employment
relationship is in dispute.
The Company opposed the petition mainly on the
ground that the union members are actually not The Court finds that since private respondents are not
employees but are independent contractors as employees of the Company, they are not entitled to the
evidenced by the collection agency agreement which constitutional right to join or form a labor
they signed. organization for purposes of collective
bargaining. Accordingly, there is no constitutional and
ISSUE legal basis for their "union" to be granted their petition
Are the respondents employees of the Company for direct certification. This Court made this
thereby entitling them to their right to form or join pronouncement in La Suerte Cigar and Cigarette
a union? Factory v. Director of Bureau of Labor Relations,
supra:
HELD
NO. Consequently, their petition for direct “x x x The question of whether employer-employee
certification must be dismissed. The nature of the relationship exists is a primordial consideration
relationship between a company and its collecting before extending labor benefits under the workmen's
agents depends on the circumstances of each compensation, social security, medicare, termination
particular relationship. Not all collecting agents are pay and labor relations law. It is important in the
employees and neither are all collecting agents determination of who shall be included in a proposed
independent contractors. The collectors could fall bargaining unit because it is the sine qua non, the
under either category depending on the facts of each fundamental and essential condition that a bargaining
case. unit be composed of employees. Failure to establish
this juridical relationship between the union members
The Agreement confirms the status of the collecting and the employer affects the legality of the union
agent in this case as an independent contractor not itself. It means the ineligibility of the union members
only because he is explicitly described as such but also to present a petition for certification election as well
because the provisions permit him to perform as to vote therein x x x.”
collection services for the company without being
subject to the control of the latter except only as to the
result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the
petitioner.

The Court finds the contention of the respondents that
the union members are employees under Article 280
of the Labor Code to have no basis. The definition that
regular employees are those who perform activities
which are desirable and necessary for the business of
the employer is not determinative in this case. Any
103 LABOR CONGRESS V. NLRC (MAY 21, 1998) Labor Code, as amended by R.A. No. 6715. Due to
strained relations however, in lieu of reinstatement
DAVIDE, JR., J. then, separation pay at the rate of one month for every
year of service, with a fraction of at least six (6)
FACTS months of service considered as one (1) year, is in
The 99 persons named as petitioners in this order.
proceeding were rank-and-file employees of
respondent Empire Food Products, which hired them
on various dates.

In finding that petitioner employees abandoned their
work, the Labor Arbiter and the NLRC relied on the
testimony of Security Guard Rolando Cairo that on
January 21, 1991, petitioners refused to work. As a
result of their failure to work, the cheese curls ready
for repacking on said date were spoiled. They were
thereafter dismissed from employment on the ground
of abandonment of work. Petitioners thus filed a
complaint for illegal dismissal.

ISSUE
Are petitioners’ guilty of abandonment of work?

HELD
NO. The failure to work for one day, which resulted in
the spoilage of cheese curls does not amount to
abandonment of work. In fact two (2) days after the
reported abandonment of work or on January 23,
1991, petitioners filed a complaint for, among others,
unfair labor practice, illegal lockout and/or illegal
dismissal. In several cases, this Honorable Court held
that “one could not possibly abandon his work and
shortly thereafter vigorously pursue his complaint for
illegal dismissal. In De Ysasi III v. NLRC (supra), this
Honorable Court stressed that it is the clear, deliberate
and unjustified refusal to resume employment and not
mere absence that constitutes abandonment. The
absence of petitioner employees for one day on
January 21, 1991 as testified [to] by Security Guard
Orlando Cairo did not constitute abandonment.

It may likewise be stressed that the burden of proving
the existence of just cause for dismissing an employee,
such as abandonment, rests on the employer, a burden
private respondents failed to discharge. Private
respondents, moreover, in considering petitioners’
employment to have been terminated by
abandonment, violated their rights to security of
tenure and constitutional right to due process in not
even serving them with a written notice of such
termination.

Petitioners are therefore entitled to reinstatement
with full back wages pursuant to Article 279 of the
104 PAGUIO V. NLRC (MAY 9, 2003) Thus defined, a regular employee is one who is
engaged to perform activities which are necessary and
VITUG, J. desirable in the usual business or trade of the
employer as against those which are undertaken for a
FACTS specific project or are seasonal. Even in these latter
On 22 June 1992, respondent Metromedia Times cases, where such person has rendered at least one
Corporation entered, for the fifth time, into an year of service, regardless of the nature of the activity
agreement with petitioner Efren P. Paguio, appointing performed or of whether it is continuous or
the latter to be an account executive of the firm. Again, intermittent, the employment is considered regular as
petitioner was to solicit advertisements for "The long as the activity exists, it not being indispensable
Manila Times," a newspaper of general circulation, that he be first issued a regular appointment or be
published by respondent company. Petitioner, for his formally declared as such before acquiring a regular
efforts, was to receive compensation consisting of a status.
15% commission on direct advertisements less
withholding tax and a 10% commission on agency That petitioner performed activities which were
advertisements based on gross revenues less agency necessary and desirable to the business of the
commission and the corresponding withholding employer, and that the same went on for more than a
tax. The commissions, released every fifteen days of year, could hardly be denied. Petitioner was an
each month, were to be given to petitioner only after account executive in soliciting advertisements, clearly
the clients would have paid for the necessary and desirable, for the survival and
advertisements. Apart from commissions, petitioner continued operation of the business of respondent
was also entitled to a monthly allowance of P2,000.00 corporation. Robina Gokongwei, its President, herself
as long as he met the P30,000.00-monthly quota. admitted that the income generated from paid
advertisements was the lifeblood of the newspaper's
existence. Implicitly, respondent corporation
On 15 August 1992, barely two months after the recognized petitioner's invaluable contribution to the
renewal of his contract, petitioner received the business when it renewed, not just once but five times,
following notice from respondent firm to terminate its contract with petitioner.
his employment. Apart from vague allegations of
misconduct on which he was not given the Respondent company cannot seek refuge under the
opportunity to defend himself, i.e., pirating clients terms of the agreement it has entered into with
from his co-executives and failing to produce results, petitioner. The law, in defining their contractual
no definite cause for petitioner's termination was relationship, does so, not necessarily or exclusively
given. Aggrieved, petitioner filed a case before the upon the terms of their written or oral contract, but
labor arbiter, asking that his dismissal be declared also on the basis of the nature of the work petitioner
unlawful and that his reinstatement, with entitlement has been called upon to perform. The law affords
to backwages without loss of seniority rights, be protection to an employee, and it will not countenance
ordered. any attempt to subvert its spirit and intent. A
stipulation in an agreement can be ignored as and
ISSUE when it is utilized to deprive the employee of his
The crux of the matter would entail the security of tenure. The sheer inequality that
determination of the nature of contractual characterizes employer-employee relations, where
relationship between petitioner and respondent the scales generally tip against the employee, often
company — was it or was it not one of regular scarcely provides him real and better options.
employment?
The real question that should thus be posed is whether
HELD or not petitioner has been justly dismissed from
IT WAS one of REGULAR EMPLOYMENT. The Labor service. A lawful dismissal must meet both
Code, in Article 280 thereof, provides: substantive and procedural requirements; in fine, the
dismissal must be for a just or authorized cause and
"ART. 280. Regular and Casual Employment (refer to must comply with the rudimentary due process of
the codal). notice and hearing. It is not shown that respondent
company has fully bothered itself with either of these
requirements in terminating the services of
petitioner. The notice of termination recites no valid 105 ABSCBN V. NAZARENO (SEPTEMBER 26, 2006)
or just cause for the dismissal of petitioner nor does it
appear that he has been given an opportunity to be CALLEJO, SR., J.
heard in his defense.
FACTS
Complainants were engaged by respondent ABS-CBN
as regular and full-time employees for a continuous
period of more than five (5) years with a monthly
salary rate of Four Thousand (P4,000.00) pesos
beginning 1995 up until the filing of this complaint on
November 20, 2000. Petitioner employed respondents
Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates. They
were assigned at the news and public affairs, for
various radio programs in the Cebu Broadcasting
Station, with a monthly compensation of P4,000. They
were issued ABS-CBN employees' identification cards
and were required to work for a minimum of eight
hours a day, including Sundays and holidays.

On October 12, 2000, respondents filed a Complaint
for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay,
Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13th Month Pay with Damages against the
petitioner before the NLRC.

Petitioner contends that respondents are considered
as its talents, hence, not regular employees of the
broadcasting company and that the functions
performed by the respondents are not at all necessary,
desirable, or even vital to its trade or business.

ISSUE
Are respondents who are petitioner’s talents
ought not to be considered regular employees?

HELD
NO. They are REGULAR EMPLOYEES.

We agree with respondents' contention that where a
person has rendered at least one year of service,
regardless of the nature of the activity performed, or
where the work is continuous or intermittent, the
employment is considered regular as long as the
activity exists, the reason being that a customary
appointment is not indispensable before one may be
formally declared as having attained regular status.
Article 280 of the Labor Code provides (refer to codal):

In Universal Robina Corporation v. Catapang, the Court
reiterated the test in determining whether one is a
regular employee: The primary standard, therefore, of
determining regular employment is the reasonable
connection between the particular activity performed desirable for a limited period of time. Even then, any
by the employee in relation to the usual trade or employee who has rendered at least one year of service,
business of the employer. The test is whether the whether continuous or intermittent, is deemed regular
former is usually necessary or desirable in the usual with respect to the activity performed and while such
business or trade of the employer. The connection can activity actually exists.
be determined by considering the nature of work
performed and its relation to the scheme of the It is of no moment that petitioner hired respondents
particular business or trade in its entirety. Also, if the as "talents." The fact that respondents received pre-
employee has been performing the job for at least a agreed "talent fees" instead of salaries, that they did
year, even if the performance is not continuous and not observe the required office hours, and that they
merely intermittent, the law deems repeated and were permitted to join other productions during their
continuing need for its performance as sufficient free time are not conclusive of the nature of their
evidence of the necessity if not indispensability of that employment. Respondents cannot be considered
activity to the business. Hence, the employment is "talents" because they are not actors or actresses or
considered regular, but only with respect to such radio specialists or mere clerks or utility employees.
activity and while such activity exists. They are regular employees who perform several
different duties under the control and direction of
As elaborated by this Court in Magsalin v. National ABS-CBN executives and supervisors.
Organization of Working Men: Even while the
language of law might have been more definitive, the Thus, there are two kinds of regular employees under
clarity of its spirit and intent, i.e., to ensure a "regular" the law: (1) those engaged to perform activities which
worker's security of tenure, however, can hardly be are necessary or desirable in the usual business or
doubted. In determining whether an employment trade of the employer; and (2) those casual employees
should be considered regular or non-regular, the who have rendered at least one year of service,
applicable test is the reasonable connection between whether continuous or broken, with respect to the
the particular activity performed by the employee in activities in which they are employed.
relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the The law overrides such conditions which are
work undertaken is necessary or desirable in the usual prejudicial to the interest of the worker whose weak
business or trade of the employer, a fact that can be bargaining situation necessitates the succor of the
assessed by looking into the nature of the services State. What determines whether a certain
rendered and its relation to the general scheme under employment is regular or otherwise is not the will or
which the business or trade is pursued in the usual word of the employer, to which the worker oftentimes
course. It is distinguished from a specific undertaking acquiesces, much less the procedure of hiring the
that is divorced from the normal activities required in employee or the manner of paying the salary or the
carrying on the particular business or trade. But, actual time spent at work. It is the character of the
although the work to be performed is only for a activities performed in relation to the particular trade
specific project or seasonal, where a person thus or business taking into account all the circumstances,
engaged has been performing the job for at least one and in some cases the length of time of its performance
year, even if the performance is not continuous or is and its continued existence. It is obvious that one year
merely intermittent, the law deems the repeated and after they were employed by petitioner, respondents
continuing need for its performance as being sufficient became regular employees by operation of law.
to indicate the necessity or desirability of that activity
to the business or trade of the employer. The Additionally, respondents cannot be considered as
employment of such person is also then deemed to be project or program employees because no evidence
regular with respect to such activity and while such was presented to show that the duration and scope of
activity exists. the project were determined or specified at the time of
their engagement. Under existing jurisprudence,
Not considered regular employees are "project project could refer to two distinguishable types of
employees," the completion or termination of which is activities. First, a project may refer to a particular job
more or less determinable at the time of employment, or undertaking that is within the regular or usual
such as those employed in connection with a business of the employer, but which is distinct and
particular construction project, and "seasonal separate, and identifiable as such, from the other
employees" whose employment by its nature is only undertakings of the company. Such job or undertaking
begins and ends at determined or determinable times. 106 MAGSALIN V. NOWM (MAY 9, 2003)
Second, the term project may also refer to a particular
job or undertaking that is not within the regular VITUG, J.
business of the employer. Such a job or undertaking
must also be identifiably separate and distinct from FACTS
the ordinary or regular business operations of the Coca-Cola Bottlers Phils., Inc., herein petitioner,
employer. The job or undertaking also begins and ends engaged the services of respondent workers as "sales
at determined or determinable times. route helpers" for a limited period of five
months. After five months, respondent workers were
The principal test is whether or not the project employed by petitioner company on a day-to-day
employees were assigned to carry out a specific basis. According to petitioner company, respondent
project or undertaking, the duration and scope of workers were hired to substitute for regular sales
which were specified at the time the employees were route helpers whenever the latter would be
engaged for that project. unavailable or when there would be an unexpected
In this case, it is undisputed that respondents had shortage of manpower in any of its work places or an
continuously performed the same activities for an unusually high volume of work. The practice was for
average of five years. Their assigned tasks are the workers to wait every morning outside the gates
necessary or desirable in the usual business or trade of the sales office of petitioner company. If thus hired,
of the petitioner. The persisting need for their services the workers would then be paid their wages at the end
is sufficient evidence of the necessity and of the day.
indispensability of such services to petitioner's
business or trade. While length of time may not be a Ultimately, respondent workers asked petitioner
sole controlling test for project employment, it can be company to extend to them regular appointments.
a strong factor to determine whether the employee Petitioner company refused. On 07 November 1997,
was hired for a specific undertaking or in fact tasked twenty-three (23) of the "temporary" workers (herein
to perform functions which are vital, necessary and respondents) filed with the National Labor Relations
indispensable to the usual trade or business of the Commission (NLRC) a complaint for the regularization
employer. of their employment with petitioner company. The
complaint was amended a number of times to include
We note further that petitioner did not report the other complainants that ultimately totaled fifty-eight
termination of respondents' employment in the (58) workers. Claiming that petitioner company
particular "project" to the Department of Labor and meanwhile terminated their services, respondent
Employment Regional Office having jurisdiction over workers filed a notice of strike and a complaint for
the workplace within 30 days following the date of illegal dismissal and unfair labor practice with the
their separation from work, using the prescribed form NLRC.
on employees' termination/ dismissals/suspensions.
ISSUE
Is the work of respondents in the company of such
nature as to be deemed necessary and desirable in
the usual business or trade of petitioner that could
qualify them to be regular employees?

HELD
YES. The basic law on the case is Article 280 of the
Labor Code (refer to codal).

Coca-Cola Bottlers Phils., Inc., is one of the leading and
largest manufacturers of softdrinks in the
country. Respondent workers have long been in the
service of petitioner company. Respondent workers,
when hired, would go with route salesmen on board
delivery trucks and undertake the laborious task of
loading and unloading softdrink products of petitioner
company to its various delivery points.
Even while the language of law might have been more agreed to be employed on such basis and to forego the
definitive, the clarity of its spirit and intent, i.e., to protection given to them on their security of tenure,
ensure a "regular" worker's security of tenure, demonstrate nothing more than the serious problem
however, can hardly be doubted. In determining of impoverishment of so many of our people and the
whether an employment should be considered regular resulting unevenness between labor and capital. A
or non-regular, the applicable test is the reasonable contract of employment is impressed with public
connection between the particular activity performed interest. The provisions of applicable statutes are
by the employee in relation to the usual business or deemed written into the contract, and "the parties are
trade of the employer. The standard, supplied by the not at liberty to insulate themselves and their
law itself, is whether the work undertaken is relationships from the impact of labor laws and
necessary or desirable in the usual business or trade regulations by simply contracting with each other.”
of the employer, a fact that can be assessed by looking
into the nature of the services rendered and its
relation to the general scheme under which the
business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is
divorced from the normal activities required in
carrying on the particular business or trade. But,
although the work to be performed is only for a
specific project or seasonal, where a person thus
engaged has been performing the job for at least one
year, even if the performance is not continuous or is
merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient
to indicate the necessity or desirability of that activity
to the business or trade of the employer. The
employment of such person is also then deemed to be
regular with respect to such activity and while such
activity exists.

The nature of the work performed must be viewed
from a perspective of the business or trade in its
entirety and not on a confined scope. The repeated
rehiring of respondent workers and the continuing
need for their services clearly attest to the necessity or
desirability of their services in the regular conduct of
the business or trade of petitioner company. The
Court of Appeals has found each of respondents to
have worked for at least one year with petitioner
company. While this Court, in Brent School, Inc. vs.
Zamora, has upheld the legality of a fixed-term
employment, it has done so, however, with a stern
admonition that where from the circumstances it is
apparent that the period has been imposed to
preclude the acquisition of tenurial security by the
employee, then it should be struck down as being
contrary to law, morals, good customs, public order
and public policy. The pernicious practice of having
employees, workers and laborers, engaged for a fixed
period of few months, short of the normal six-month
probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law. Any
obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have
107 SERRANO V. ISETANN (JANUARY 27, 2000) administrative agency which must be accorded
respect and even finality by this Court since nothing
MENDOZA, J. can be found in the record which fairly detracts from
such finding.
FACTS
Petitioner was hired by private respondent Isetann Accordingly, we hold that the termination of
Department Store as a security checker to apprehend petitioner’s services was for an authorized cause, i.e.,
shoplifters and prevent pilferage of merchandise. redundancy. Hence, pursuant to Art. 283 of the Labor
Initially hired on October 4, 1984 on contractual basis, Code, petitioner should be given separation pay at the
petitioner eventually became a regular employee on rate of one month pay for every year of service.
April 4, 1985. In 1988, he became head of the Security
Checkers Section of private respondent. HOWEVER, Art. 283 also provides that to terminate
the employment of an employee for any of the
Sometime in 1991, as a cost-cutting measure, private authorized causes the employer must serve "a written
respondent decided to phase out its entire security notice on the workers and the Department of Labor
section and engage the services of an independent and Employment at least one (1) month before the
security agency. For this reason, it wrote petitioner intended date thereof." In the case at bar, petitioner
the following memorandum: In view of the was given a notice of termination on October 11, 1991.
retrenchment program of the company, we hereby On the same day, his services were terminated. He was
reiterate our verbal notice to you of your termination thus denied his right to be given written notice before
as Security Section Head effective October 11, 1991. the termination of his employment.

The loss of his employment prompted petitioner to file We hold, therefore, that, with respect to Art. 283 of the
a complaint on December 3, 1991 for illegal dismissal, Labor Code, the employer’s failure to comply with the
illegal layoff, unfair labor practice, underpayment of notice requirement does not constitute a denial of due
wages, and nonpayment of salary and overtime pay. process but a mere failure to observe a procedure for
Petitioner contends that abolition of private the termination of employment which makes the
respondent’s Security Checkers Section and the termination of employment merely ineffectual.
employment of an independent security agency do not
fall under any of the authorized causes for dismissal Indeed, under the Labor Code, only the absence of a
under Art. 283 of the Labor Code. just cause for the termination of employment can
make the dismissal of an employee illegal. This is
ISSUE clear from Art. 279 which provides: Security of Tenure.
Does the abolition of Security Checker’s Section - In cases of regular employment, the employer shall
and employment of an independent security not terminate the services of an employee except for a
agency fall under authorized causes for dismissal? just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall
HELD be entitled to reinstatement without loss of seniority
YES. Art. 283 provides: Closure of establishment rights and other privileges and to his full backwages,
and reduction of personnel (refer to codal). inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his
In the case at bar, we have only the bare assertion of compensation was withheld from him up to the time
petitioner that, in abolishing the security section, of his actual reinstatement.
private respondent’s real purpose was to avoid
payment to the security checkers of the wage Thus, only if the termination of employment is not for
increases provided in the collective bargaining any of the causes provided by law is it illegal and,
agreement approved in 1990. Such an assertion is not therefore, the employee should be reinstated and paid
a sufficient basis for concluding that the termination backwages.
of petitioner’s employment was not a bona fide
decision of management to obtain reasonable return
from its investment, which is a right guaranteed to
employers under the Constitution. Indeed, that the
phase-out of the security section constituted a
"legitimate business decision" is a factual finding of an
108 WACK WACK GOLF V. NLRC (APRIL 15, 2005) amounts of separation pay indicating that their
separation from the company was for a valuable
CALLEJO, SR., J. consideration. Where the person making the waiver
has done so voluntarily, with a full understanding
FACTS thereof, and the consideration for the quitclaim is
Due to a fire which destroyed a large portion of the credible and reasonable, the transaction must be
main clubhouse of the Wack Wack Golf and Country recognized as being a valid and binding undertaking.
Club (Wack Wack), including its kitchen, Wack Wack As in contracts, these quitclaims amount to a valid and
entered into a Management Contract with Business binding compromise agreement between the parties
Staffing and Management, Inc. (BSMI), a corporation which deserve to be respected. When the respondents
engaged in the business as Management Service voluntarily signed their quitclaims and accepted the
Consultant undertaking and managing for a fee separation package offered by the petitioner, they,
projects which are specialized and technical in thenceforth, already ceased to be employees of the
character like marketing, promotions, merchandising, petitioner.
financial management, operation management and
the like. BSMI was to provide management services for (2) YES. There is indubitable evidence showing that
Wack Wack. BSMI is an independent contractor, engaged in the
management of projects, business operations,
Due to these various management service contracts, functions, jobs and other kinds of business ventures,
BSMI undertook an organizational analysis and and has sufficient capital and resources to undertake
manpower evaluation to determine its efficacy, and to its principal business. It had provided management
streamline its operations. In the course of its services to various industrial and commercial
assessment, BSMI saw that the positions of Cagasan business establishments. Its Articles of Incorporation
and Dominguez were redundant. Thus, in separate proves its sufficient capitalization. In December 1993,
Letters dated February 27, 1998, the services of Labor Secretary Bienvenido Laguesma recognized
Dominguez and Cagasan were terminated. With BSMI as an independent contractor. As a legitimate
respect to Baluyot, BSMI continued with its plan to job contractor, there can be no doubt as to the
abolish the said position of Chief Porter and Baluyot existence of an employer-employee relationship
was dismissed from the service. between the contractor and the workers.

Thereafter, the three (3) employees filed their BSMI admitted that it employed the respondents,
respective complaints with the National Labor giving the said retired employees some degree of
Relations Commission (NLRC) for illegal dismissal and priority merely because of their work experience with
damages against Wack Wack and BSMI. the petitioner, and in order to have a smooth
transition of operations. In accordance with its own
ISSUES recruitment policies, the respondents were made to
(1) Was there illegal dismissal? sign applications for employment, accepting the
(2) Is BSMI an independent contractor? condition that they were hired by BSMI as
probationary employees only. Not being contrary to
HELD law, morals, good custom, public policy and public
(1) NO. It must be recalled that said respondents order, these employment contracts, which the parties
availed of the special separation package offered by are bound are considered valid. Unfortunately, after a
the petitioner. Thereafter, the respondents signed study and evaluation of its personnel organization,
their respective release and quitclaims after receiving BSMI was impelled to terminate the services of the
their money benefits. It cannot be said that the respondents on the ground of redundancy. This right
respondents in the case at bar did not fully to hire and fire is another element of the employer-
comprehend and realize the consequences of their employee relationship which actually existed between
acts. Herein respondents are not unlettered persons the respondents and BSMI, and not with Wack Wack.
who need special protection. They held responsible
positions in the petitioner-employer, so they There being no employer-employee relationship
presumably understood the contents of the between the petitioner and respondents Cagasan and
documents they signed. There is no showing that the Dominguez, the latter have no cause of action for
execution thereof was tainted with deceit or illegal dismissal and damages against the petitioner.
coercion. Further, the respondents were paid hefty
109 ALCATEL V. RELOS (JULY 3, 2009) was hired and the periods of employment were
specified in his employment contracts. The services he
CARPIO, J. rendered, the duration and scope of each employment
are clear indications that respondent was hired as a
FACTS project employee.
Alcatel argues that respondent was a project
employee because he worked on distinct projects with We do not agree with respondent that he became a
the terms of engagement and the specific project made regular employee because he was continuously
known to him at the time of the engagement. Alcatel rehired by Alcatel every termination of his contract. In
clarifies that respondent's employment was Maraguinot, Jr. v. NLRC, we said:
coterminous with the project for which he was hired
and, therefore, respondent was not illegally dismissed A project employee or a member of a work pool may
but was validly dismissed upon the expiration of the acquire the status of a regular employee when the
term of his project employment. Alcatel explains that following concur:
its business relies mainly on the projects it enters into
and thus, it is constrained to hire project employees to 1. There is a continuous rehiring of project
meet the demands of specific projects. employees even after the cessation of a
project; and
On the other hand, respondent insists that he is a 2. The tasks performed by the alleged "project
regular employee because he was assigned by Alcatel employee" are vital, necessary and
on its various projects since 4 January 1988 indispensable to the usual business or trade of
performing functions desirable or necessary to the employer.
Alcatel's business. Respondent adds that his
employment contracts were renewed successively by While respondent performed tasks that were clearly
Alcatel for seven years. Respondent contends that, vital, necessary and indispensable to the usual
even assuming that he was a project employee, he business or trade of Alcatel, respondent was not
became a regular employee because he was re-hired continuously rehired by Alcatel after the cessation of
every termination of his employment contract and he every project. Records show that respondent was
performed functions necessary to Alcatel's business. hired by Alcatel from 1988 to 1995 for three projects,
Respondent also claims that he was illegally dismissed namely the PLDT X-5 project, the PLDT X-4 IOT project
because he was dismissed during the existence of the and the PLDT 1342 project. On 30 April 1988, upon the
project. expiration of respondent's contract for the PLDT X-4
IOT project, Alcatel did not rehire respondent until 1
ISSUE February 1991, or after a lapse of 33 months, for the
Is respondent a regular employee or a project PLDT 1342 project. Alcatel's continuous rehiring of
employee? respondent in various capacities from February 1991
to December 1995 was done entirely within the
HELD framework of one and the same project: the PLDT
A PROJECT EMPLOYEE, he is. The principal test for 1342 project. This did not make respondent a regular
determining whether a particular employee is a employee of Alcatel as respondent was not
project employee or a regular employee is whether the continuously rehired after the cessation of a project.
project employee was assigned to carry out a specific Respondent remained a project employee of Alcatel
project or undertaking, the duration and scope of working on the PLDT 1342 project.
which were specified at the time the employee is
engaged for the project. "Project" may refer to a The employment of a project employee ends on the
particular job or undertaking that is within the regular date specified in the employment contract. Therefore,
or usual business of the employer, but which is distinct respondent was not illegally dismissed but his
and separate and identifiable as such from the employment terminated upon the expiration of his
undertakings of the company. Such job or undertaking employment contract. Here, Alcatel employed
begins and ends at determined or determinable times. respondent as a Site Inspector until 31 December
1995.
In our review of respondent's employment contracts,
we are convinced that respondent was a project
employee. The specific projects for which respondent
110 VIOLETA and BALTAZAR V. NLRC (OCTOBER HELD
10, 1997) PETITIONERS ARE REGULAR EMPLOYEES. We have
held that the services of project employees are
REGALADO, J. coterminous with the project and may be terminated
upon the end or completion of that project for which
FACTS they were hired. Regular employees, in contrast, are
Petitioner Violeta worked in Construction and legally entitled to remain in the service of their
Development Corporation of the Philippines (CDCP), a employer until their services are terminated by one or
sister corporation of private respondent, at its project another of the recognized modes of termination of
in CDCP Mines, Basay, Negros Oriental from December service under the Labor Code.
15, 1980 up to February 15, 1981. Private respondent
then hired him as Erector II at the former’s project for The source of the definition of a regular employee vis-
Philphos in Isabel, Leyte on November 10, 1982 until à-vis a project employee is found in Article 280 of the
the termination of the project on December 3, 1984. Labor Code (refer to codal).
On January 21, 1985, he was reassigned as Erector II
for Five Stand TCM Project, with vacation and sick In order to properly characterize petitioners’
leaves, and was designated as a regular project employment, we now proceed to ascertain whether or
employee at private respondent’s project for National not their employment falls under the exceptions
Steel Corporation (NSC) in Iligan City. After receiving provided in Article 280 of the Code.
a salary adjustment, he was again hired on June 6,
1989 as Handyman for the civil works of a The principal test for determining whether particular
construction project for NSC. On February 10, 1992, he employees are properly characterized as ”project
was appointed for project employment, again as employees,” as distinguished from “regular
Handyman, to NSC ETL #3 Civil Works by private employees,” is whether or not the “project employees”
respondent. Due to the completion of the particular were assigned to carry out a “specific project or
item of work he was assigned to, private respondent undertaking,” the duration (and scope) of which were
terminated the services of petitioner Violeta on March specified at the time the employees were engaged for
15, 1992. that project. As defined, project employees are those
workers hired (1) for a specific project or undertaking,
Petitioner Baltazar started in the employ of CDCP on and (2) the completion or termination of such project
June 23, 1980. He was hired by private respondent as or undertaking has been determined at the time of
Lead Carpenter for project Agua VII on October 1, engagement of the employee.
1981. Like petitioner Violeta, he was transferred from
one project to another as a regular project employee. Based on the above criteria, we find petitioners to be
On November 28, 1991, he was hired as Leadman II in regular employees of private respondent, and not
ETL #3 Civil Works by private respondent in its project employees as postulated by respondent NLRC.
project for NSC, but he was separated from such Petitioners’ dismissal, therefore, could not be justified
employment on December 20, 1991 as a result of the by the completion of their items of work.
completion of said item of work.
The predetermination of the duration or period of a
Contending that they are already regular employees project employment is important in resolving whether
who cannot be dismissed on the ground of completion one is a project employee or not. On this score, the
of the particular project where they are engaged, term period has been defined to be “a length of
petitioners filed two separate complaints for illegal existence; duration. A point of time marking a
dismissal against private respondent, with a prayer termination as of a cause or an activity; an end, a limit,
for reinstatement and back wages plus damages. a bound; conclusion; termination. A series of years,
months or days in which something is completed. A
ISSUE time of definite length or the period from one fixed
Are petitioners regular (non-project) employees date to another fixed date.”
or project employees? Upon the resolution of this
query rests the validity of petitioners’ dismissal? There is no debate that petitioners were hired for a
specific project or undertaking. Their Appointments
for Project Employment clearly state that their
employment is for NSC ETL #3 Civil Works. The fact of
the completion of said item of work is also undisputed. 111 MERCADO V. NLRC (SEPTEMBER 5, 1991)
However, the records are barren of any definite period
or duration for the expiration of the assigned items of PADILLA, J.
work of petitioners at the time of their engagement. An
examination of said appointments reveal that the FACTS
completion or termination of the project for which Petitioners alleged in their complaint that they were
petitioners were hired was not determined at the start agricultural workers utilized by private respondents
of their employment. There is no specific mention of in all the agricultural phases of work on the 7 1/2
the period or duration when the project will be hectares of rice land and 10 hectares of sugar land
completed or terminated. In fact, the lines for “DATE owned by the latter; that Fortunato Mercado, Sr. and
OF COVERAGE” in the appointments (referring to the Leon Santillan worked in the farm of private
particular items of work for which petitioners are respondents since 1949, Fortunato Mercado, Jr. and
engaged) are left blank. Antonio Mercado since 1972 and the rest of the
petitioners since 1960 up to April 1979, when they
To be exempted from the presumption of regularity of were all allegedly dismissed from their employment;
employment, therefore, the agreement between a and that, during the period of their employment,
project employee and his employer must strictly petitioners received the following daily wages.
conform with the requirements and conditions
provided in Article 280. It is not enough that an Private respondent Aurora Cruz in her answer to
employee is hired for a specific project or phase of petitioners' complaint denied that said petitioners
work. There must also be a determination of or a clear were her regular employees and instead averred that
agreement on the completion or termination of the she engaged their services, through Spouses
project at the time the employee is engaged if the Fortunato Mercado, Sr. and Rosa Mercado, their
objective of Article 280 is to be achieved. Since this "mandarols", that is, persons who take charge in
second requirement was not met in petitioners’ case, supplying the number of workers needed by owners
they should be considered as regular employees of various farms, but only to do a particular phase of
despite their admissions and declarations that they agricultural work necessary in rice production and/or
are project employees made under circumstances sugar cane production, after which they would be free
unclear to us. to render services to other farm owners who need
their services.
There is another reason why we should rule in favor
of petitioners. Nowhere in the records is there any ISSUE
showing that private respondent reported the Are petitioners regular and permanent farm
completion of its projects and the dismissal of workers and therefore entitled to the benefits
petitioners in its finished projects to the nearest Public which they pray for? And corollary to this, were
Employment Office in compliance with Policy said petitioners illegally dismissed by private
Instruction No. 20 of then Labor Secretary Blas F. Ople. respondents?

Jurisprudence abounds with the consistent rule that HELD
the failure of an employer to report to the nearest NO. The contention of petitioners that the second
Public Employment Office the termination of its paragraph of Article 280 of the Labor Code should
workers’ services every time a project or a phase have been applied in their case presents an
thereof is completed indicates that said workers are opportunity to clarify the afore-mentioned provision
not project employees. In the case at bar, only the last of law.
and final termination of petitioners was reported to
the aforementioned labor office. Article 280 of the Labor Code reads in full: "Article
280. Regular and Casual Employment (refer to codal).
Just as important, the fact that petitioners had
rendered more than one year of service at the time of The first paragraph answers the question of who are
their dismissal overturns private respondent’s regular employees. It states that, regardless of any
allegations that petitioners were hired for a specific or written or oral agreement to the contrary, an
a fixed undertaking for a limited period of time. employee is deemed regular where he is engaged in
necessary or desirable activities in the usual business
or trade of the employer, except for project employees.
employees who are deemed "casuals" but not to
A project employee has been defined to be one whose the "project" employees nor the regular
employment has been fixed for a specific project or employees treated in paragraph one of Art. 280.
undertaking, the completion or termination of which
has been determined at the time of the engagement of Clearly, therefore, petitioners being project
the employee, or where the work or service to be employees, or, to use the correct term, seasonal
performed is seasonal in nature and the employment employees, their employment legally ends upon
is for the duration of the season, as in the present case. completion of the project or the season. The
termination of their employment cannot and should
The second paragraph of Art. 280 demarcates as not constitute an illegal dismissal.
"casual" employees, all other employees who do not
fall under the definition of the preceding
paragraph. The proviso, in said second paragraph,
deems as regular employees those "casual" employees
who have rendered at least one year of service
regardless of the fact that such service may be
continuous or broken.

Petitioners, in effect, contend that the proviso in
the second paragraph of Art. 280 is applicable to
their case and that the Labor Arbiter should have
considered them regular by virtue of said
proviso. The contention is without merit.

The general rule is that the office of a proviso is to
qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the
clause that it immediately follows. Thus, it has been
held that a proviso is to be construed with reference to
the immediately preceding part of the provision to
which it is attached, and not to the statute itself or to
other sections thereof. The only exception to this rule
is where the clear legislative intent is to restrain or
qualify not only the phrase immediately preceding it
(the proviso) but also earlier provisions of the statute
or even the statute itself as a whole.

Policy Instruction No. 12 of the Department of Labor
and Employment discloses that the concept of regular
and casual employees was designed to put an end to
casual employment in regular jobs, which has been
abused by many employers to prevent so-called
casuals from enjoying the benefits of regular
employees or to prevent casuals from joining
unions. The same instructions show that the proviso
in the second paragraph of Art. 280 was not designed
to stifle small-scale businesses nor to oppress
agricultural land owners to further the interests of
laborers, whether agricultural or industrial. What it
seeks to eliminate are abuses of employers against
their employees and not, as petitioners would have us
believe, to prevent small-scale businesses from
engaging in legitimate methods to realize
profit. Hence, the proviso is applicable only to the
112 MARAGUINOT V. NLRC (JANUARY 22, 1998) 2. The tasks performed by the alleged “project
employee” are vital, necessary and
DAVIDE, JR., J. indispensable to the usual business or trade of
the employer.
FACTS
Petitioners’ tasks consisted of loading, unloading and However, the length of time during which the
arranging movie equipment in the shooting area as employee was continuously re-hired is not controlling,
instructed by the cameraman, returning the but merely serves as a badge of regular employment.
equipment to Viva Films’ warehouse, assisting in the
“fixing” of the lighting system, and performing other In the instant case, the evidence on record shows that
tasks that the cameraman and/or director may assign. petitioner Enero was employed for a total of two (2)
years and engaged in at least eighteen (18) projects,
Sometime in May 1992, petitioners sought the while petitioner Maraguinot was employed for some
assistance of their supervisor, Mrs. Alejandria Cesario, three (3) years and worked on at least twenty-three
to facilitate their request that private respondents (23) projects. Moreover, as petitioners’ tasks involved,
adjust their salary in accordance with the minimum among other chores, the loading, unloading and
wage law. In June 1992, Mrs. Cesario informed arranging of movie equipment in the shooting area as
petitioners that Mr. Vic del Rosario would agree to instructed by the cameramen, returning the
increase their salary only if they signed a blank equipment to the Viva Films’ warehouse, and assisting
employment contract. As petitioners refused to sign, in the “fixing” of the lighting system, it may not be
private respondents forced Enero to go on leave in gainsaid that these tasks were vital, necessary and
June 1992, then refused to take him back when he indispensable to the usual business or trade of the
reported for work on 20 July 1992. Meanwhile, employer.
Maraguinot was dropped from the company payroll
from 8 to 21 June 1992, but was returned on 22 June A work pool may exist although the workers in the
1992. He was again asked to sign a blank employment pool do not receive salaries and are free to seek other
contract, and when he still refused, private employment during temporary breaks in the business,
respondents terminated his services on 20 July 1992. provided that the worker shall be available when
Petitioners thus sued for illegal dismissal before the called to report for a project. Although primarily
Labor Arbiter. applicable to regular seasonal workers, this set-up can
likewise be applied to project workers insofar as the
Private respondents assert that they contract persons effect of temporary cessation of work is concerned.
called “producers” -- also referred to as “associate This is beneficial to both the employer and employee
producers” -- to “produce” or make movies for private for it prevents the unjust situation of “coddling labor
respondents; and contend that petitioners are project at the expense of capital” and at the same time enables
employees of the associate producers who, in turn, act the workers to attain the status of regular employees.
as independent contractors. As such, there is no
employer-employee relationship between petitioners The Court’s ruling here is meant precisely to give life
and private respondents. to the constitutional policy of strengthening the labor
sector, but, we stress, not at the expense of
ISSUE management. Lest it be misunderstood, this ruling
Are petitioners project employees or regular does not mean that simply because an employee is a
employees? project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a
HELD regular employee.
THEY ARE REGULAR EMPLOYEES. A project
employee or a member of a work pool may acquire the All that we hold today is that once a project or work
status of a regular employee when the following pool employee has been:
concur:
1. continuously, as opposed to intermittently, re-
1. There is a continuous rehiring of project hired by the same employer for the same tasks
employees even after cessation of a project; or nature of tasks; and
and
2. these tasks are vital, necessary and 113 HACIENDA FATIMA V. NATIONAL
indispensable to the usual business or trade of FEDERATION OF SUGARCANE WORKERS
the employer, (JANUARY 28, 2003)

then the employee must be deemed a regular PANGANIBAN, J.
employee, pursuant to Article 280 of the Labor Code
and jurisprudence. To rule otherwise would allow FACTS
circumvention of labor laws in industries not falling The workers including complainants herein were not
within the ambit of Policy Instruction No. given work for more than one month. In protest,
20/Department Order No. 19, hence allowing the complainants staged a strike which was however
prevention of acquisition of tenurial security by settled upon the signing of a Memorandum of
project or work pool employees who have already Agreement.
gained the status of regular employees by the
employer’s conduct. However, alleging that complainants failed to load the
fifteen wagons, respondents reneged on its
In closing then, as petitioners had already gained the commitment to sit down and bargain collectively.
status of regular employees, their dismissal was Instead, respondent employed all means including the
unwarranted, for the cause invoked by private use of private armed guards to prevent the organizers
respondents for petitioners’ dismissal, viz., from entering the premises.
completion of project, was not, as to them, a valid
cause for dismissal under Article 282 of the Labor Moreover, starting September 1991, respondents did
Code. As such, petitioners are now entitled to back not any more give work assignments to the
wages and reinstatement, without loss of seniority complainants forcing the union to stage a strike on
rights and other benefits that may have accrued. January 2, 1992. For all their persistence, the risk they
had to undergo in conducting a strike in the face of
Nevertheless, following the principles of “suspension overwhelming odds, complainants in an ironic twist of
of work” and “no pay” between the end of one project fate now find themselves being accused of ‘refusing to
and the start of a new one, in computing petitioners’ work and being choosy in the kind of work they have
back wages, the amounts corresponding to what could to perform. The CA affirmed that while the work of
have been earned during the periods from the date respondents was seasonal in nature, they were
petitioners were dismissed until their reinstatement considered to be merely on leave during the off-season
when petitioners’ respective Shooting Units were not and were therefore still employed by petitioners.
undertaking any movie projects, should be deducted. Moreover, the workers enjoyed security of tenure. Any
infringement upon this right was deemed by the CA to
be tantamount to illegal dismissal.

ISSUE
Are petitioners regular employees?

HELD
YES. Article 280 of the Labor Code, as amended, states:
“Art. 280. Regular and Casual Employment (refer to
codal).

For respondents to be excluded from those classified
as regular employees, it is not enough that they
perform work or services that are seasonal in nature.
They must have also been employed only for the
duration of one season. The evidence proves the
existence of the first, but not of the second, condition.
The fact that respondents -- with the exception of
Luisa Rombo, Ramona Rombo, Bobong Abriga and
Boboy Silva -- repeatedly worked as sugarcane
workers for petitioners for several years is not denied
by the latter. Evidently, petitioners employed The Court finds no reason to disturb the CA’s dismissal
respondents for more than one season. Therefore, the of what petitioners claim was their valid exercise of a
general rule of regular employment is applicable. management prerogative. The sudden changes in
work assignments reeked of bad faith. These changes
“[T]he test of whether or not an employee is a regular were implemented immediately after respondents
employee has been laid down in De Leon v. NLRC, in had organized themselves into a union and started
which this Court held: “The primary standard, demanding collective bargaining. Those who were
therefore, of determining regular employment is the union members were effectively deprived of their
reasonable connection between the particular activity jobs. Petitioners’ move actually amounted to
performed by the employee in relation to the usual unjustified dismissal of respondents, in violation of
trade or business of the employer. The test is whether the Labor Code.
the former is usually necessary or desirable in the
usual trade or business of the employer. The “Where there is no showing of clear, valid and legal
connection can be determined by considering the cause for the termination of employment, the law
nature of the work performed and its relation to the considers the matter a case of illegal dismissal and the
scheme of the particular business or trade in its burden is on the employer to prove that the
entirety. Also if the employee has been performing the termination was for a valid and authorized cause.” In
job for at least a year, even if the performance is not the case at bar, petitioners failed to prove any such
continuous and merely intermittent, the law deems cause for the dismissal of respondents who, as
repeated and continuing need for its performance as discussed above, are regular employees.
sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence,
the employment is considered regular, but only with
respect to such activity and while such activity exists.

[T]he fact that [respondents] do not work
continuously for one whole year but only for the
duration of the x x x season does not detract from
considering them in regular employment since in a
litany of cases this Court has already settled that
seasonal workers who are called to work from time to
time and are temporarily laid off during off-season are
not separated from service in said period, but merely
considered on leave until re-employed.”

The CA did not err when it ruled that Mercado v. NLRC
was not applicable to the case at bar. In the earlier
case, the workers were required to perform phases of
agricultural work for a definite period of time, after
which their services would be available to any other
farm owner. They were not hired regularly and
repeatedly for the same phase/s of agricultural work,
but on and off for any single phase thereof. On the
other hand, herein respondents, having performed the
same tasks for petitioners every season for several
years, are considered the latter’s regular employees
for their respective tasks. Petitioners’ eventual refusal
to use their services -- even if they were ready, able
and willing to perform their usual duties whenever
these were available -- and hiring of other workers to
perform the tasks originally assigned to respondents
amounted to illegal dismissal of the latter.

114 PHIL TOBACCO FLU-CURING AND REDRYING employee’s dismissal arising from the closure or
CORP V. NLRC (DECEMBER 10, 1998) cessation of operation of the establishment.

PANGANIBAN, J. It must be noted that the present case involves the
closure of merely a unit or division, not the whole
FACTS business of an otherwise viable
To state the facts simply, there are two groups of enterprise. Although Article 283 uses the phrase
employees, namely, the Lubat group and the Luris “closure or cessation of operation of an establishment
group. The Lubat group is composed of petitioner’s or undertaking,” this Court previously ruled in Coca-
seasonal employees who were not rehired for the Cola Bottlers (Phils.), Inc. v. NLRC that said statutory
1994 tobacco season. At the start of that season, they provision applies in cases of both complete and partial
were merely informed that their employment had cessation of the business operation: “x x x Ordinarily,
been terminated at the end of the 1993 season. They the closing of a warehouse facility and the termination
claimed that petitioner’s refusal to allow them to of the services of employees there assigned is a matter
report for work without mention of any just or that is left to the determination of the employer in the
authorized cause constituted illegal dismissal. In their good faith exercise of its management prerogatives.
Complaint, they prayed for separation pay, back The applicable law in such a case is Article 283 of the
wages, attorney’s fees and moral damages. Labor Code which permits ‘closure or cessation of
operation of an establishment or undertaking not due
On the other hand, the Luris group is made up of to serious business losses or financial reverses,’ which,
seasonal employees who worked during the 1994 in our reading, includes both the complete cessation of
season. On August 3, 1994, they received a notice operations and the cessation of only part of a
informing them that, due to serious business losses, company’s business.”
petitioner planned to close its Balintawak plant and
transfer its tobacco processing and redrying In Somerville Stainless Steel Corporation v. NLRC, the
operations to Ilocos Sur. Although the closure was to Court held that “[t]he ‘loss’ referred to in Article 283
be effective September 15, 1994, they were no longer cannot be just any kind or amount of loss; otherwise,
allowed to work starting August 4, 1994. Instead, a company could easily feign excuses to suit its whims
petitioner awarded them separation pay computed and prejudices or to rid itself of unwanted
according to the following formula: employees. To guard against this possibility of abuse,
the Court laid down the following standard which a
[(total no. of days actually worked / total no. of company must meet to justify retrenchment: ‘x x x
working days in one year) x daily rate x 15 days] Firstly, the losses expected should be substantial and
not merely de minimis in extent. If the loss
In their Complaint, they claimed that the computation purportedly sought to be forestalled by retrenchment
should be based not on the above mathematical is clearly shown to be insubstantial and
equation, but on the actual number of years served. In inconsequential in character, the bonafide nature of
addition, they contended that they were illegally the retrenchment would appear to be seriously in
dismissed, and thus they prayed for back wages. question. Secondly, the substantial loss apprehended
must be reasonably imminent, as such imminence can
ISSUES be perceived objectively and in good faith by the
(1) Did petitioner prove “serious business losses,” employer. There should, in other words, be a certain
its justification for the nonpayment of separation degree of urgency for the retrenchment, which is after
pay? all a drastic recourse with serious consequences for
the livelihood of the employees retired or otherwise
(2) Was the dismissal of the employees valid? laid off. Because of the consequential nature of
retrenchment, it must, thirdly, be reasonably
(3) How should the separation pay of illegally necessary and likely to effectively prevent the
dismissed seasonal employees be computed? expected losses. The employer should have taken
other measures prior or parallel to retrenchment to
HELD forestall losses, i.e., cut other costs other than labor
(1) NO. Article 283 of the Labor Code (refer to codal) costs. An employer who, for instance, lays off
prescribes the requisites and the procedure for an substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-
called ‘golden parachutes,’ can scarcely claim to be (2) NO. From the facts, we are convinced that
retrenching in good faith to avoid losses. To impart petitioner illegally dismissed the members of the
operational meaning to the constitutional policy of Lubat group when it refused to allow them to work
providing ‘full protection’ to labor, the employer’s during the 1994 season.
prerogative to bring down labor costs by retrenching
must be exercised essentially as a measure of last This Court has previously ruled in Manila Hotel
resort, after less drastic means -- e.g., reduction of both Company v. CIR that seasonal workers who are called
management and rank-and-file- bonuses and salaries, to work from time to time and are temporarily laid off
going on reduced time, improving manufacturing during off-season are not separated from service in
efficiencies, trimming of marketing and advertising said period, but are merely considered on leave until
costs, etc. -- have been tried and found wanting. reemployed, viz.: “The nature of their relationship x x
‘Lastly, but certainly not the least important, alleged x is such that during off season they are temporarily
losses if already realized, and the expected imminent laid off but during summer season they are re-
losses sought to be forestalled, must be proved by employed, or when their services may be needed.
sufficient and convincing evidence. The reason for They are not strictly speaking separated from the
requiring this quantum of proof is readily apparent: service but are merely considered as on leave of
any less exacting standard of proof would render too absence without pay until they are re-employed.”
easy the abuse of this ground for termination of
services of employees. x x x’” From the foregoing, it follows that the employer-
employee relationship between herein petitioner and
To repeat, petitioner did not actually close its entire members of the Lubat group was not terminated at the
business. It merely transferred or relocated its end of the 1993 season. From the end of the 1993
tobacco processing and redrying operations. season until the beginning of the 1994 season, they
were considered only on leave but nevertheless still in
MOREOVER, Article 283 of the Labor Code also the employ of petitioner.
requires the employer to furnish
both the employee and the Department of Labor The facts in the above-mentioned cases are different
and Employment a written Notice of Closure at least from those in Mercado v. NLRC and in Magcalas v.
one month prior to closure. True, in the present case NLRC. In Mercado, although respondent constantly
the Notices of Termination were given to the availed herself of petitioners’ services from year to
employees on August 3, 1994, and the intended date year, it was clear from the facts therein that they were
of closure was September 15, 1994. However, the not in her regular employ. Petitioners therein
employees were in fact not allowed to work after performed different phases of agricultural work in a
August 3, 1994. Therefore, the termination notices to given year. However, during that period, they were
the employees were given in violation of the requisite free to work for other farm owners, and in fact they
one-month prior notice under Article 283 of the Labor did. In other words, they worked for respondent, but
Code. were nevertheless free to contract their services with
other farm owners. The Court was thus emphatic
Given the illogical and misleading entries in the when it ruled that petitioners were mere project
Statement of Income and Expenses, as well as the employees, who could be hired by other farm owners.
recasted version thereof, and the defective Notice of As such, their employment would naturally end upon
Closure, this Court holds that petitioner was not able the completion of each project or each phase of farm
to establish that the closure of its business operations work which has been contracted. In Magcalas v. NLRC,
in its Balintawak plant was in fact due to serious the Court merely cited the aforequoted ruling to
financial losses. Therefore, under the last two explain the difference among regular, project and
sentences of Article 283 of the Labor Code, the seasonal employees. In fact, it concluded that the
dismissed employees belonging to the Luris group are employees therein were regular and not project
entitled to separation pay “equivalent to one (1) employees.
month pay or at least one half (1/2) month pay for
every year of service, whichever is higher. A fraction Prescinding from the above, we hold that petitioner is
of at least six (6) months shall be considered one (1) liable for illegal dismissal and should be responsible
whole year.” for the reinstatement of the Lubat group and the
payment of their back wages.

(3) The amount of separation pay is based on two 115 BRENT SCHOOL V. ZAMORA (FEBRUARY 5,
factors: the amount of monthly salary and the number 1990)
of years of service. Although the Labor Code provides
different definitions as to what constitutes “one year NARVASA, J.
of service,” Book Six does not specifically define “one
year of service” for purposes of computing separation FACTS
pay. However, Articles 283 and 284 both state in The root of the controversy at bar is an employment
connection with separation pay that a fraction of at contract in virtue of which Doroteo R. Alegre was
least six months shall be considered one whole engaged as athletic director by Brent School, Inc. at a
year. Applying this to the case at bar, we hold that the yearly compensation of P20,000.00. The contract fixed
amount of separation pay which respondent members a specific term for its existence, five (5) years, i.e., from
of the Lubat and Luris groups should receive is one- July 18, 1971, the date of execution of the agreement,
half (1/2) their respective average monthly pay to July 17, 1976. Subsequent subsidiary agreements
during the last season they worked multiplied by the dated March 15, 1973, August 28, 1973, and
number of years they actually rendered service, September 14, 1974 reiterated the same terms and
provided that they worked for at least six months conditions, including the expiry date, as those
during a given year. contained in the original contract of July 18, 1971.

The formula that petitioner proposes, wherein a year At the investigation conducted by a Labor Conciliator
of work is equivalent to actual work rendered for 303 of said report of termination of his services, Alegre
days, is both unfair and inapplicable, considering that protested the announced termination of his
Articles 283 and 284 provide that in connection with employment. He argued that although his contract did
separation pay, a fraction of at least six months shall stipulate that the same would terminate on July 17,
be considered one whole year. Under these 1976, since his services were necessary and desirable in
provisions, an employee who worked for only six the usual business of his employer, and his employment
months in a given year -- which is certainly less than had lasted for five years, he had acquired the status of
303 days -- is considered to have worked for one a regular employee and could not be removed except
whole year. for valid cause.

ISSUE
Is Alegre a regular employee?

HELD
NO. He is a fixed term employee. Article 272 of the
Labor Code, as amended by said PD 850, still impliedly
acknowledged the propriety of term employment: it
listed the "just causes" for which "an employer may
terminate employment without a definite period," thus
giving rise to the inference that if the employment be
with a definite period, there need be no just cause for
termination thereof if the ground be precisely the
expiration of the term agreed upon by the parties for
the duration of such employment.

Still later, however, said Article 272 (formerly Article
321) was further amended by Batas Pambansa Bilang
130, to eliminate altogether reference to employment
without a definite period. As lastly amended, the
opening lines of the article (renumbered 283), now
pertinently read: "An employer may terminate an
employment for any of the following just causes: ** ."
BP 130 thus completed the elimination of every
reference in the Labor Code, express or implied, to
employment with a fixed or definite period or term.
It is in the light of the foregoing description of the providing that these officials," * * may lose their jobs
development of the provisions of the Labor Code as president, executive vice-president or vice-
bearing on term or fixed-period employment that the president, etc., because the stockholders or the board
question posed in the opening paragraph of this of directors for one reason or another did not reelect
opinion should now be addressed. Is it then the them."
legislative intention to outlaw stipulations in
employment contracts laying down a definite period There can of course be no quarrel with the proposition
therefor? Are such stipulations in essence contrary to that where from the circumstances it is apparent that
public policy and should not on this account be periods have been imposed to preclude acquisition of
accorded legitimacy? tenurial security by the employee, they should be
struck down or disregarded as contrary to public
On the one hand, there is the gradual and progressive policy, morals, etc. But where no such intent to
elimination of references to term or fixed-period circumvent the law is shown, or stated otherwise,
employment in the Labor Code, and the specific where the reason for the law does not exist, e.g., where
statement of the rule Article 280 LC * * Regular and it is indeed the employee himself who insists upon a
Casual Employment (refer to codal). period or where the nature of the engagement is such
that, without being seasonal or for a specific project, a
There is, on the other hand, the Civil Code, which has definite date of termination is a sine qua non, would an
always recognized, and continues to recognize, the agreement fixing a period be essentially evil or illicit,
validity and propriety of contracts and obligations therefore anathema? Would such an agreement come
with a fixed or definite period, and imposes no within the scope of Article 280 which admittedly was
restraints on the freedom of the parties to fix the enacted "to prevent the circumvention of the right of
duration of a contract, whatever its object, be it specie, the employee to be secured in * * (his) employment?”
goods or services, except the general admonition
against stipulations contrary to law, morals, good As it is evident from even only the three examples
customs, public order or public policy. Under the Civil already given that Article 280 of the Labor Code, under
Code, therefore, and as a general proposition, fixed- a narrow and literal interpretation, not only fails to
term employment contracts are not limited, as they exhaust the gamut of employment contracts to which
are under the present Labor Code, to those by nature the lack of a fixed period would be an anomaly, but
seasonal or for specific projects with pre-determined would also appear to restrict, without reasonable
dates of completion; they also include those to which distinctions, the right of an employee to freely
the parties by free choice have assigned a specific date stipulate with his employer the duration of his
of termination. engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The
Some familiar examples may be cited of employment law must be given a reasonable interpretation, to
contracts which may be neither for seasonal work nor preclude absurdity in its application. Outlawing the
for specific projects, but to which a fixed term is an whole concept of term employment and subverting to
essential and natural appurtenance: overseas boot the principle of freedom of contract to remedy
employment contracts, for one, to which, whatever the the evil of employers' using it as a means to prevent
nature of the engagement, the concept of regular their employees from obtaining security of tenure is
employment with all that it implies does not appear like cutting off the nose to spite the face or, more
ever to have been applied, Article 280 of the Labor relevantly, curing a headache by lopping off the head.
Code notwithstanding; also appointments to the
positions of dean, assistant dean, college secretary, Accordingly, and since the entire purpose behind the
principal, and other administrative offices in development of legislation culminating in the present
educational institutions, which are by practice or Article 280 of the Labor Code clearly appears to have
tradition rotated among the faculty members, and been, as already observed, to prevent circumvention
where fixed terms are a necessity without which no of the employee's right to be secure in his tenure, the
reasonable rotation would be possible. Similarly, clause in said article indiscriminately and completely
despite the provisions of Article 280, Policy ruling out all written or oral agreements conflicting
Instructions No. 8 of the Minister of Labor implicitly with the concept of regular employment as defined
recognize that certain company officials may be therein should be construed to refer to the substantive
elected for what would amount to fixed periods, at the evil that the Code itself has singled out: agreements
expiration of which they would have to stand down, in entered into precisely to circumvent security of
tenure. It should have no application to instances 116 VIERNES V. NLRC (APRIL 4, 2003)
where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any AUSTRIA-MARTINEZ, J.
force, duress or improper pressure being brought to
bear upon the employee and absent any other FACTS
circumstances vitiating his consent, or where it Complainants’ services as meter readers were
satisfactorily appears that the employer and employee contracted for hardly a month’s duration, or from
dealt with each other on more or less equal terms with October 8 to 31, 1990. Their employment contracts,
no moral dominance whatever being exercised by the couched in identical terms, read: You are hereby
former over the latter. Unless thus limited in its appointed as METER READER (APPRENTICE) under
purview, the law would be made to apply to purposes BENECO-NEA Management with compensation at the
other than those explicitly stated by its framers; it thus rate of SIXTY-SIX PESOS AND SEVENTY-FIVE
becomes pointless and arbitrary, unjust in its effects CENTAVOS (P66.75) per day from October 08 to 31,
and apt to lead to absurd and unintended 1990.
consequences.
The said term notwithstanding, the complainants
Paraphrasing Escudero, respondent Alegre's were allowed to work beyond October 31, 1990, or
employment was terminated upon the expiration of until January 2, 1991. On January 3, 1991, they were
his last contract with Brent School on July 16, 1976 each served their identical notices of termination
without the necessity of any notice. The advance dated December 29, 1990.
written advice given the Department of Labor with
copy to said petitioner was a mere reminder of the The complainants filed separate complaints for illegal
impending expiration of his contract, not a letter of dismissal. It is the contention of the complainants that
termination, nor an application for clearance to they were not apprentices but regular employees
terminate which needed the approval of the whose services were illegally and unjustly terminated
Department of Labor to make the termination of his in a manner that was whimsical and capricious. On the
services effective. other hand, the respondent invokes Article 283 of the
Labor Code in defense of the questioned dismissal.

ISSUE
Should petitioners be reinstated not on a
probationary status but as regular employees?

HELD
YES. Reinstatement means restoration to a state or
condition from which one had been removed or
separated. In case of probationary employment,
Article 281 of the Labor Code requires the employer to
make known to his employee at the time of the latter’s
engagement of the reasonable standards under which
he may qualify as a regular employee.

A review of the records shows that petitioners have
never been probationary employees. There is nothing
in the letter of appointment, to indicate that their
employment as meter readers was on a probationary
basis. It was not shown that petitioners were informed
by the private respondent, at the time of the latter’s
employment, of the reasonable standards under which
they could qualify as regular employees. Instead,
petitioners were initially engaged to perform their job
for a limited duration, their employment being fixed
for a definite period, from October 8 to 31, 1990.

Private respondent’s reliance on the case of Brent 117 PHILIPS SEMICONDUCTORS V. FADRIQUELA
School, Inc. vs. Zamora, wherein we held as follows:
CALLEJO, SR., J.
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present FACTS
Article 280 of the Labor Code clearly appears to have On May 8, 1992, respondent Eloisa Fadriquela
been, as already observed, to prevent circumvention executed a Contract of Employment with the
of the employee’s right to be secure in his tenure, the petitioner in which she was hired as a production
clause in said article indiscriminately and completely operator with a daily salary of P118. Her initial
ruling out all written or oral agreements conflicting contract was for a period of three months up to August
with the concept of regular employment as defined 8, 1992, but was extended for two months when she
therein should be construed to refer to the substantive garnered a performance rating of 3.15. Her contract
evil that the Code itself has singled out: agreements was again renewed for two months or up to December
entered into precisely to circumvent security of 16, 1992, when she received a performance rating of
tenure. It should have no application to instances 3.8. After the expiration of her third contract, it was
where a fixed period of employment was agreed upon extended anew, for three months, that is, from January
knowingly and voluntarily by the parties, without any 4, 1993 to April 4, 1993.
force, duress or improper pressure being brought to
bear upon the employee and absent any other After garnering a performance rating of 3.4, the
circumstances vitiating his consent, or where it respondent’s contract was extended for another three
satisfactorily appears that the employer and employee months, that is, from April 5, 1993 to June 4, 1993. She,
dealt with each other on more or less equal terms with however, incurred five absences in the month of April,
no moral dominance whatever being exercised by the three absences in the month of May and four absences
former over the latter.” in the month of June. Line supervisor Shirley F. Velayo
asked the respondent why she incurred the said
is misplaced. absences, but the latter failed to explain her side. The
respondent was warned that if she offered no valid
The principle we have enunciated in Brent applies justification for her absences, Velayo would have no
only with respect to fixed term employments. While it other recourse but to recommend the non-renewal of
is true that petitioners were initially employed on a her contract. The respondent still failed to respond, as
fixed term basis as their employment contracts were a consequence of which her performance rating
only for October 8 to 31, 1990, after October 31, 1990, declined to 2.8. Velayo recommended to the petitioner
they were allowed to continue working in the same that the respondent’s employment be terminated due
capacity as meter readers without the benefit of a new to habitual absenteeism, in accordance with the
contract or agreement or without the term of their Company Rules and Regulations. Thus, the
employment being fixed anew. After October 31, 1990, respondent’s contract of employment was no longer
the employment of petitioners is no longer on a fixed renewed. The respondent filed a complaint before the
term basis. The complexion of the employment National Capital Region Arbitration Branch of the
relationship of petitioners and private respondent is National Labor Relations Commission (NLRC) for
thereby totally changed. Petitioners have attained the illegal dismissal. On the other hand, the petitioner
status of regular employees. contended that the respondent had not been
dismissed, but that her contract of employment for the
period of April 4, 1993 to June 4, 1993 merely expired
and was no longer renewed because of her low
performance rating. Being merely a contractual
employee, respondent was not illegally dismissed.

ISSUE
Is respondent still a contractual employee?

HELD
NO. She is already a regular employee by operation of
law. The appellate court held that, in light of the factual

milieu, the respondent was already a regular all excuse to prevent her regularization. Such
employee on June 4, 1993. Thus: statement is contrary to the letter and spirit of Articles
279 and 280 of the Labor Code.
It is apparent from the factual circumstances of this
case that the period of employment has been imposed In the Romares v. NLRC case, we cited the criteria
to preclude acquisition of tenurial security by under which “term employment” cannot be said to be
petitioner. It bears stressing that petitioner’s original in circumvention of the law on security of tenure,
contract of employment, dated May 8, 1992 to August namely:
8, 1992, had been extended through several contracts
– one from October 13, 1992 to December 16, 1992, 1. The fixed period of employment was
another from January 7, 1993 to April 4, 1993, and, knowingly and voluntarily agreed upon by the
lastly, from April 5, 1993 to June 4, 1993. parties without any force, duress, or improper
pressure being brought to bear upon the
The fact that the petitioner had rendered more than employee and absent any other circumstances
one year of service at the time of his (sic) dismissal vitiating his consent; or
only shows that she is performing an activity which is
usually necessary and desirable in private 1. It satisfactorily appears that the employer and
respondent’s business or trade. The work of petitioner the employee dealt with each other on more or
is hardly “specific” or “seasonal.” The petitioner is, less equal terms with no moral dominance
therefore, a regular employee of private respondent, exercised by the former or the latter.
the provisions of their contract of employment
notwithstanding. The private respondent’s prepared None of these criteria has been met in this case. While
employment contracts placed petitioner at the mercy at the start, petitioner was just a mere contractual
of those who crafted the said contract. employee, she became a regular employee as soon as
she had completed one year of service. It is not difficult
We agree with the appellate court. to see that to uphold the contractual arrangement
between private respondent and petitioner would, in
In this case, the respondent was employed by the effect, be to permit employers to avoid the necessity of
petitioner on May 8, 1992 as production operator. She hiring regular or permanent employees. By hiring
was assigned to wirebuilding at the transistor employees indefinitely on a temporary or casual
division. There is no dispute that the work of the status, employers deny their right to security of
respondent was necessary or desirable in the business tenure. This is not sanctioned by law.
or trade of the petitioner. She remained under the
employ of the petitioner without any interruption Additionally, petitioner’s reliance on the CBA is
since May 8, 1992 to June 4, 1993 or for one (1) year misplaced. The CBA, during its lifetime, constitutes the
and twenty-eight (28) days. The original contract of law between the parties. Such being the rule, the
employment had been extended or renewed for four aforementioned CBA should be binding only upon
times, to the same position, with the same chores. Such private respondent and its regular employees who
a continuing need for the services of the respondent is were duly represented by the bargaining union. The
sufficient evidence of the necessity and agreement embodied in the “Minutes of Meeting”
indispensability of her services to the petitioner’s between the representative union and private
business. By operation of law, then, the respondent respondent, providing that contractual employees
had attained the regular status of her employment shall become regular employees only after seventeen
with the petitioner, and is thus entitled to security of months of employment, cannot bind petitioner. Such a
tenure as provided for in Article 279 of the Labor Code provision runs contrary to law not only because
which reads: Art. 279. Security of Tenure (refer to contractual employees do not form part of the
codal). collective bargaining unit which entered into the CBA
with private respondent but also because of the Labor
The respondent’s re-employment under contracts Code provision on regularization. The law explicitly
ranging from two to three months over a period of one states that an employee who had rendered at least one
year and twenty-eight days, with an express statement year of service, whether such service is continuous or
that she may be reassigned at the discretion of the broken, shall be considered a regular employee. The
petitioner and that her employment may be period set by law is one year. The seventeen months
terminated at any time upon notice, was but a catch- provided by the “Minutes of Meeting” is obviously
much longer. The principle is well settled that the law 118 PANGILINAN V. GENERAL MILLING (JULY 12,
forms part of and is read into every contract without 2004)
the need for the parties expressly making reference to
it. CALLEJO, SR., J.

FACTS
The petitioners were employed by the respondent on
different dates as emergency workers at its poultry
plant in Cainta, Rizal, under separate
“temporary/casual contracts of employment” for a
period of five months. Most of them worked as
chicken dressers, while the others served as packers
or helpers. Upon the expiration of their respective
contracts, their services were terminated. They later
filed separate complaints for illegal dismissal and non-
payment of holiday pay, 13th month pay, night-shift
differential and service incentive leave pay against the
respondent before the Arbitration Branch of the
National Labor Relations Commission. The petitioners
alleged that their work as chicken dressers was
necessary and desirable in the usual business of the
respondent, and added that although they worked
from 10:00 p.m. to 6:00 a.m., they were not paid night-
shift differential. They stressed that based on the
nature of their work, they were regular employees of
the respondent; hence, could not be dismissed from
their employment unless for just cause and after due
notice.

ISSUE
Are petitioners regular employees when their
employment was terminated?

HELD
NO. We agree that the petitioners were employees
with a fixed period, and, as such, were not regular
employees. Article 280 of the Labor Code
comprehends three kinds of employees: (a) regular
employees or those whose work is necessary or
desirable to the usual business of the employer; (b)
project employees or those whose employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season; and, (c) casual
employees or those who are neither regular nor
project employees.

A regular employee is one who is engaged to perform
activities which are necessary and desirable in the
usual business or trade of the employer as against
those which are undertaken for a specific project or
are seasonal. There are two separate instances as chicken dressers is necessary and desirable in the
whereby it can be determined that an employment is usual business of the respondent, they were employed
regular: (1) if the particular activity performed by the on a mere temporary basis, since their employment
employee is necessary or desirable in the usual was limited to a fixed period. As such, they cannot be
business or trade of the employer; and, (2) if the said to be regular employees, but are merely
employee has been performing the job for at least a “contractual employees.” Consequently, there was no
year. illegal dismissal when the petitioners’ services were
terminated by reason of the expiration of their
In the case of St. Theresa’s School of Novaliches contracts. Lack of notice of termination is of no
Foundation vs. NLRC, we held that Article 280 of the consequence, because when the contract specifies the
Labor Code does not proscribe or prohibit an period of its duration, it terminates on the expiration
employment contract with a fixed period. We of such period. A contract for employment for a
furthered that it does not necessarily follow that definite period terminates by its own term at the end
where the duties of the employee consist of activities of such period.
usually necessary or desirable in the usual business of
the employer, the parties are forbidden from agreeing
on a period of time for the performance of such
activities. There is thus nothing essentially
contradictory between a definite period of
employment and the nature of the employee’s duties.

Indeed, in the leading case of Brent School Inc. v.
Zamora, we laid down the guideline before a contract
of employment may be held as valid, to wit:
“Stipulations in employment contracts providing for
term employment or fixed period employment are
valid when the period were agreed upon knowingly
and voluntarily by the parties without force, duress or
improper pressure, being brought to bear upon the
employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other
on more or less equal terms with no moral dominance
whatever being exercised by the former over the
latter.”

An examination of the contracts entered into by the
petitioners showed that their employment was limited
to a fixed period, usually five or six months, and did
not go beyond such period. The records reveal that the
stipulations in the employment contracts were
knowingly and voluntarily agreed to by the petitioners
without force, duress or improper pressure, or any
circumstances that vitiated their consent. Similarly,
nothing therein shows that these contracts were used
as a subterfuge by the respondent GMC to evade the
provisions of Articles 279 and 280 of the Labor Code.

The petitioners were hired as “emergency workers”
and assigned as chicken dressers, packers and helpers
at the Cainta Processing Plant. The respondent GMC is
a domestic corporation engaged in the production and
sale of livestock and poultry, and is a distributor of
dressed chicken. While the petitioners’ employment
119 CLARION PRINTING V. NLRC (JUNE 27, 2005) “Probationary employment shall be governed by the
following rules:
CARPIO-MORALES, J.
x x x (d) In all cases of probationary employment, the
FACTS employer shall make known to the employee the
Respondent Michelle Miclat (Miclat) was employed on standards under which he will qualify as a regular
April 21, 1997 on a probationary basis as marketing employee at the time of his engagement. Where no
assistant with a monthly salary of P6,500.00 by standards are made known to the employee at that
petitioner Clarion Printing House (CLARION) owned time, he shall be deemed a regular employee”
by its co-petitioner Eulogio Yutingco. At the time of her
employment, she was not informed of the standards she was deemed to have been hired from day one as a
that would qualify her as a regular employee. regular employee.

On October 22, 1997, the Assistant Personnel Manager
of CLARION informed Miclat by telephone that her
employment contract had been terminated effective
October 23, 1997. No reason was given for the
termination. The following day or on October 23,
1997, on reporting for work, Miclat was informed by
the General Sales Manager that her termination was
part of CLARION’s cost-cutting measures. On
November 17, 1997, Miclat filed a complaint for illegal
dismissal against CLARION and Yutingco (petitioners)
before the National Labor Relations Commission
(NLRC).

Miclat claimed that she was never informed of the
standards which would qualify her as a regular
employee. She asserted, however, that she qualified as
a regular employee since her immediate supervisor
even submitted a written recommendation in her
favor before she was terminated without just or
authorized cause.

ISSUE
Did Miclat qualify as a regular employee?

HELD
YES. This Court’s finding that Miclat’s termination was
justified notwithstanding, since at the time she was
hired on probationary basis she was not informed of
the standards that would qualify her as a regular
employee, under Section 6, Rule I of the Implementing
Rules of Book VI of the Labor Code which reads:

SEC. 6. Probationary employment. There is
probationary employment where the employee, upon
his engagement, is made to undergo a trial period
during which the employer determines his fitness to
qualify for regular employment, based on reasonable
standards made known to him at the time of
engagement.

120 DUSIT HOTEL V. GATBONTON (MAY 5, 2006) start of the employment. Nonetheless, the power of
the employer to terminate an employee on probation
QUISUMBING, J. is not without limitations. First, this power must be
exercised in accordance with the specific
FACTS requirements of the contract. Second, the
On November 21, 1998, respondent Renato M. dissatisfaction on the part of the employer must be
Gatbonton was hired as Chief Steward in petitioner real and in good faith, not feigned so as to circumvent
Dusit Hotel Nikko's Food and Beverage Department. the contract or the law; and third, there must be no
He signed a three-month probationary employment unlawful discrimination in the dismissal. In
contract until February 21, 1999, with a monthly termination cases, the burden of proving just or valid
salary of P25,000. At the start of his employment, the cause for dismissing an employee rests on the
standards by which he would be assessed to qualify employer.
for regular employment were explained to him.
Here, the petitioner did not present proof that the
The hotel alleged that at the end of the probation respondent was evaluated from November 21, 1998 to
period, Ingo Rauber, Director of its Food and Beverage February 21, 1999, nor that his probationary
Department, observed that Gatbonton failed to meet employment was validly extended.
the qualification standards for Chief Steward, and
Rauber recommended a two-month extension of In the absence of any evaluation or valid extension, we
Gatbonton's probationary period, or until April 22, cannot conclude that respondent failed to meet the
1999. At the end of the 4th month, on March 24, 1999, standards of performance set by the hotel for a chief
Rauber informed Gatbonton that the latter had poor steward. At the expiration of the three-month period,
ratings on staff supervision, productivity, quantity of Gatbonton had become a regular employee. It is an
work, and overall efficiency and did not qualify as elementary rule in the law on labor relations that a
Chief Steward. Gatbonton requested another month or probationary employee engaged to work beyond the
until April 22, 1999 to improve his performance, to probationary period of six months, as provided under
which Rauber agreed but allegedly refused to sign the Article 281 of the Labor Code, or for any length of time
Performance Evaluation Form. Neither did he sign the set forth by the employer (in this case, three months),
Memorandum on the extension. shall be considered a regular employee. This is clear in
the last sentence of Article 281. Any circumvention of
On March 31, 1999, a noticE of termination of this provision would put to naught the State's avowed
probationary employment effective April 9, 1999, on protection for labor.
the above alleged grounds was served on Gatbonton.
On April 12, 1999, he filed a complaint for illegal Since respondent was not dismissed for a just or
dismissal and non-payment of wages, with prayers for authorized cause, his dismissal was illegal, and he is
reinstatement, full backwages, and damages, including entitled to reinstatement without loss of seniority
attorney's fees. rights, and other privileges as well as to full
backwages, inclusive of allowances, and to other
ISSUE benefits or their monetary equivalent computed from
Was the respondent a regular employee at the the time his compensation was withheld from him up
time of dismissal? Was he validly terminated from to the time of his actual reinstatement.
employment?

HELD
YES. He was a regular employee. Consequently, he was
not validly terminated from employment. Here, Article
281 of the Labor Code is pertinent. It provides that:
ART. 281. Probationary Employment (refer to codal).

As Article 281 clearly states, a probationary employee
can be legally terminated either: (1) for a just cause;
or (2) when the employee fails to qualify as a regular
employee in accordance with the reasonable
standards made known to him by the employer at the
MANAGEMENT PREROGATIVE where there was any need for his services. "Although
some vindictive motivation might have impelled the
121 INTERNATIONAL HARVESTER V. IAC (MAY 18, abolition of his position, yet, it is undeniable that the
1987) bank's board of directors possessed the power to
remove him and to determine whether the interest of
PARAS, J. the bank justified the existence of his department.”

FACTS In an evident reiteration of the employer's right and
On July 25, 1977, Eduard Lim, Vice President of prerogative to manage its affairs, the Court in a much
petitioner IHMI, called private respondent and later case ruled: "An employer has a much wider
informed him that he was being transferred to the discretion in terminating the employment
Fleet Account Sales Department as a Fleet Account relationship of managerial personnel as compared to
Salesman with a salary of P1,000.00 a month, without rank-and-file employees. However, such prerogative
allowance but he was entitled to commissions. of management to dismiss or lay-off an employee must
Plaintiff was taken completely by surprise at his be made without abuse of discretion, for what is at
sudden demotion and he asked Eduard Lim the reason stake is not only the private respondent's position but
for such action taken against him by the company. also his means of livelihood x x x.”
Management answered plaintiff stating that his
position as Government Relations Officer had become In fact, under Policy Instructions No. 8 of the Secretary
redundant in view of the appointment of the of Labor "the employer is not required to obtain a
International Heavy Equipment Corporation (herein previous written clearance to terminate managerial
referred to as IHEC) as the Company's dealer with the employees in order to enable him to manage effec-
government. Subsequently, the petitioner IHMI tively." A managerial employee can be suspended or
handed private respondent a check for P??,594.82 dismissed without prior clearance from the Secretary
representing his termination pay (as plaintiff had of Labor.
refused to accept his transfer, and defendant IHMI had
accordingly advised private respondent to resign Reverting to the case at bar, a searching review of the
instead). Plaintiff accepted the check with the records fails to show that petitioner in demoting
following notation: "I am accepting this check since I private respondent and later terminating his services
am entitled to it but without prejudice and with acted oppressively, unjustly or arbitrarily. The lower
reservations, to take whatever necessary actions court observing that the phasing out of the
which I deem fit under the circumstances to protect department in question was preceded by a bitter
my interest.” discussion between private respondent and his
superiors, alluded to the latter as the probable cause
Private respondent signed a voucher indicating that of the alleged illegal dismissal. But such is only a
said check was in payment of his termination pay. surmise, in the absence of any concrete evidence that
the reorganization being undertaken by petitioner
Private respondent, Diosdado L. Joson filed a company is for any other purpose than its declared
complaint for damages for his illegal termination objective — as a labor and cost saving device. Indeed,
there is no argument against the fact that with the
ISSUE hiring of IHEC, it was no longer economical to retain
Who determines the need for the existence of a the services of private respondent; so much so that
department in the employer corporation and the despite the findings of the trial court that on many
reduction of personnel therein? occasions, petitioner company undertook direct sales
to the Philippine Government despite engagement of
HELD the Asia Pacific Corporation as government dealer, it
THE EMPLOYER. Article 284 of the Labor Code reads: is not precluded from adopting a new policy conducive
"Closure of establishment and reduction of personnel to a more economical and effective management.
(refer to codal). This issue has been squarely settled
by the Supreme Court in the case of Bondoc v. People's "Time and again, this Office has sustained the view
Bank and Trust Co. (103 SCRA 599 [1981]) where it that it is management prerogative to transfer, demote,
was held that as petitioner occupied a managerial discipline and even to dismiss an employee to protect
position, his stay therein depended on his retention of its business, provided it is not tainted with unfair labor
the trust and confidence of the management and practice.”
122 CHUA-QUA V. CLAVE (AUGUST 30, 1990) the truism that the heart has reasons of its own which
reason does not know. But, definitely, yielding to this
REGALADO, J. gentle and universal emotion is not to be so casually
equated with immorality. The deviation of the
FACTS circumstances of their marriage from the usual
Citing its upright intention to preserve the respect of societal pattern cannot be considered as a defiance of
the community toward the teachers and to strengthen contemporary social mores.
the educational system, private respondent submits
that petitioner's actuations as a teacher constitute It would seem quite obvious that the avowed policy of
serious misconduct, if not an immoral act, a breach of the school in rearing and educating children is being
trust and confidence reposed upon her and, thus, a unnecessarily bannered to justify the dismissal of
valid and just ground to terminate her services. It petitioner. This policy, however, is not at odds with
argues that as a school teacher who exercises and should not be capitalized on to defeat the security
substitute parental authority over her pupils inside of tenure granted by the Constitution to labor. In
the school campus, petitioner had moral ascendancy termination cases, the burden of proving just and valid
over Bobby Qua and, therefore, she must not abuse cause for dismissing an employee rests on the
such authority and respect extended to her. employer and his failure to do so would result in a
Furthermore, it charged petitioner with having finding that the dismissal is unjustified.
allegedly violated the Code of Ethics for teachers the
pertinent provision of which states that a "school The charge against petitioner not having been
official or teacher should never take advantage of substantiated, we declare her dismissal as
his/her position to court a pupil or student.” unwarranted and illegal. It being apparent, however,
that the relationship between petitioner and private
On the other hand, petitioner maintains that there was respondent has been inevitably and severely strained,
no ground to terminate her services as there is nothing we believe that it would neither be to the interest of
wrong with a teacher falling in love with her pupil and, the parties nor would any prudent purpose be served
subsequently, contracting a lawful marriage with him. by ordering her reinstatement.
She argued that she was dismissed because of her
marriage with Bobby Qua.

ISSUE
Was the dismissal valid?

HELD
NO. After a painstaking perusal of the records, we are
of the considered view that the determination of the
legality of the dismissal hinges on the issue of whether
or not there is substantial evidence to prove that the
antecedent facts which culminated in the marriage
between petitioner and her student constitute
immorality and/or grave misconduct. To constitute
immorality, the circumstances of each particular case
must be holistically considered and evaluated in the
light of prevailing norms of conduct and the applicable
law.

With the finding that there is no substantial evidence
of the imputed immoral acts, it follows that the alleged
violation of the Code of Ethics governing school
teachers would have no basis. Private respondent
utterly failed to show that petitioner took advantage
of her position to court her student. If the two
eventually fell in love, despite the disparity in their
ages and academic levels, this only lends substance to
123 STAR PAPER CORP V. SIMBOL (APRIL 12,
2006) Respondents submit that their dismissal violates the
above provision. It is true that the policy of petitioners
PUNO, J. prohibiting close relatives from working in the same
company takes the nature of an anti-nepotism
FACTS employment policy. Companies adopt these policies to
Simbol and Comia allege that they did not resign prevent the hiring of unqualified persons based on
voluntarily; they were compelled to resign in view of their status as a relative, rather than upon their ability.
an illegal company policy. As to respondent Estrella, These policies focus upon the potential employment
she alleges that she had a relationship with co-worker problems arising from the perception of favoritism
Zuñiga who misrepresented himself as a married but exhibited towards relatives.
separated man. After he got her pregnant, she
discovered that he was not separated. Thus, she With more women entering the workforce, employers
severed her relationship with him to avoid dismissal are also enacting employment policies specifically
due to the company policy. On November 30, 1999, she prohibiting spouses from working for the same
met an accident and was advised by the doctor at the company. We note that two types of employment
Orthopedic Hospital to recuperate for twenty-one policies involve spouses: policies banning only
(21) days. She returned to work on December 21, spouses from working in the same company (no-
1999 but she found out that her name was on-hold at spouse employment policies), and those banning all
the gate. She was denied entry. She was directed to immediate family members, including spouses, from
proceed to the personnel office where one of the staff working in the same company (anti-nepotism
handed her a memorandum. The memorandum stated employment policies).
that she was being dismissed for immoral conduct. She
refused to sign the memorandum because she was on Unlike in our jurisdiction where there is no express
leave for twenty-one (21) days and has not been given prohibition on marital discrimination, there are
a chance to explain. The management asked her to twenty state statutes in the United States prohibiting
write an explanation. However, after submission of the marital discrimination.
explanation, she was nonetheless dismissed by the
company. Due to her urgent need for money, she later They hold that the absence of such a bona fide
submitted a letter of resignation in exchange for her occupational qualification invalidates a rule denying
thirteenth month pay. employment to one spouse due to the current
employment of the other spouse in the same office.
Respondents later filed a complaint for unfair labor Thus, they rule that unless the employer can prove
practice, constructive dismissal, separation pay and that the reasonable demands of the business require a
attorney's fees. They averred that the aforementioned distinction based on marital status and there is no
company policy is illegal and contravenes Article 136 better available or acceptable policy which would
of the Labor Code. They also contended that they were better accomplish the business purpose, an employer
dismissed due to their union membership. may not discriminate against an employee based on
the identity of the employee's spouse. This is known
ISSUE as the bona fide occupational qualification
Does the policy of the employer banning spouses exception.
from working in the same company violate the
rights of the employee under the Constitution and We note that since the finding of a bona fide
the Labor Code or is a valid exercise of occupational qualification justifies an employer's no-
management prerogative? spouse rule, the exception is interpreted strictly and
narrowly by these state courts. There must be a
HELD compelling business necessity for which no
YES. It violates the rights of employees under the PGC alternative exists other than the discriminatory
and the LC. Consequently, it is not a valid exercise of practice. To justify a bona fide occupational
management prerogative. The Labor Code is the most qualification, the employer must prove two factors:
comprehensive piece of legislation protecting labor. (1) that the employment qualification is reasonably
The case at bar involves Article 136 of the Labor Code related to the essential operation of the job involved;
which provides “Stipulation Against Marriage” (refer and, (2) that there is a factual basis for believing that
to codal). all or substantially all persons meeting the
qualification would be unable to properly perform the burden was successfully discharged in Duncan but not
duties of the job. in PT&T.

The concept of a bona fide occupational qualification We do not find a reasonable business necessity in the
is not foreign in our jurisdiction. We employ the case at bar. The failure of petitioners to prove a
standard of reasonableness of the company policy legitimate business concern in imposing the
which is parallel to the bona fide occupational questioned policy cannot prejudice the employee's
qualification requirement. In the recent case of right to be free from arbitrary discrimination based
Duncan Association of Detailman-PTGWO and upon stereotypes of married persons working
Pedro Tecson v. Glaxo Wellcome Philippines, Inc., together in one company.
we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees The absence of a statute expressly prohibiting marital
from marrying employees of any competitor company. discrimination in our jurisdiction cannot benefit the
We held that Glaxo has a right to guard its trade petitioners. The protection given to labor in our
secrets, manufacturing formulas, marketing strategies jurisdiction is vast and extensive that we cannot
and other confidential programs and information prudently draw inferences from the legislature's
from competitors. We considered the prohibition silence that married persons are not protected under
against personal or marital relationships with our Constitution and declare valid a policy based on a
employees of competitor companies upon Glaxo's prejudice or stereotype. Thus, for failure of petitioners
employees reasonable under the circumstances to present undisputed proof of a reasonable business
because relationships of that nature might necessity, we rule that the questioned policy is an
compromise the interests of Glaxo. In laying down the invalid exercise of management prerogative.
assailed company policy, we recognized that Glaxo
only aims to protect its interests against the possibility
that a competitor company will gain access to its
secrets and procedures.

The requirement that a company policy must be
reasonable under the circumstances to qualify as a
valid exercise of management prerogative was also at
issue in the 1997 case of Philippine Telegraph and
Telephone Company v. NLRC. In said case, the
employee was dismissed in violation of petitioner's
policy of disqualifying from work any woman worker
who contracts marriage. We held that the company
policy violates the right against discrimination
afforded all women workers under Article 136 of the
Labor Code, but established a permissible exception,
viz.: [A] requirement that a woman employee must
remain unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, where the
particular requirements of the job would justify the
same, but not on the ground of a general principle,
such as the desirability of spreading work in the
workplace. A requirement of that nature would be
valid provided it reflects an inherent quality
reasonably necessary for satisfactory job
performance.

The cases of Duncan and PT&T instruct us that the
requirement of reasonableness must be clearly
established to uphold the questioned employment
policy. The employer has the burden to prove the
existence of a reasonable business necessity. The
124 ESCOBIN V. NLRC (APRIL 15, 1998) HELD
NONE. There was no disobedience. While it is true
PANGANIBAN, J. that petitioners failed to report to Manila and to
respond to private respondent’s letters, this is not the
FACTS end-all and be-all of the matter. One of the
Complainants, for reasons known only to them, did not fundamental duties of an employee is to obey all
bother even sending a courtesy reply nor answer to reasonable rules, orders and instructions of the
PISI. Neither did they comply with the reiterated employer.
Order to report to their Head Office for posting. They Disobedience, to be a just cause for termination, must
did not also explain why they were unable to so be willful or intentional, willfulness being
comply with the Order. characterized by a wrongful and perverse mental
attitude rendering the employee’s act inconsistent
Thus, on June 28, 1991, PISI wrote complainants with proper subordination. A willful or intentional
individual letters that by reason of their failure to disobedience of such rule, order or instruction justifies
respond to or to comply with PISI’s letters dated April dismissal only where such rule, order or instruction is
8, May 2, and May 29, 1991, and by their failure to (1) reasonable and lawful, (2) sufficiently known
report to PISI Head Office for posting, as ordered, they to the employee, and (3) connected with the duties
were dismissed on ground of insubordination or which the employee has been engaged to
willful disobedience to lawful orders of their discharge. The assailed Resolution of Respondent
employer. Commission and the arguments of the solicitor general
failed to prove these requisites.
Late in the day however, on July 1, 1991, complainants
wrote PISI General Manager, Teodolfo Santos, saying On the other hand, petitioners negated the solicitor
they had no intention to abandon their employment, general’s stance, contending that the instruction to
nor to defy fair, reasonable and lawful orders. In the report to the Manila office was “inconvenient,
same letter, they acknowledged receipt of all PISI’s unreasonable and prejudicial,” as they were not given
letters to them dated April 8 and May 2, 1991. transportation money or, more important, any
assurance that work would be available to them once
After having been terminated, and during the arbitral they reached Manila. They were not even furnished a
proceedings below, complainants belatedly justified copy of the so-called Office Memorandum No. 4 dated
their inability to comply with PISI’s Order to report to February 6, 1991, which placed them under “floating
Head Office in Metro-Manila for posting, saying: they status.” Thus, they aver that their failure to report to
are residents of Basilan, have families of their own in the Manila office was not characterized by a “wrongful
Basilan, have never traveled beyond Visayas and and perverse [mental] attitude.” They also assert that
Mindanao, not provided by PISI with fare money as they have families which they could not just leave
they cannot, on their own, finance their travel from behind.
Basilan to Manila; that to comply with PISI’s Order to
report to Head Office for posting under said The reasonableness and lawfulness of a rule, order or
circumstances was absurd, to say the least. instruction depend on the circumstances availing in
Complainants therefore, charged PISI with bad faith in each case. Reasonableness pertains to the kind or
issuing said Order. That in truth, complainants said character of directives and commands and to the
they were constructively dismissed by PISI. For which manner in which they are made. In this case, the order
reason, complainants prayed that the Labor Arbiter to report to the Manila office fails to meet this
declare their dismissal as illegal and consequently standard.
they should be paid separation pay (in lieu of
reinstatement), backwages, moral and exemplary There was no abandonment of work.
damages, attorney’s fees and litigation costs. Abandonment, as a just and valid cause for dismissal,
requires a deliberate, unjustified refusal of an
ISSUE employee to resume his work, coupled with a clear
Were there just causes for terminating the absence of any intention of returning to his work. No
complainants’ employment, namely disobedience evidence was presented to establish that petitioners
and abandonment of work? relinquished their jobs. Denying they abandoned their
work, petitioners contend that it was private
respondent agency which deserted them by failing to
communicate with them for over two months, from 125 BENGUET ELECTRIC COOPERATIVE V. FIANZA
February 1, 1991 to April 8, 1991; and that the (MARCH 9, 2004)
directive to make them report to Manila was only a
ruse to terminate their services. Although a letter YNARES-SANTIAGO, J.
dated September 13, 1991 and signed by a certain Jose
E. Fernandez declined the offer to work outside FACTS
Basilan despite the receipt of transportation Fianza claims that, although she was not actually fired
allowance, such letter cannot be attributed to from the services of BENECO, she was constructively
petitioners because Fernandez did not represent any dismissed therefrom. This claim of constructive
of them. That petitioners did not pray for dismissal is based mainly on the allegation that, upon
reinstatement in their pleadings is not proof of transfer from the position of Property Custodian to
abandonment. In fact, petitioners’ contention is that Bill Distributor of BENECO, she was demoted from a
private respondent effected constructive dismissal, position with a rank of 5 to a rank of 4. Fianza claims
which is incompatible with abandonment. that, contrary to the allegations of petitioners, the
position of Property Custodian was not phased out.
She further maintains that such transfer was neither
necessary nor temporary, and was done in an
arbitrary and capricious manner. Finally, Fianza
alleges that a comparison of the two positions reveals
that her former job was clerical in nature, and that she
was transferred to a menial and servile position,
which bolsters her contention that she was demoted.

ISSUE
Was Fianza's transfer from Property Custodian to
Bill Distributor valid?

HELD
YES. To resolve this point, the scope and limits of the
exercise of management prerogative must be balanced
against the security of tenure given to labor. In this
jurisdiction, we recognize that management has a
wide latitude to regulate, according to his own
discretion and judgment, all aspects of employment,
including the freedom to transfer and reassign
employees according to the requirements of its
business. On the other hand, the transfer of an
employee may constitute constructive dismissal when
it amounts to an involuntary resignation resorted to
when continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in
rank and/or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an
employer becomes unbearable to the employee.

The position of Property Custodian was deemed a
superfluity, since, even as early as 1997, many
functions of the said office had been absorbed by other
offices. Certainly, the position was not abolished
because Fianza was the occupant thereof; rather, the
position was abolished because the functions of the
position had become redundant and unnecessary.
There is no showing that the position of Property
Custodian was abolished in order to single out Fianza,
or that malice and ill-will attended the phasing out of 126 BLUE DAIRY V. NLRC (SEPTEMBER 14, 1999)
the position. As such, the deletion of Fianzas position
should be accepted and validated as a sound exercise BELLOSILLO, J.
of management prerogative, which this Court should
not interfere with. FACTS
In cases when an employees position is abolished due BLUE DAIRY CORPORATION, engaged in the
to corporate restructuring, the law, in general, permits processing of dairy and chocolate products, juices and
the severance of the employer-employee relationship, vegetables, hired on 14 May 1994 private respondent
provided that certain requirements are met. In the Elvira R. Recalde as a food technologist in its
instant case, Fianza was not terminated from laboratory. On 21 October 1994 Recalde accompanied
employment, but was transferred to another Production Manager Editha N. Nicolas in conducting a
department. sensory evaluation of vanilla syrup in one of the
outlets of a client. While on their way back to the office
Managements prerogative of transferring and a post fell on the company vehicle they were riding
reassigning employees from one area of operation to due to a raging typhoon damaging the vehicle's
another in order to meet the requirements of the windshield and side mirror.
business is generally not constitutive of constructive
dismissal. Thus, in Philippine Japan Active Carbon On 3 December 1994 Recalde was transferred from
Corporation v. NLRC, the Court ruled: It is the the laboratory to the vegetable processing section
employers prerogative, based on its assessment and where she cored lettuce, minced and repacked garlic
perception of its employees qualifications, aptitudes, and performed similar work, and was restricted from
and competence, to move them around in the various entering the laboratory. She was unhappy. She
areas of its business operations in order to ascertain considered her new job humiliating and menial. On 14
where they will function with maximum benefit to the December 1994 she stopped reporting for work.
company. An employees right to security of tenure
does not give him such a vested right in his position as On 16 December 1994 Recalde filed a complaint
would deprive the company of its prerogative to against petitioner Blue Dairy Corporation, Edison T.
change his assignment or transfer him where he will Aviguetero and Pedro G. Miguel for constructive
be most useful. When his transfer is not unreasonable, dismissal and non-payment of premium pay.
nor inconvenient, nor prejudicial to him, and it does Petitioners contended that Recalde was given a less
not involve a demotion in rank or a diminution of his sensitive assignment outside of the laboratory on
salaries, benefits, and other privileges, the employee account of her dishonesty which resulted in loss of
may not complain that it amounts to a constructive trust and confidence. They seriously took into account
dismissal. the result of the investigation concerning the October
21 incident that Recalde was actually scouting for a
The employer has the burden of proving that the new residence using company vehicle without prior
transfer of an employee is for valid and legitimate permission from the General Manager and during
grounds. Particularly, for a transfer not to be office hours, in violation of par. IV, subpars. B and G, of
considered a constructive dismissal, the employer the company's General Rules and Regulations.
must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the ISSUE
employee; nor does it involve a demotion in rank or a Was Recalde constructively dismissed?
diminution of his salaries, privileges and other
benefits. HELD
YES. The freedom of management to conduct its
The Labor Arbiter and NLRC found that the business operations to achieve its purpose cannot be
reorganization of BENECO was done in good faith, and denied. But, like other rights, there are limits thereto.
that the transfer would not be unreasonable, The managerial prerogative to transfer personnel
inconvenient or prejudicial to the employee. must be exercised without grave abuse of discretion,
Petitioners, therefore, have discharged the burden of bearing in mind the basic elements of justice and fair
proving that the transfer was not unreasonable, play. Having the right should not be confused with the
inconvenient or prejudicial to the employee. manner in which that right is exercised. Thus, it cannot
be used as a subterfuge by the employer to rid himself
of an undesirable worker. In particular, the employer
must be able to show that the transfer is not dishonesty imputed to Recalde has no bearing at all to
unreasonable, inconvenient or prejudicial to the her work in the laboratory.
employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other Further still, granting that Recalde was proved guilty
benefits. Should the employer fail to overcome this of dishonesty, the companys General Rules and
burden of proof, the employees transfer shall be Regulations provide the corresponding sanctions
tantamount to constructive dismissal, which has been therefor. Recalde appears to have no prior record of
defined as a quitting because continued employment infractions. For "leaving post temporarily without
is rendered impossible, unreasonable or unlikely; as permission during working hours" committed for the
an offer involving a demotion in rank and diminution first time, "warning" is imposable, whereas for
in pay. Likewise, constructive dismissal exists when an "unauthorized use of any company vehicle"
act of clear discrimination, insensibility or disdain by committed for the first time, the commensurate
an employer has become so unbearable to the penalty is "15 days suspension.” Although petitioners
employee leaving him with no option but to forego invoked the pertinent provisions of the rules and
with his continued employment. regulations which Recalde allegedly violated, for
reasons known only to them, they disregarded those
In the present case, petitioners failed to justify sanctions.
Recaldes transfer from the position of food
technologist in the laboratory to a worker in the
vegetable processing section. We recall that what
triggered Recaldes transfer was the October 21
incident where she was found to have allegedly
utilized company vehicle in looking for a new
residence during office hours without permission
from management. In petitioners view, she was
dishonest such that they lost their trust and
confidence in her. Yet, it does not appear that Recalde
was provided an opportunity to refute the reason for
the transfer. Petitioners merely relied on the
narrations of the company driver. Nor was Recalde
notified in advance of her impending transfer which
was, as we shall elucidate later, a demotion in rank. In
Gaco v. NLRC we noted - While due process required
by law is applied in dismissals, the same is also
applicable to demotions as demotions likewise affect
the employment of a worker whose right to continued
employment, under the same terms and conditions, is
also protected by law. Moreover, considering that
demotion is, like dismissal, also a punitive action, the
employee being demoted should, as in cases of
dismissals, be given a chance to contest the same.

Further, petitioners overstretched the effect of
Recaldes claimed wrongdoing. We have ruled that
breach of trust and confidence as a ground for
dismissal from employment must be related to the
performance of the duties of the employee such as
would show him to be thereby unfit to continue
working for the employer. By analogy, breach of trust
and confidence as a ground for reassignment must be
related to the performance of the duties of the
employee such as would show him to be thereby unfit
to discharge the same task. Clearly, the act of

127 MENDOZA V. RURAL BANK OF LUCBAN (JULY his table had been placed near the toilet and
7, 2004) eventually removed. He adds that the reshuffling of
employees was done in bad faith, because it was
PANGANIBAN, J. designed primarily to force him to resign.
In the pursuit of its legitimate business interest,
FACTS management has the prerogative to transfer or assign
On April 25, 1999, the Board of Directors of the Rural employees from one office or area of operation to
Bank of Lucban, Inc., issued Board Resolution Nos. 99- another -- provided there is no demotion in rank or
52 and 99-53, which read:[ Board Res. No. 99-52 diminution of salary, benefits, and other privileges;
RESOLVED AS IT IS HEREBY RESOLVED that in line and the action is not motivated by discrimination,
with the policy of the bank to familiarize bank made in bad faith, or effected as a form of punishment
employees with the various phases of bank operations or demotion without sufficient cause. This privilege is
and further strengthen the existing internal control inherent in the right of employers to control and
system[,] all officers and employees are subject to manage their enterprise effectively. The right of
reshuffle of assignments. Moreover, this resolution employees to security of tenure does not give them
does not preclude the transfer of assignment of bank vested rights to their positions to the extent of
officers and employees from the branch office to the depriving management of its prerogative to change
head office and vice-versa. their assignments or to transfer them. Managerial
prerogatives, however, are subject to limitations
Board Res. No. 95-53: Pursuant to Resolution No. 99- provided by law, collective bargaining agreements,
52, the following branch employees are hereby and general principles of fair play and justice.
reshuffled to their new assignments without changes
in their compensation and other benefits (cf names of The employer bears the burden of proving that the
employees attached). Among them was the petitioner. transfer of the employee has complied with the
foregoing test. In the instant case, we find no reason to
On June 7, 1999, petitioner submitted to the banks disturb the conclusion of the NLRC and the CA that
Tayabas branch manager a letter in which he applied there was no constructive dismissal. Their finding is
for a leave of absence from work. On June 21, 1999, supported by substantial evidence -- that amount of
petitioner again submitted a letter asking for another relevant evidence that a reasonable mind might accept
leave of absence for twenty days effective on the same as justification for a conclusion.
date. On June 24, 1999, while on his second leave of
absence, petitioner filed a Complaint before Petitioners transfer was made in pursuit of
Arbitration Branch No. IV of the National Labor respondents policy to familiarize bank employees
Relations Commission (NLRC). The Complaint -- for with the various phases of bank operations and
illegal dismissal, underpayment, separation pay and further strengthen the existing internal control system
damages -- was filed against the Rural Bank of Lucban of all officers and employees. We have previously held
and/or its president, Alejo B. Daya; and its Tayabas that employees may be transferred -- based on their
branch manager, Briccio V. Cada. qualifications, aptitudes and competencies -- to
positions in which they can function with maximum
ISSUE benefit to the company. There appears no justification
Was petitioner constructively dismissed from his for denying an employer the right to transfer
employment? employees to expand their competence and maximize
their full potential for the advancement of the
HELD establishment. Petitioner was not singled out; other
NO. Constructive dismissal is defined as an employees were also reassigned without their express
involuntary resignation resorted to when continued consent. Neither was there any demotion in the rank
employment is rendered impossible, unreasonable or of petitioner; or any diminution of his salary,
unlikely; when there is a demotion in rank or a privileges and other benefits. This fact is clear in
diminution of pay; or when a clear discrimination, respondents Board Resolutions, the April 30, 1999
insensibility or disdain by an employer becomes letter of Bank President Daya to Branch Manager Cada,
unbearable to the employee. Petitioner argues that he and the May 10, 1999 letter of Daya to petitioner.
was compelled to file an action for constructive
dismissal, because he had been demoted from On the other hand, petitioner has offered no sufficient
appraiser to clerk and not given any work to do, while proof to support his allegations. Given no credence by
both lower tribunals was his bare and self-serving 128 PHILIPPINE AMERICAN LIFE V. GRAMAJE
statement that he had been positioned near the (NOVEMBER 11, 2003)
comfort room, made to work without a table, and
given no work assignment. Purely conjectural is his CHICO-NAZARIO, J.
claim that the reshuffle of personnel was a harassment
in retaliation for an alleged falsification case filed by FACTS
his relatives against a public official. On December 18, 1998, respondent Cuisia through a
memorandum appointed Ms. Corine Moralda as
replacement of petitioner as Head of the Pensions
Department effective December 14, 1998. It was only
at that time that petitioner learned that as early as
August 23, 1998, respondents had advertised in the
Manila Bulletin for her replacement.

Also, although, it is the tradition of Philamlife to give,
during the Christmas Season, officers and employees a
traditional Seasons giveaways, i.e., ham and queso de
bola, petitioner then, thru her authorized
representatives, asked for her share, but she was not
in the list of recipients. Petitioners name was not in the
Legal Department, not in the Pensions Department,
and not in the list of employees of Philamlife when
verified with the Personnel Department. Hence, on
December 23, 1998, petitioner filed the instant case
for illegal or constructive dismissal against herein
private respondents.

Petitioner maintains that it was respondent who
severed her working relationship with it. Per letter,
dated 11 January 1999, issued by petitioners Legal
Department, respondent was asked to report
immediately to her new assignment and submit to a
medical examination, and that the latter took no heed
of this.

ISSUE
Was respondent constructively dismissed?

HELD
YES. It seems that the point impliedly being raised by
petitioner is that respondent disengaged her
employment relationship with petitioner by
abandoning her work and failing to report
accordingly. This argument is apocryphal.
Respondent, on 23 December 1998, already filed a
case for illegal dismissal against petitioner. For
petitioner to anticipate respondent to report for work
after the latter already filed a case for illegal dismissal
before the NLRC, would be absurd. We have already
laid down the rule that for abandonment to exist, it is
essential that the employee must have failed to report
for work or must have been absent without valid or
justifiable reason; and that there must have been a
clear intention to sever the employer-employee
relationship manifested by some overt acts. Both these 129 DOSCH V. NLRC (JULY 5, 1983)
requisites are not present here. There was no
abandonment as the latter is not compatible with GUERRERO, J.
constructive dismissal.
FACTS
It is no less than the Constitution which guarantees Petitioner Helmut Dosch, an American citizen, married
protection to the workers security of tenure as a policy to a Filipina, was the resident Manager of Northwest
of the State. This guarantee is an act of social justice. Airlines, Inc. (Northwest, for short) in the
Philippines. He has to his credit eleven (11) years of
Social justice, as held by this Court, speaking through continuous service with the company, including nine
Justice Laurel, in the case of Calalang v. Williams: (9) years as Northwest Manager with station at
Manila. On August 18, 1975 he received an inter-office
Social justice is neither communism, nor despotism, communication from R.C. Jenkins, Northwest's Vice
nor atomism, nor anarchy, but the humanization of President for Orient Region based in Tokyo,
laws and the equalization of social and economic promoting him to the position of Director of
forces by the State so that justice in its rational and International Sales and transferring him to
objectively secular conception may at least be Northwest's General Office in Minneapolis, U.S.A.,
approximated. Social justice means the promotion of effective the same day.
the welfare of all the people, the adoption by the
Government of measures calculated to insure Petitioner, acknowledging receipt of the above memo
economic stability of all the competent elements of of August 18, 1975, expressed appreciation for the
society, through the maintenance of a proper promotion and at the same time regretted that "for
economic and social equilibrium in the interrelations personal reasons and reasons involving my family, I
of the members of the community, constitutionally, am unable to accept a transfer from the Philippines.”
through the adoption of measures legally justifiable, or On September 16, 1975, Northwest filed a Report on
extra-constitutionally, through the exercise of powers Resignation of Managerial Employee (Form No. 74-3,
underlying the existence of all governments on the Revised September 1974), i.e., Helmut Dosch, before
time-honored principle of salus populi est suprema Regional Office No. IV (Manila) Department of Labor,
lex. copy thereof furnished petitioner.

Social justice, therefore, must be founded on the The Report was contested by the petitioner and the
recognition of the necessity of interdependence parties were conciliated by Regional Office No. IV,
among divers and diverse units of a society and of the Manila but failed to agree on a settlement. The case
protection that should be equally and evenly extended was thus certified to the Executive Labor Arbiter,
to all groups as a combined force in our social and National Labor Relations Commission, for compulsory
economic life, consistent with the fundamental and arbitration.
paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of ISSUE
bringing about the greatest good to the greatest May Dosch be faulted for not assenting to the
number. promotion offered by the company?

HELD
NO. "It is more in the nature of a promotion than a
transfer, the latter being merely incidental to such
promotion.” "A transfer is a movement from one po-
sition to another of equivalent rank, level or salary,
without break in the service. Promotion, on the other
hand, is the advancement from one position to another
with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an
increase in salary. Whereas, promotion denotes a
scalar ascent of a senior officer or employee to another
position, higher either in rank or salary, transfer refers

to lateral movement from one position to another, of 130 PT&T V. COURT OF APPEALS (SEPTEMBER 29,
equivalent rank, level or salary.” 2003)

There is no law that compels an employee to accept a CALLEJO, SR., J.
promotion, as a promotion is in the nature of a gift or
a reward, which a person has a right to refuse. When FACTS
petitioner refused to accept his promotion to Director Sometime in 1997, after conducting a series of studies
of International Sales, he was exercising a right and he regarding the profitability of its retail operations, its
cannot be punished for it as qui jure suo utitur existing branches and the number of employees, the
neminem laedit. He who uses his own legal right petitioner came up with a Relocation and
injures no one. Restructuring Program. Thereafter through HRAG
Bulletin No. 97-06-16, the private respondents and
There can be no dispute that the constitutional other petitioners employees were directed to relocate
guarantee of security of tenure mandated under to their new PT&T Branches.
Section 9, Article 2, 1973 Constitution applies to all
employees and laborers, whether in the government The private respondents rejected the petitioners offer.
service or in the private sector. The fact that private respondents explained that: The transfers
petitioner is a managerial employee does not by itself imposed by the management would cause enormous
exclude him from the protection of the constitutional difficulties on the individual complainants. For one,
guarantee of security of tenure. Even a manager in a their new assignment involve distant places which
private concern has the right to be secure in his would require their separation from their respective
position, to decline a promotion where, although the families.
promotion carries an increase in his salary and rank
but results in his transfer to a new place of assignment Dissatisfied with this explanation, the petitioner
or station and away from his family. Such an order considered the private respondents refusal as
constitutes removal without just cause and is insubordination and willful disobedience to a lawful
illegal. Nor can the removal be justified on the ground order; hence, the private respondents were dismissed
of loss of confidence as now claimed by private from work. They forthwith filed their respective
respondent Northwest, insisting as it does that by complaints against the petitioner before the
petitioner's alleged contumacious refusal to obey the appropriate sub-regional branches of the NLRC.
transfer order, said petitioner was guilty of
insubordination. Petitioner (respondent therein) alleged that the
private respondents transfers were made in the lawful
exercise of its management prerogative and were
done in good faith. The transfers were aimed at
decongesting surplus employees and detailing them to
a more demanding branch. In their reply to the
petitioners position paper, the private respondents
opined that since their respective transfers resulted in
their promotion, they had the right to refuse or decline
the positions being offered to them. Resultantly, the
refusal to accept the transfer could not have amounted
to insubordination or willful disobedience to the
lawful orders of the employer.

ISSUE
Was there valid dismissal?

HELD
NO. Indeed, the increase in the respondents
responsibility can be ascertained from the scalar
ascent of their job grades. With or without a
corresponding increase in salary, the respective
transfer of the private respondents were in fact
promotions, following the ruling enunciated in
Homeowners Savings and Loan Association, Inc. v.
NLRC: [P]romotion, as we defined in Millares v,
Subido, is the advancement from one position to
another with an increase in duties and responsibilities
as authorized by law, and usually accompanied by an
increase in salary. Apparently, the indispensable
element for there to be a promotion is that there must
be an advancement from one position to another or an
upward vertical movement of the employees rank or
position. Any increase in salary should only be
considered incidental but never determinative of
whether or not a promotion is bestowed upon an
employee. This can be likened to the upgrading of
salaries of government employees without conferring
upon the, the concomitant elevation to the higher
positions.

The admissions of the petitioner are conclusive on it.
An employee cannot be promoted, even if merely as a
result of a transfer, without his consent. A transfer that
results in promotion or demotion, advancement or
reduction or a transfer that aims to lure the employee
away from his permanent position cannot be done
without the employees consent.

There is no law that compels an employee to accept a
promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has a right
to refuse. Hence, the exercise by the private
respondents of their right cannot be considered in law
as insubordination, or willful disobedience of a lawful
order of the employer. As such, there was no valid
cause for the private respondents dismissal.

As the questioned dismissal is not based on any of the
just or valid grounds under Article 282 of the Labor
Code, the NLRC correctly ordered the private
respondents reinstatement without loss of seniority
rights and the payment of backwages from the time of
their dismissal up to their actual reinstatement.

JUST CAUSES OF TERMINATION Anent the first requisite, the employer must furnish
the employee with two (2) written notices: (a) a
131 NATIONAL BOOKSTORE V. COURT OF written notice containing a statement of the cause for
APPEALS (FEBRUARY 27, 2002) the termination to afford the employee ample
opportunity to be heard and defend himself with the
BELLOSILLO, J. assistance of his representative, if he so desires; and,
(b) if the employer decides to terminate the services
FACTS of the employee, the employer must notify him in
On 31 July 1992 private respondents explained in writing of the decision to dismiss him, stating clearly
writing what transpired on 28 and 29 June 1992, the reasons therefor.
basically denying responsibility over the lost company
funds. They emphasized that they had no access to Petitioner National Bookstore, as correctly pointed
petitioner National Bookstores vault and that before out by the Labor Arbiter in his decision, more than
leaving the office on both occasions and after doing substantially observed this requirement. On 30 July
their tasks, petitioner National Bookstores lady guard, 1992 it gave private respondents an opportunity to
Ms. Roda Sungkip, subjected them to a thorough body explain why they should not be dismissed for the loss
search. They asserted that [they] have been in the of company funds, which private respondents
service of the company for the past 13 years and it has immediately complied with by submitting their joint
been [their] practice to turn over [their] collection to answer on 31 July 1992. Moreover, on 29 August 1992
[their] supervisor without any proof of receipt every petitioner National Bookstore sent another written
end of the business day. Moreover, they appealed that notice to private respondents informing them of its
they have been honest and sincere to [their] work and decision to terminate their services setting forth the
religiously rendered [their] services to the company to reasons therefor. But the burden imposed on
the best of [their] ability. petitioner National Bookstore does not stop here. It
must also show with convincing evidence that the
Petitioner National Bookstore, after finding the dismissal was based on any of the just or authorized
explanations of private respondents unsatisfactory, causes provided by law for termination of
notified them on 29 August 1992 of the termination of employment by an employer.
their services for gross neglect of duty and loss of
confidence to take effect immediately and without To quote petitioner National Bookstores Personnel
prejudice to appropriate legal action that the Manager Padilla, Jr: we are constrained to terminate
Management may take for the restitution of the your employment or services with the Company
missing Company funds. On 4 February 1993 private effective immediately for gross neglect of duty and
respondents filed a complaint for illegal dismissal loss of confidence. Gross neglect of duty and loss of
against petitioner. confidence are just causes for termination of
employment by an employer.
ISSUE
Were the respondents illegally dismissed? Gross negligence has been defined as the want or
absence of or failure to exercise slight care or
HELD diligence, or the entire absence of care. It evinces a
YES. The onus of proving that the dismissal of the thoughtless disregard of consequences without
employee was for a valid and authorized cause rests exerting any effort to avoid them. A perusal of the
on the employer and failure to discharge the same records of the case does not in any way show that
would mean that the dismissal was not justified and private respondents were even remotely negligent of
therefore illegal. their duties so as to cause the loss of petitioner
National Bookstores funds. Private respondents were
The requisites for a valid dismissal are: (a) the able to illustrate with candor and sincerity the
employee must be afforded due process, i.e., he must procedure they took prior to the loss which was
be given an opportunity to be heard and to defend witnessed by an employee of petitioner National
himself; and, (b) the dismissal must be for a valid Bookstore. They were in fact subjected to a thorough
cause as provided in Art. 282 of the Labor Code or for body search by petitioner National Bookstores lady
any of the authorized causes under Arts. 283 and 284 guard before leaving their place of work on the date in
of the same Code. issue, a claim not controverted by petitioners.
Moreover, it was not even shown that they had access
to the vault where the money was kept. Significantly, 132 HEAVYLIFT MANILA V. COURT OF APPEALS
in order to constitute a just cause for the employees (OCTOBER 20, 2005)
dismissal, the neglect of duties must not only be gross
but also habitual. Thus, the single or isolated act of QUISUMBING, J.
negligence does not constitute a just cause for the
dismissal of the employee. Verily, assuming arguendo FACTS
that private respondents were negligent, although we On February 23, 1999, petitioner Heavylift, a maritime
find otherwise, it could only be a single or an isolated agency, thru a letter signed by petitioner Josephine
act that cannot be categorized as habitual, hence, not a Evangelio, Administrative and Finance Manager of
just cause for their dismissal. Heavylift, informed respondent Ma. Dottie Galay,
Heavylift Insurance and Provisions Assistant, of her
On the other hand, loss of trust and confidence to be a low performance rating and the negative feedback
valid ground for dismissal must be based on a willful from her team members regarding her work attitude.
breach of trust and founded on clearly established The letter also notified her that she was being relieved
facts. A breach is willful if it is done intentionally, of her other functions except the development of the
knowingly and purposely, without justifiable excuse, new Access program.
as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. The Labor Subsequently, on August 16, 1999, Galay was
Arbiter, the NLRC and the Court of Appeals were terminated for alleged loss of confidence. Thereafter,
unanimous in declaring that there was no willful she filed with the Labor Arbiter a complaint for illegal
breach of confidence in the instant case as petitioners dismissal and nonpayment of service incentive leave
failed to establish with certainty the facts upon which and 13th month pay against petitioners.
it could be based. Indeed, petitioner National
Bookstore lost some funds but that private Before the labor arbiter, petitioners alleged that Galay
respondents were responsible therefor was not had an attitude problem and did not get along with her
supported by any substantial evidence. co-employees for which she was constantly warned to
improve. Petitioners aver that Galay's attitude
resulted to the decline in the company's efficiency and
productivity.

ISSUE
Was there just cause in the termination of Galay?

HELD
NO. An employee who cannot get along with his co-
employees is detrimental to the company for he can
upset and strain the working environment. Without
the necessary teamwork and synergy, the
organization cannot function well. Thus, management
has the prerogative to take the necessary action to
correct the situation and protect its organization.
When personal differences between employees and
management affect the work environment, the peace
of the company is affected. Thus, an employee's
attitude problem is a valid ground for his termination.
It is a situation analogous to loss of trust and
confidence that must be duly proved by the employer.
Similarly, compliance with the twin requirement of
notice and hearing must also be proven by the
employer.

However, we are not convinced that in the present
case, petitioners have shown sufficiently clear and
convincing evidence to justify Galay's termination.
Though they are correct in saying that in this case, 133 EQUITABLE BANKING CORP. V. NLRC (JUNE 13,
proof beyond reasonable doubt is not required, still 1997)
there must be substantial evidence to support the
termination on the ground of attitude. The mere VITUG, J.
mention of negative feedback from her team
members, and the letter dated February 23, 1999, are FACTS
not proof of her attitude problem. Likewise, her failure Private respondent Sadac was appointed, effective 01
to refute petitioners' allegations of her negative August 1981, Vice-President for the Legal Department
attitude does not amount to admission. Technical of petitioner bank by its then President, Manuel L.
rules of procedure are not binding in labor cases. Morales. On 08 December 1981, private respondent
Besides, the burden of proof is not on the employee was also designated as the banks General Counsel.
but on the employer who must affirmatively show
adequate evidence that the dismissal was for The turning point in the relationship among the
justifiable cause. parties surfaced, when, on 26 June 1989, nine lawyers
of the banks Legal Department, who were all under
In our view, neither does the February 23, 1999 letter private respondent, addressed a letter-petition to the
constitute the required notice. The letter did not Chairman of the Board of Directors, accusing private
inform her of the specific acts complained of and their respondent of abusive conduct, inefficiency,
corresponding penalty. The law requires the employer mismanagement, ineffectiveness and indecisiveness.
to give the worker to be dismissed two written notices The individual written complaints of each of the nine
before terminating his employment, namely, (1) a lawyers were attached to the letter-petition. Private
notice which apprises the employee of the particular respondent was furnished with a copy of the letter.
acts or omissions for which his dismissal is sought;
and (2) the subsequent notice which informs the Mr. Romulo stated that the banks confidence on
employee of the employer's decision to dismiss him. private respondent had been lost most especially in
Additionally, the letter never gave respondent Galay the light of (his) threats and that the latter could bring
an opportunity to explain herself, hence denying her the matter up in the appropriate forum. Undaunted,
due process. private respondent, in his memorandum of 07
September 1989 to the individual members of the
In sum, we find that Galay was illegally dismissed, Board of Directors, persisted in his request for a
because petitioners failed to show adequately that a formal investigation. Having been unheeded, private
valid cause for terminating respondent exists, and respondent, on 09 November 1989, filed with the
because petitioners failed to comply with the twin Manila arbitration branch of the NLRC, a complaint
requirement of notice and hearing. against herein petitioners for illegal dismissal and
damages.

After learning of the filing of the complaint, the Board
of Directors, on 21 November 1989, adopted
Resolution No. 5803 terminating the services of
private respondent in view of his belligerence" and the
Board's "honest belief that the relationship" between
private respondent and petitioner bank was one of
"client and lawyer." Private respondent was removed
from his office occupancy in the bank and ordered
disentitled, starting 10 August 1989, to any
compensation and other benefits.

ISSUE
Was private respondent Sadac validly dismissed
from his employment?

HELD
NO. The existence of an employer-employee
relationship, between the bank and private
respondent brings the case within the coverage of the reached by management without that compliance can
Labor Code. Under the Code, an employee may be be considered void and inexistent. While it is true that
validly dismissed if these requisites are attendant: (1) the essence of due process is simply an opportunity to
the dismissal is grounded on any of the causes stated be heard or, as applied in administrative proceedings,
in Article 282 of the Labor Code, and (2) the employee an opportunity to explain one's side, meetings in the
has been notified in writing and given the opportunity nature of consultation and conferences such as the
to be heard and to defend himself as so required by case here, however, may not be valid substitutes for
Section 2 and Section 5, Rule XIV, Book V, of the the proper observance of notice and hearing.
Implementing Rules of the Labor Code.

Article 282(c) of the Labor Code provides that "willful
breach by the employee of the trust reposed in him by
his employer" is a cause for the termination of
employment by an employer. Ordinary breach of trust
will not suffice, it must be willful and without
justifiable excuse. This ground must be founded on
facts established by the employer who must clearly
and convincingly prove by substantial evidence the
facts and incidents upon which loss of confidence in
the employee may fairly be made to rest; otherwise,
the dismissal will be rendered illegal.

Petitioners' stated loss of trust and confidence on
private respondent was spawned by the complaints
leveled against him by the lawyers in his department.

Concededly, a wide latitude of discretion is given an
employer in terminating the employment of
managerial employees on the ground of breach of
trust and confidence. In order to constitute a just cause
for dismissal, however, the act complained of must be
related to the performance of the duties of the
employee such as would show him to be thereby unfit
to continue working for the employer. Here, the
grievances of the lawyers, in main, refer to what are
perceived to be certain objectionable character traits
of private respondent. Although petitioners have
charged private respondent with allegedly
mishandling two cases in his long service with the
bank, it is quite apparent that private respondent
would not have been asked to resign had it not been
for the letter-complaint of his associates in the Legal
Department.

Confident that no employer-employee existed
between the bank and private respondent, petitioners
have put aside the procedural requirements for
terminating ones employment, i.e., (a) a notice
apprising the employee of the particular acts or
omissions for which his dismissal is sought, and (b)
another notice informing the employee of the
employer's decision to dismiss him. Failure to comply
with these requirements taints the dismissal with
illegality. This procedure is mandatory, any judgment
134 MABEZA V. NLRC (APRIL 18, 1997) to arise, there must be concurrence of two things: 1)
lack of intention to work; and 2) the presence of overt
KAPUNAN, J. acts signifying the employee's intention not to work.

FACTS In the instant case, respondent does not dispute the
Petitioner Norma Mabeza contends that around the fact that petitioner tried to file a leave of absence when
first week of May, 1991, she and her co-employees at she learned that the hotel management was
the Hotel Supreme in Baguio City were asked by the displeased with her refusal to attest to the affidavit.
hotel's management to sign an instrument attesting to The fact that she made this attempt clearly indicates
the latter's compliance with minimum wage and other not an intention to abandon but an intention to return
labor standard provisions of law. Petitioner signed the to work after the period of her leave of absence, had it
affidavit but refused to go to the City Prosecutor's been granted, shall have expired. Furthermore, while
Office to swear to the veracity and contents of the absence from work for a prolonged period may
affidavit as instructed by management. suggest abandonment in certain instances, mere
absence of one or two days would not be enough to
After she refused to proceed to the City Prosecutor's sustain such a claim. The overt act (absence) ought to
Office - on the same day the affidavit was submitted to unerringly point to the fact that the employee has no
the Cordillera Regional Office of DOLE - petitioner intention to return to work, which is patently not the
avers that she was ordered by the hotel management case here. In fact, several days after she had been
to turn over the keys to her living quarters and to advised to take an informal leave, petitioner tried to
remove her belongings from the hotel premises. resume working with the hotel, to no avail. It was only
According to her, respondent strongly chided her for after she had been repeatedly rebuffed that she filed a
refusing to proceed to the City Prosecutor's Office to case for illegal dismissal. These acts militate against
attest to the affidavit. She thereafter reluctantly filed a the private respondent's claim that petitioner
leave of absence from her job which was denied by abandoned her job.
management. When she attempted to return to work
on May 10, 1991, the hotel's cashier, Margarita Choy, (2) NO. Loss of confidence as a just cause for dismissal
informed her that she should not report to work and, was never intended to provide employers with a blank
instead, continue with her unofficial leave of absence. check for terminating their employees. Such a vague,
Consequently, on May 13, 1991, three days after her all-encompassing pretext as loss of confidence, if
attempt to return to work, petitioner filed a complaint unqualifiedly given the seal of approval by this Court,
for illegal dismissal. could readily reduce to barren form the words of the
constitutional guarantee of security of tenure. Having
Responding to the allegations made in support of this in mind, loss of confidence should ideally apply
petitioner's complaint for illegal dismissal, private only to cases involving employees occupying positions
respondent Peter Ng alleged before Labor Arbiter Pati of trust and confidence or to those situations where
that petitioner "surreptitiously left (her job) without the employee is routinely charged with the care and
notice to the management” and that she actually custody of the employer's money or property. To the
abandoned her work. first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down
ISSUES management policies and/or to hire, transfer,
(1) Was there abandonment of work on the part of suspend, lay-off, recall, discharge, assign or discipline
petitioner? employees or effectively recommend such managerial
actions; and to the second class belong cashiers,
(2) Was she validly dismissed from her auditors, property custodians, etc., or those who, in
employment? the normal and routine exercise of their functions,
regularly handle significant amounts of money or
HELD property. Evidently, an ordinary chambermaid who
(1) NO. From the evidence on record, it is crystal clear has to sign out for linen and other hotel property from
that the circumstances upon which private the property custodian each day and who has to
respondent anchored his claim that petitioner account for each and every towel or bedsheet utilized
"abandoned" her job were not enough to constitute by the hotel's guests at the end of her shift would not
just cause to sanction the termination of her services fall under any of these two classes of employees for
under Article 283 of the Labor Code. For abandonment
which loss of confidence, if ably supported by 135 RIVERA V. SOLIDBANK (APRIL 19, 2006)
evidence, would normally apply.
CALLEJO, J.
More importantly, we have repeatedly held that loss of
confidence should not be simulated in order to justify FACTS
what would otherwise be, under the provisions of law, In December 1994, Solidbank offered two retirement
an illegal dismissal. "It should not be used as a programs to its employees: (a) the Ordinary
subterfuge for causes which are illegal, improper and Retirement Program (ORP), under which an employee
unjustified.It must be genuine, not a mere would receive 85% of his monthly basic salary
afterthought to justify an earlier action taken in bad multiplied by the number of years in service; and (b)
faith.” the Special Retirement Program (SRP), under which a
In the case at bar, the suspicious delay in private retiring employee would receive 250% of the gross
respondent's filing of qualified theft charges against monthly salary multiplied by the number of years in
petitioner long after the latter exposed the hotel's service.
scheme (to avoid its obligations as employer under the
Labor Code) by her act of filing illegal dismissal Subsequently, Solidbank required Rivera to sign an
charges against the private respondent would hardly undated Release, Waiver and Quitclaim, which was
warrant serious consideration of loss of confidence as notarized on March 1, 1995. Aside from
a valid ground for dismissal. Clearly, the efforts to acknowledging that he had no cause of action against
justify petitioner's dismissal - on top of the private Solidbank or its affiliate companies, Rivera agreed that
respondent's scheme of inducing his employees to the bank may bring any action to seek an award for
sign an affidavit absolving him from possible damages resulting from his breach of the Release,
violations of the Labor Code - taints with evident bad Waiver and Quitclaim, and that such award would
faith and deliberate malice petitioner's summary include the return of whatever sums paid to him by
termination from employment. virtue of his retirement under the SRP. Rivera was
likewise required to sign an undated Undertaking as a
supplement to the Release, Waiver and Quitclaim in
favor of Solidbank. In this Undertaking, he promised
that [he] will not seek employment with a competitor
bank or financial institution within one (1) year from
February 28, 1995, and that any breach of the
Undertaking or the provisions of the Release, Waiver
and Quitclaim would entitle Solidbank to a cause of
action against him before the appropriate courts of
law. Unlike the Release, Waiver and Quitclaim, the
Undertaking was not notarized.

On May 1, 1995, the Equitable Banking Corporation
(Equitable) employed Rivera as Manager of its Credit
Investigation and Appraisal Division of its Consumers
Banking Group. Upon discovering this, Solidbank First
Vice-President for Human Resources Division (HRD)
Celia J.L. Villarosa wrote a letter dated May 18, 1995,
informing Rivera that he had violated the Undertaking.
She likewise demanded the return of all the monetary
benefits he received in consideration of the SRP within
five (5) days from receipt. When Rivera refused to
return the amount demanded within the given period,
Solidbank filed a complaint for Sum of Money with
Prayer for Writ of Preliminary Attachment before the
Regional Trial Court (RTC) of Manila.

ISSUE
Was the Undertaking a valid contract?
HELD they may also include a cause of action for prohibitory
NO. Thus, in determining whether the contract is and mandatory injunction against petitioner, specific
reasonable or not, the trial court should consider the performance plus damages, or a damage suit (for
following factors: (a) whether the covenant protects a actual, moral and/or exemplary damages), all
legitimate business interest of the employer; (b) inclusive of the restitution of the P963,619.28 which
whether the covenant creates an undue burden on the petitioner received from respondent. The Undertaking
employee; (c) whether the covenant is injurious to the and the Release, Waiver and Quitclaim do not provide
public welfare; (d) whether the time and territorial for the automatic forfeiture of the benefits petitioner
limitations contained in the covenant are reasonable; received under the SRP upon his breach of said deeds.
and (e) whether the restraint is reasonable from the Thus, the post-retirement competitive employment
standpoint of public policy. ban incorporated in the Undertaking of respondent
does not, on its face, appear to be of the same class or
The strong weight of authority is that forfeitures for genre as that contemplated in Rochester.
engaging in subsequent competitive employment
included in pension and retirement plans are valid
even though unrestricted in time or geography. The
raison detre is explained by the United States Circuit
Court of Appeals in Rochester Corporation v. W.L.
Rochester, Jr.:

x x x The authorities, though, generally draw a clear
and obvious distinction between restraints on
competitive employment in employment contracts
and in pension plans. The strong weight of authority
holds that forfeitures for engaging in subsequent
competitive employment, included in pension
retirement plans, are valid, even though unrestricted
in time or geography. The reasoning behind this
conclusion is that the forfeiture, unlike the restraint
included in the employment contract, is not a
prohibition on the employees engaging in competitive
work but is merely a denial of the right to participate
in the retirement plan if he does so engage. A leading
case on this point is Van Pelt v. Berefco, Inc., supra, 208
N.E.2d at p. 865, where, in passing on a forfeiture
provision similar to that here, the Court said: A
restriction in the contract which does not preclude the
employee from engaging in competitive activity, but
simply provides for the loss of rights or privileges if he
does so is not in restraint of trade. A post-retirement
competitive employment restriction is designed to
protect the employer against competition by former
employees who may retire and obtain retirement or
pension benefits and, at the same time, engage in
competitive employment.

We have reviewed the Undertaking which respondent
impelled petitioner to sign, and find that in case of
failure to comply with the promise not to accept
competitive employment within one year from
February 28, 1995, respondent will have a cause of
action against petitioner for protection in the courts of
law. The words cause of action for protection in the
courts of law are so broad and comprehensive, that
136 SALAS V. ABOITIZ (JUNE 27, 2008) The CA also justified Salas dismissal on ground of
willful breach of trust. It lent credence to Aboitizs
NACHURA, J. posture that Salas was a warehouseman holding a
position of trust and confidence, and that he tampered
FACTS with the bin card to cover up [his] negligence and [to]
Claiming termination without cause, Salas filed with mislead the investigating team.
the Labor Arbiter a complaint against Aboitiz and its
president Sabin Aboitiz for illegal dismissal with We disagree. Evidently, Salas as material controller
prayer for reinstatement, and for payment of full was tasked with monitoring and maintaining the
backwages, moral and exemplary damages, as well as availability and supply of Quickbox.There appears
attorneys fees. nothing to suggest that Salas position was a highly or
even primarily confidential position, so that he can be
Aboitiz responded that there was valid termination. It removed for loss of trust and confidence by the
asserted that Salas was dismissed for just cause and employer.
with due process. It claimed Salas willfully breached
his duty when Aboitiz ran out of Large Quickbox, Notably, in Manila Memorial Park Cemetery, Inc. v.
justifying the termination of his employment. Panado, we held that: [T]he term trust and confidence
is restricted to managerial employees or those who
ISSUE are vested with powers or prerogatives to lay down
Was Salas validly dismissed from employment? and execute management policies and/or to hire
transfer, suspend, lay-off, recall, discharge, assign or
HELD discipline employees or to effectively recommend
NO. As stated in the decision notice, Salas was such managerial actions.
terminated for neglect of duty and willful breach of
trust. Gross negligence connotes want or absence of or Besides, as we review the records before us, we do not
failure to exercise slight care or diligence, or the entire see any semblance of willful breach of trust on the part
absence of care. It evinces a thoughtless disregard of of Salas. It is true that there was erasure or alteration
consequences without exerting any effort to avoid on the bin card. Aboitiz, however, failed to
them. To warrant removal from service, the demonstrate that it was done to cover up Salas alleged
negligence should not merely be gross, but also negligence. Other than the bin card and Aboitizs
habitual. barefaced assertion, no other evidence was offered to
prove the alleged cover-up. Neither was there any
Undoubtedly, it was Salas duty, as material controller, showing that Salas attempted to mislead the
to monitor and maintain the availability and supply of investigating team. The CA, therefore, erred in
Quickbox needed by Aboitiz in its day-to-day adopting Aboitizs unsubstantiated assertion to justify
operations, and on June 4, 2003, Aboitiz had run out of Salas dismissal.
Large Quickbox. However, records show that Salas
made a requisition for Quickbox as early as May 21, Indeed, an employer has the right, under the law, to
2003; that he made several follow-ups with Eric dismiss an employee based on fraud or willful breach
Saclamitao regarding the request; and that he even of the trust bestowed upon him by his employer or the
talked to the supplier to facilitate the immediate latters authorized representative. However, the loss of
delivery of the Quickbox. It cannot be gainsaid that trust must be based not on ordinary breach but, in the
Salas exerted efforts to avoid a stock out of Quickbox. language of Article 282(c) of the Labor Code, on willful
Accordingly, he cannot be held liable for gross breach. A breach is willful if it is done intentionally,
negligence. knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly,
If there is anything that Salas can be faulted for, it is thoughtlessly, heedlessly or inadvertently. It must rest
his failure to promptly inform his immediate on substantial grounds and not on the employers
supervisor, Mr. Ed Dumago, of the non-delivery of the arbitrariness, whims, caprices or suspicion;
requisitioned items. Nevertheless, such failure did not otherwise, the employee would eternally remain at
amount to gross neglect of duty or to willful breach of the mercy of the employer. It should be genuine and
trust, which would justify his dismissal from service. not simulated; nor should it appear as a mere
afterthought to justify an earlier action taken in bad
faith or a subterfuge for causes which are improper,
illegal or unjustified. It has never been intended to 137 JOHN HANCOCK LIFE INSURANCE V. J DAVIS
afford an occasion for abuse because of its subjective (SEPTEMBER 3, 2008)
nature. There must, therefore, be an actual breach of
duty committed by the employee which must be CORONA, J.
established by substantial evidence. In this case,
Aboitiz utterly failed to establish the requirements FACTS
prescribed by law and jurisprudence for a valid Because loss of personal property among its
dismissal on the ground of breach of trust and employees had become rampant in its office,
confidence. petitioner sought the assistance of the National
Bureau of Investigation (NBI). The NBI, in the course
of its investigation, obtained a security video from
Abensons showing the person who used Yusecos
credit cards. Yuseco and other witnesses positively
identified the person in the video as respondent.

Consequently, the NBI and Yuseco filed a complaint for
qualified theft against respondent in the office of the
Manila city prosecutor. But because the affidavits
presented by the NBI (identifying respondent as the
culprit) were not properly verified, the city prosecutor
dismissed the complaint due to insufficiency of
evidence.

Meanwhile, petitioner placed respondent under
preventive suspension and instructed her to
cooperate with its ongoing investigation. Instead of
doing so, however, respondent filed a complaint for
illegal dismissal alleging that petitioner terminated
her employment without cause.

Petitioner essentially argues that the ground for an
employees dismissal need only be proven by
substantial evidence. Thus, the dropping of charges
against an employee (specially on a technicality such
as lack of proper verification) or his subsequent
acquittal does not preclude an employer from
dismissing him due to serious misconduct.

ISSUE
Did petitioner substantially prove the presence of
valid cause for respondents termination?

HELD
YES. Misconduct involves the transgression of some
established and definite rule of action, forbidden act, a
dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. For
misconduct to be serious and therefore a valid ground
for dismissal, it must be:

1. of grave and aggravated character and not
merely trivial or unimportant and
2. connected with the work of the employee.

In this case, petitioner dismissed respondent based on
the NBIs finding that the latter stole and used Yusecos
credit cards. But since the theft was not committed
against petitioner itself but against one of its
employees, respondents misconduct was not work-
related and therefore, she could not be dismissed for
serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of
other analogous causes or those which are susceptible
of comparison to another in general or in specific
detail. For an employee to be validly dismissed for a
cause analogous to those enumerated in Article 282,
the cause must involve a voluntary and/or willful act
or omission of the employee.

A cause analogous to serious misconduct is a
voluntary and/or willful act or omission attesting to
an employees moral depravity. Theft committed by an
employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous
to serious misconduct.

Did petitioner substantially prove the existence of
valid cause for respondents separation? Yes. The labor
arbiter and the NLRC relied not only on the affidavits
of the NBIs witnesses but also on that of respondent.
They likewise considered petitioners own
investigative findings. Clearly, they did not merely
adopt the findings of the NBI but independently
assessed evidence presented by the parties. Their
conclusion (that there was valid cause for respondents
separation from employment) was therefore
supported by substantial evidence.

All things considered, petitioner validly dismissed
respondent for cause analogous to serious
misconduct.

AUTHORIZED CAUSES FOR TERMINATION streamlining of PEPSIs distribution and sales systems
were an honest effort to make the company more
138 SANTOS ET AL V. COURT OF APPEALS (JULY 5, efficient.
2001)
Redundancy exists when the service capability of the
BELLOSILLA, J. work force is in excess of what is reasonably needed
to meet the demands of the enterprise. A redundant
FACTS position is one rendered superfluous by a number of
In a letter dated December 26, 1994, PEPSI informed factors, such as overhiring of workers, decreased
its employees that due to poor performance of its volume of business, dropping of a particular product
Metro Manila Sales Operations it would restructure line previously manufactured by the company or
and streamline certain physical and sales distribution phasing out of a service previously undertaken by the
systems to improve its warehousing efficiency. Certain business.
positions, including that of petitioners, were declared
redundant and abolished. Consequently, employees While it is true that management may not, under the
with affected positions were terminated. guise of invoking its prerogative, ease out employees
and defeat their constitutional right to security of
On 15 January 1995 petitioners left their respective tenure, the same must be respected if clearly
positions, accepted their separation pays and undertaken in good faith and if no arbitrary or
executed the corresponding releases and malicious action is shown.
quitclaims.However, before the end of the year,
petitioners learned that PEPSI created new positions Similarly, in Wiltshire File Co., Inc. v. NLRC petitioner
called Account Development Managers (ADM) with company effected some changes in its organization by
substantially the same duties and responsibilities as abolishing the position of Sales Manager and simply
the CDS. Aggrieved, on 15 April 1996, petitioners filed adding the duties previously discharged by it to the
a complaint with the Labor Arbiter for illegal dismissal duties of the General Manager to whom the Sales
with a prayer for reinstatement, back wages, moral Manager used to report. In that case, we held that the
and exemplary damages and attorneys fees. characterization of private respondents services as no
longer necessary or sustainable, and therefore
In their complaint, petitioners alleged that the properly terminable, was an exercise of business
creation of the new positions belied PEPSIs claim of judgment on the part of petitioner company. The
redundancy. They further alleged that the wisdom or soundness of such characterization or
qualifications for both the CDS and ADM positions decision is not subject to discretionary review on the
were similar and that the employees hired for the part of the Labor Arbiter or of the NLRC so long as no
latter positions were even less qualified than they violation of law or arbitrary and malicious action is
were. indicated.

ISSUE In the case at bar, no such violation or arbitrary action
Were the petitioners illegally dismissed due to the was established by petitioners. The subject matter
company's redundancy program? being well beyond the discretionary review allowed
by law, it behooves this Court to steer clear of the
HELD realm properly belonging to the business experts. We
NO. The job descriptions submitted by PEPSI are agree with the NLRC in its application of International
replete with information and is an adequate basis to Hardware v. NLRC that the mandated one (1) month
compare and contrast the two (2) positions. notice prior to termination given to the worker and
the DOLE is rendered unnecessary by the consent of
Therefore, the two (2) positions being different, it the worker himself. Petitioners assail the
follows that the redundancy program instituted by voluntariness of their consent by stating that had they
PEPSI was undertaken in good faith. Petitioners have known of PEPSIs bad faith they would not have agreed
not established that the title Account Development to their termination, nor would they have signed the
Manager was created in order to maliciously corresponding releases and quitclaims. Having
terminate their employment. Nor have they shown established private respondents good faith in
that PEPSI had any ill motive against them. It is undertaking the assailed redundancy program, there
therefore apparent that the restructuring and is no need to rule on this contention.
139 SERRANO V. NLRC (JANUARY 27, 2000) by the availment of the services of an independent
contractor to replace the services of the terminated
MENDOZA, J. employees to promote economy and efficiency.

FACTS Indeed, as we pointed out in another case, the
Petitioner was hired by private respondent Isetann "[management of a company] cannot be denied the
Department Store as a security checker to apprehend faculty of promoting efficiency and attaining economy
shoplifters and prevent pilferage of merchandise. by a study of what units are essential for its operation.
Initially hired on October 4, 1984 on contractual basis, To it belongs the ultimate determination of whether
petitioner eventually became a regular employee on services should be performed by its personnel or
April 4, 1985. In 1988, he became head of the Security contracted to outside agencies . . . [While there] should
Checkers Section of private respondent. Sometime in be mutual consultation, eventually deference is to be
1991, as a cost-cutting measure, private respondent paid to what management decides.” Consequently,
decided to phase out its entire security section and absent proof that management acted in a malicious or
engage the services of an independent security arbitrary manner, the Court will not interfere with the
agency. exercise of judgment by an employer.

The loss of his employment prompted petitioner to file In the case at bar, we have only the bare assertion of
a complaint on December 3, 1991 for illegal dismissal, petitioner that, in abolishing the security section,
illegal layoff, unfair labor practice, underpayment of private respondent’s real purpose was to avoid
wages, and nonpayment of salary and overtime pay. payment to the security checkers of the wage
increases provided in the collective bargaining
ISSUE agreement approved in 1990. Such an assertion is not
Is the hiring of an independent security agency by a sufficient basis for concluding that the termination
the private respondent to replace its current of petitioner’s employment was not a bona fide
security section a valid ground for the dismissal of decision of management to obtain reasonable return
the employees classed under the latter? from its investment, which is a right guaranteed to
employers under the Constitution. Indeed, that the
HELD phase-out of the security section constituted a
YES. Petitioner’s contention has no merit. Art. 283 "legitimate business decision" is a factual finding of an
provides: Closure of establishment and reduction of administrative agency which must be accorded
personnel (see Codal). respect and even finality by this Court since nothing
can be found in the record which fairly detracts from
In De Ocampo v. National Labor Relations Commission, such finding.
this Court upheld the termination of employment of
three mechanics in a transportation company and Accordingly, we hold that the termination of
their replacement by a company rendering petitioner’s services was for an authorized cause, i.e.,
maintenance and repair services. It held: In redundancy. Hence, pursuant to Art. 283 of the Labor
contracting the services of Gemac Machineries, as part Code, petitioner should be given separation pay at the
of the company’s cost-saving program, the services rate of one month pay for every year of service.
rendered by the mechanics became redundant and
superfluous, and therefore properly terminable. The
company merely exercised its business judgment or
management prerogative. And in the absence of any
proof that the management abused its discretion or
acted in a malicious or arbitrary manner, the court will
not interfere with the exercise of such prerogative.

In Asian Alcohol Corporation v. National Labor
Relations Commission, the Court likewise upheld the
termination of employment of water pump tenders
and their replacement by independent contractors. It
ruled that an employer’s good faith in implementing a
redundancy program is not necessarily put in doubt
140 ASUFRIN V. SMC (MARCH 10, 2004) retrenched with benefits or be dismissed without
receiving any benefit at all. What was the true nature
YNARES-SANTIAGO, J. of petitioners offer to private respondents? It was in
reality a Hobsons choice. All that the private
FACTS respondents were offered was a choice on the means
Respondent SMC wrote a letter to petitioner informing or method of terminating their services but never as
him that, owing to the implementation of the pre- to the status of their employment. In short, they were
selling operations scheme, all positions of route and never asked if they wanted to work for petitioner.
warehouse personnel will be declared redundant and
the Sum-ag Sales Office will be closed effective April In the case at bar, petitioner is similarly situated. It
30, 1996. Thus, from April 1, 1996 to May 15, 1996, bears stressing that whether it be by redundancy or
petitioner reported to respondents Personnel retrenchment or any of the other authorized causes,
Department at the Sta. Fe Brewery, pursuant to a no employee may be dismissed without observance of
previous directive. the fundamentals of good faith. It is not difficult for
employers to abolish positions in the guise of a cost-
Thereafter, the employees of Sum-ag sales force were cutting measure and we should not be easily swayed
informed that they can avail of respondents early by such schemes which all too often reduce to near
retirement package pursuant to the retrenchment nothing what is left of the rubble of rights of our
program, while those who will not avail of early exploited workers. Given the nature of petitioners job
retirement would be redeployed or absorbed at the as a Warehouse Checker, it is inconceivable that
Brewery or other sales offices. Petitioner opted to respondent could not accommodate his services
remain and manifested to Acting Personnel Manager considering that the warehousing operations at Sum-
Salvador Abadesco his willingness to be assigned to ag Sales Office has not shut down.
any job, considering that he had three children in
college. All told, to sustain the position taken by the appellate
court would be to dilute the workingmans most
Petitioner was surprised when he was informed by the important right: his constitutional right to security of
Acting Personnel Manager that his name was included tenure. While respondent may have offered a
in the list of employees who availed of the early generous compensation package to those whose
retirement package. Petitioners request that he be services were terminated upon the implementation of
given an assignment in the company was ignored by the pre-selling scheme, we find such an offer, in the
the Acting Personnel Manager. Petitioner thus filed a face of the prevailing facts, anathema to the
complaint for illegal dismissal with the NLRC. underlying principles which give life to our labor
statutes because it would be tantamount to likening an
ISSUE employer-employee relationship to a salesman and a
Was the petitioner validly dismissed? purchaser of a commodity. It is an archaic
abomination. To quote what has been aptly stated by
HELD former Governor General Leonard Wood in his
NO. It is not enough for a company to merely declare inaugural message before the 6th Philippine
that it has become overmanned. It must produce Legislature on October 27, 1922 labor is neither a
adequate proof that such is the actual situation to chattel nor a commodity, but human and must be dealt
justify the dismissal of the affected employees for with from the standpoint of human interest.
redundancy.
As has been said: We do not treat our workers as
In the earlier case of San Miguel Corporation v. NLRC, merchandise and their right to security of tenure
respondents reasons for terminating the services of its cannot be valued in precise peso-and-centavo terms.
employees in the very same Sum-ag Sales Office was It is a right which cannot be allowed to be devalued by
rejected, to wit: Even if private respondents were the purchasing power of employers who are only too
given the option to retire, be retrenched or dismissed, willing to bankroll the separation pay of their illegally
they were made to understand that they had no choice dismissed employees to get rid of them. This right will
but to leave the company. More bluntly stated, they never be respected by the employer if we merely
were forced to swallow the bitter pill of dismissal but honor it with a price tag. The policy of dismiss now and
afforded a chance to sweeten their separation from pay later favors moneyed employers and is a mockery
employment. They either had to voluntarily retire, be of the right of employees to social justice.
141 LOPEZ SUGAR CORP V. FFW (AUGUST 30,
1990) Thus, We consider it may be useful to sketch the
general standards in terms of which the acts of
FELECIANO, J. petitioner employer must be appraised. Firstly, the
losses expected should be substantial and not merely
FACTS de minimis in extent. If the loss purportedly sought to
Petitioner, allegedly to prevent losses due to major be forestalled by retrenchment is clearly shown to be
economic problems, and exercising its privilege under insubstantial and inconsequential in character, the
Article XI, Section 2 of its 1975-1977 Collective bona fide nature of the retrenchment would appear to
Bargaining Agreement ("CBA") entered into between be seriously in question. Secondly, the substantial loss
petitioner and private respondent Philippine Labor apprehended must be reasonably imminent, as such
Union Association ("PLUA-NACUSIP"), caused the imminence can be perceived objectively and in good
retrenchment and retirement of a number of its faith by the employer. There should, in other words,
employees. be a certain degree of urgency for the retrenchment,
which is after all a drastic recourse with serious
Contesting the retrenchment and retirement of a consequences for the livelihood of the employees
number of its employees, FFW claimed that the retired or otherwise laid-off. Because of the
terminations undertaken by petitioner were violative consequential nature of retrenchment, it must, thirdly,
of the security of tenure of its members and were be reasonably necessary and likely to effectively
intended to "bust" the union and hence constituted an prevent the expected losses. The employer should
unfair labor practice. FFW claimed that after the have taken other measures prior or parallel to
termination of the services of its members, petitioner retrenchment to forestall losses, i.e., cut other costs
advised 110 casuals to report to its personnel office. than labor costs. An employer who, for instance, lays
FFW further argued that to justify retrenchment, off substantial numbers of workers while continuing
serious business reverses must be "actual, real and to dispense fat executive bonuses and perquisites or
amply supported by sufficient and convincing so-called "golden parachutes", can scarcely claim to be
evidence." FFW prayed for reinstatement of its retrenching in good faith to avoid losses. To impart
members who had been retired or retrenched. operational meaning to the constitutional policy of
providing "full protection" to labor, the employer's
ISSUE prerogative to bring down labor costs by retrenching
Under what circumstances, the employer becomes must be exercised essentially as a measure of last
legally privileged to retrench and reduce the resort, after less drastic means — e.g., reduction of
number of his employees? both management and rank-and-file bonuses and
salaries, going on reduced time, improving
HELD manufacturing efficiencies, trimming of marketing
Article 283 of the Labor Code provides: Article 283. and advertising costs, etc. — have been tried and
Closure of establishment and reduction of personnel found wanting.
(refer to codal). In ts ordinary connotation, he phrase
"to revent losses" means that retrenchment or Lastly, but certainly not the least important, alleged if
termination of the services of some employees is already realized, and the expected imminent losses
authorized to be undertaken by the employer sought to be forestalled, must be proved by sufficient
sometime before the losses anticipated are actually and convincing evidence. The reason for requiring this
sustained or realized. It is not, in other words, the quantum of proof is readily apparent: any less
intention of the lawmaker to compel the employer to exacting standard of proof would render too easy the
stay his hand and keep all his employees until abuse of this ground for termination of services of
sometime after losses shall have in fact materialized; employees.
if such an intent were expressly written into the law,
that law may well be vulnerable to constitutional The principal difficulty with petitioner's case as above
attack as taking property from one man to give to presented was that no proof of actual declining gross
another. This is simple enough. and net revenues was submitted. No audited financial
statements showing the financial condition of
At the other end of the spectrum, it seems equally clear petitioner corporation during the above mentioned
that not every asserted possibility of loss is sufficient crop years were submitted. Since financial statements
legal warrant for reduction of personnel. audited by independent external auditors constitute
the normal method of proof of the profit and loss 142 ASIONIC PHIL. INC V. NLRC (MAY 19, 1998)
performance of a company, it is not easy to understand
why petitioner should have failed to submit such VITUG, J.
financial statements.
FACTS
Moreover, while petitioner made passing reference to Inasmuch as its business activity remained critical,
cost reduction measures it had allegedly undertaken, API was constrained to implement a company-wide
it was, once more, a fairly conspicuous failure to retrenchment affecting one hundred five (105)
specify the cost-reduction measures actually employees from a work force that otherwise totalled
undertaken in good faith before resorting to three hundred four (304). The selection was based on
retrenchment. productivity/performance standards pursuant to the
CBA. Yolanda Boaquina was one of those affected by
the retrenchment and API, through its Personnel
Manager Beatriz G. Torro, advised her of such fact in
its letter of 29 December 1992. In that letter, Boaquina
was informed that her services were to be dispensed
with effective 31 January 1993[4] although she did not
have to render any service for the month of January
she being by then already considered to be on leave
with pay. While Juana Gayola was not supposed to be
affected by the retrenchment in view of her high
performance rating, her services, nevertheless, were
considered to have been ended on 04 September
1992[5] when she was ordered by API to take an
indefinite leave of absence. She had not since been
recalled.

In this special civil action of certiorari, petitioners
Asionics Philippines, Inc. (API), and its President and
majority stockholder, Frank Yih,seek to annul and set
aside the decision, dated 19 May 1996, of the National
Labor Relations Commission ("NLRC") which has
ordered, inter alia, that they grant separation pay to
respondents Gayola and Boaquina.

It is on the issue of joint and solidary liability of
petitioner Frank Yih with API that the Court has
decided to give due course to the instant petition.

ISSUE
Can a stockholder/director/officer of a
corporation be held liable for the obligation of the
corporation absent any proof and finding of bad
faith?

HELD
NO. The court cannot agree with the Solicitor-General
in suggesting that even if Frank Yih had no direct hand
in the dismissal of the respondents he should be
personally liable therefor on account alone of his being
the President and majority stockholder of the
company.

The disquisition by the Court in Santos vs. NLRC is The Court, to be sure, did appear to have deviated
quite succinct and clear. Thus - "A corporation is a somewhat in Gudez vs. NLRC (183 SCRA 644),
juridical entity with legal personality separate and however, it should be clear from our recent
distinct from those acting for and in its behalf and, in pronouncement in Mam Realty Development
general, from the people comprising it. The rule is that Corporation and Manuel Centeno vs. NLRC (244 SCRA
obligations incurred by the corporation, acting 797), that the Sunio doctrine still prevails.
through its directors, officers and employees, are its
sole liabilities. Nevertheless, being a mere fiction of Nothing on record is shown to indicate that Frank Yih
law, peculiar situations or valid grounds can exist to has acted in bad faith or with malice in carrying out the
warrant, albeit done sparingly, the disregard of its retrenchment program of the company. His having
independent being and the lifting of the corporate veil. been held by the NLRC to be solidarily and personally
As a rule, this situation might arise when a corporation liable with API is thus legally unjustified.
is used to evade a just and due obligation or to justify
a wrong, to shield or perpetrate fraud, to carry out
similar unjustifiable aims or intentions, or as a
subterfuge to commit injustice and so circumvent the
law.”

The basic rule is still that which can deduced from the
Courts pronouncement in Sunio vs. National Labor
Relations Commission (127 SCRA 390), thus:

We come now to the personal liability of petitioner,
Sunio, who was made jointly and severally responsible
with petitioner company and CIPI for the payment of
the backwages of private respondents. This is
reversible error. The Assistant Regional Directors
Decision failed to disclose the reason why he was
made personally liable. Respondents, however,
alleged as grounds thereof, his being the owner of one-
half (1/2) interest of said corporation, and his alleged
arbitrary dismissal of private respondents.

Petitioner Sunio was impleaded in the Complaint in
his capacity as General Manager of petitioner
corporation. There appears to be no evidence on
record that he acted maliciously or in bad faith in
terminating the services of private respondents. His
act, therefore, was within the scope of his authority
and was a corporate act.

It is basic that a corporation is invested by law with a
personality separate and distinct from those of the
persons composing it as well as from that of any other
legal entity to which it may be related. Mere
ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a
corporation is not of itself sufficient ground for
disregarding the separate corporate personality.
Petitioner Sunio, therefore, should not have been
made personally answerable for the payment of
private respondents back salaries.

143 FLIGHT ATTENDANTS V. PAL (JULY 22, 2008) While it is true that the exercise of this right is a
prerogative of management, there must be faithful
YNARES-SANTIAGO, J. compliance with substantive and procedural
requirements of the law and jurisprudence, for
FACTS retrenchment strikes at the very heart of the worker's
FIRST, the record shows that PAL failed or neglected employment, the lifeblood upon which he and his
to adopt less drastic cost-cutting measures before family owe their survival. Retrenchment is only a
resorting to retrenchment. No less than the Supreme measure of last resort, when other less drastic means
Court held that resort to less drastic cost-cutting have been tried and found to be inadequate.
measures is an indispensable requirement for a valid
retrenchment x x x. The burden clearly falls upon the employer to prove
economic or business losses with sufficient
SECOND, PAL arbitrarily and capriciously singled out supporting evidence. Its failure to prove these
the year 1997 as a reference in its alleged assessment reverses or losses necessarily means that the
of employee efficiency. With this, it totally disregarded employee's dismissal was not justified. Any claim of
the employee's performance during the years prior to actual or potential business losses must satisfy certain
1997. This resulted in the unreasonable and unfair established standards, all of which must concur,
retrenchment or demotion of several flight pursers before any reduction of personnel becomes legal.
and attendants who showed impeccable service These are:
records during the years prior to 1997.
1. That retrenchment is reasonably necessary
THIRD, seniority was totally disregarded in the and likely to prevent business losses which, if
selection of employees to be retrenched, which is a already incurred, are not merely de minimis,
clear and willful violation of the CBA. but substantial, serious, actual and real, or if
only expected, are reasonably imminent as
FOURTH, PAL maliciously represented in the perceived objectively and in good faith by the
proceedings below that it could only operate on a fleet employer;
of fourteen (14) planes in order to justify the
retrenchment scheme. Yet, the evidence on record 1. That the employer served written notice both
revealed that PAL operated a fleet of twenty two (22) to the employees and to the Department of
planes. In fact, after having illegally retrenched the Labor and Employment at least one month
unfortunate flight attendants and pursers, PAL rehired prior to the intended date of retrenchment;
those who were capriciously dismissed and even hired
from the outside just to fulfill their manning 1. That the employer pays the retrenched
requirements. employees separation pay equivalent to one
(1) month pay or at least one-half (½) month
FIFTH, PAL did not use any fair and reasonable criteria pay for every year of service, whichever is
in effecting retrenchment. If there really was any, the higher;
same was applied arbitrarily, if not discriminatorily.
1. That the employer exercises its prerogative to
FINALLY, and perhaps the worst transgression of retrench employees in good faith for the
FASAP's rights, PAL used retrenchment to veil its advancement of its interest and not to defeat
union-busting motives and struck at the heart of or circumvent the employees' right to security
FASAP when it retrenched seven (7) of its twelve (12) of tenure; and,
officers and demoted three (3) others.
1. That the employer used fair and reasonable
ISSUE criteria in ascertaining who would be
Was PAL’s retrenchment scheme justified? dismissed and who would be retained among
the employees, such as status, efficiency,
HELD seniority, physical fitness, age, and financial
Under the Labor Code, retrenchment or reduction of hardship for certain workers.
employees is authorized as follows: ART. 283. Closure
of establishment and reduction of personnel. In view of the facts and the issues raised, the
resolution of the instant petition hinges on a
determination of the existence of the first, fourth and Alleged losses if already realized, and the expected
the fifth elements set forth above, as well as imminent losses sought to be forestalled, must be
compliance therewith by PAL, taking to mind that the proved by sufficient and convincing evidence. The
burden of proof in retrenchment cases lies with the reason for requiring this is readily apparent: any less
employer in showing valid cause for dismissal; that exacting standard of proof would render too easy the
legitimate business reasons exist to justify abuse of this ground for termination of services of
retrenchment. employees; scheming employers might be merely
feigning business losses or reverses in order to ease
FIRST ELEMENT: That retrenchment is reasonably out employees.
necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but Alleged losses if already realized, and the expected
substantial, serious, actual and real, or if only imminent losses sought to be forestalled, must be
expected, are reasonably imminent as perceived proved by sufficient and convincing evidence. The
objectively and in good faith by the employer. reason for requiring this is readily apparent: any less
exacting standard of proof would render too easy the
The law speaks of serious business losses or financial abuse of this ground for termination of services of
reverses. Sliding incomes or decreasing gross employees; scheming employers might be merely
revenues are not necessarily losses, much less serious feigning business losses or reverses in order to ease
business losses within the meaning of the law. The fact out employees.
that an employer may have sustained a net loss, such
loss, per se, absent any other evidence on its impact on In establishing a unilateral claim of actual or potential
the business, nor on expected losses that would have losses, financial statements audited by independent
been incurred had operations been continued, may external auditors constitute the normal method of
not amount to serious business losses mentioned in proof of profit and loss performance of a company. The
the law. The employer must show that its losses condition of business losses justifying retrenchment is
increased through a period of time and that the normally shown by audited financial documents like
condition of the company will not likely improve in the yearly balance sheets and profit and loss statements
near future, or that it expected no abatement of its as well as annual income tax returns. Financial
losses in the coming years. Put simply, not every loss statements must be prepared and signed by
incurred or expected to be incurred by a company will independent auditors; otherwise, they may be assailed
justify retrenchment. as self-serving. A Statement of Profit and Loss
submitted to prove alleged losses, without the
The employer must also exhaust all other means to accompanying signature of a certified public
avoid further losses without retrenching its accountant or audited by an independent auditor, is
employees. Retrenchment is a means of last resort; it nothing but a self-serving document which ought to be
is justified only when all other less drastic means have treated as a mere scrap of paper devoid of any
been tried and found insufficient. Even assuming that probative value.
the employer has actually incurred losses by reason of
the Asian economic crisis, the retrenchment is not The audited financial statements should be presented
completely justified if there is no showing that the before the Labor Arbiter who is in the position to
retrenchment was the last recourse resorted to. evaluate evidence. They may not be submitted
Where the only less drastic measure that the employer belatedly with the Court of Appeals, because the
undertook was the rotation work scheme, or the admission of evidence is outside the sphere of the
three-day-work-per-employee-per-week schedule, appellate court's certiorari jurisdiction.
and it did not endeavor at other measures, such as cost
reduction, lesser investment on raw materials, In the instant case, PAL failed to substantiate its claim
adjustment of the work routine to avoid scheduled of actual and imminent substantial losses which would
power failure, reduction of the bonuses and salaries of justify the retrenchment of more than 1,400 of its
both management and rank-and-file, improvement of cabin crew personnel. Although the Philippine
manufacturing efficiency, and trimming of marketing economy was gravely affected by the Asian financial
and advertising costs, the claim that retrenchment crisis, however, it cannot be assumed that it has
was done in good faith to avoid losses is belied. likewise brought PAL to the brink of bankruptcy.
Likewise, the fact that PAL underwent corporate
rehabilitation does not automatically justify the Court held that the implementation of a retrenchment
retrenchment of its cabin crew personnel. scheme without taking seniority into account
rendered the retrenchment invalid, even as against
To prove that PAL was financially distressed, it could factors such as dependability, adaptability,
have submitted its audited financial statements but it trainability, job performance, discipline, and attitude
failed to present the same with the Labor Arbiter. towards work.

FOURTH ELEMENT: That the employer exercises its In the implementation of its retrenchment scheme,
prerogative to retrench employees in good faith for PAL evaluated the cabin crew personnel's
the advancement of its interest and not to defeat or performance during the year preceding the
circumvent the employees' right to security of tenure. retrenchment (1997), based on the following set of
criteria or rating variables found in the Performance
Concededly, retrenchment to prevent losses is an Evaluation Form of the cabin crew personnel's
authorized cause for terminating employment and the Grooming and Appearance Handbook.
decision whether to resort to such move or not is a
management prerogative. However, the right of an In sum, PAL's retrenchment program is illegal because
employer to dismiss an employee differs from and it was based on wrongful premise (Plan 14, which in
should not be confused with the manner in which such reality turned out to be Plan 22, resulting in
right is exercised. It must not be oppressive and retrenchment of more cabin attendants than was
abusive since it affects one's person and property. necessary) and in a set of criteria or rating variables
that is unfair and unreasonable when implemented. It
On the requirement that the prerogative to retrench failed to take into account each cabin attendant's
must be exercised in good faith, we have ruled that the respective service record, thereby disregarding
hiring of new employees and subsequent rehiring of seniority and loyalty in the evaluation of overall
"retrenched" employees constitute bad faith; that the employee performance.
failure of the employer to resort to other less drastic
measures than retrenchment seriously belies its claim
that retrenchment was done in good faith to avoid
losses; and that the demonstrated arbitrariness in the
selection of which of its employees to retrench is
further proof of the illegality of the employer's
retrenchment program, not to mention its bad faith.

In sum, we find that PAL had implemented its
retrenchment program in an arbitrary manner and
with evident bad faith, which prejudiced the tenurial
rights of the cabin crew personnel.

FIFTH ELEMENT: That the employer used fair and
reasonable criteria in ascertaining who would be
dismissed and who would be retained among the
employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain
workers.

In selecting employees to be dismissed, fair and
reasonable criteria must be used, such as but not
limited to: (a) less preferred status (e.g., temporary
employee), (b) efficiency and (c) seniority.

In Villena v. National Labor Relations Commission, the
Court considered seniority an important aspect for the
validity of a retrenchment program. In Philippine
Tuberculosis Society, Inc. v. National Labor Union, the
144 SEBUGUERO V. NLRC (SEPTEMBER 27, 1995)
The requirement of notice to both the employees
DAVIDE, JR., J. concerned and the Department of Labor and
Employment (DOLE) is mandatory and must be
FACTS written and given at least one month before the
The petitioners were among the thirty-eight (38) intended date of retrenchment. In this case, it is
regular employees of private respondent GTI undisputed that the petitioners were given notice of
Sportswear Corporation (hereinafter GTI), a the temporary lay-off. There is, however, no evidence
corporation engaged in the manufacture and export of that any written notice to permanently retrench them
ready-to-wear garments, who were given "temporary was given at least one month prior to the date of the
lay-off" notices by the latter on 22 January 1991 due intended retrenchment. The NLRC found that GTI
to alleged lack of work and heavy losses caused by the conveyed to the petitioners the impossibility of
cancellation of orders from abroad and by the recalling them due to the continued unavailability of
garments embargo of 1990. work. But what the law requires is a written notice to
the employees concerned and that requirement is
Believing that their "temporary lay-off" was a ploy to mandatory. The notice must also be given at least one
dismiss them, resorted to because of their union month in advance of the intended date of
activities and was in violation of their right to security retrenchment to enable the employees to look for
of tenure since there was no valid ground therefor, the other means of employment and therefore to ease the
38 laid-off employees filed with the Labor Arbiter's impact of the loss of their jobs and the corresponding
office in the National Capital Region complaints for income. That they were already on temporary lay-off
illegal dismissal, unfair labor practice, underpayment at the time notice should have been given to them is
of wages under Wage Orders Nos. 01 and 02, and non- not an excuse to forego the one-month written notice
payment of overtime pay and 13th month pay. because by this time, their lay-off is to become
permanent and they were definitely losing their
ISSUE employment.
Were the petitioners validly retrenched or were
they illegally dismissed? There is also nothing in the records to prove that a
written notice was ever given to the DOLE as required
HELD by law. The law requires two notices — one to the
Petitioners were validly retrenched albeit their employee/s concerned and another to the DOLE —
dismissal was defective. Under the aforequoted not just one. The notice to the DOLE is essential
Article 283 of the Labor Code, there are three basic because the right to retrench is not an absolute
requisites for a valid retrenchment: prerogative of an employer but is subject to the
requirement of law that retrenchment be done to
1. the retrenchment is necessary to prevent prevent losses. The DOLE is the agency that will
losses and such losses are proven; determine whether the planned retrenchment is
2. written notice to the employees and to the justified and adequately supported by facts.
Department of Labor and Employment at least
one month prior to the intended date of With respect to the payment of separation pay, the
retrenchment; and NLRC found that GTI offered to give the petitioners
3. payment of separation pay equivalent to one their separation pay but that the latter rejected such
month pay or at least 1/2 month pay for every offer which was accepted only by 22 out of the 38
year of service, whichever is higher. original complainants in this case. As to when this
offer was made was not, however, proven.
As for the first requisite, whether or not an employer
would imminently suffer serious or substantial losses But with or without this offer of separation pay, our
for economic reasons is essentially a question of fact conclusion would remain the same: that the
for the Labor Arbiter and the NLRC to determine. Here, retrenchment of the petitioners is defective in the face
both the Labor Arbiter and the NLRC found that the of our finding that the required notices to both the
private respondent was suffering and would continue petitioners and the DOLE were not given. The lack of
to suffer serious losses, thereby justifying the written notice to the petitioners and to the DOLE does
retrenchment of some of its employees, including the not, however, make the petitioners' retrenchment
petitioners. illegal such that they are entitled to the payment of
back wages and separation pay in lieu of 145 HOTEL ENTERPRISES OF THE PHILIPPINES
reinstatement as they contend. Their retrenchment, INC. V. SAMASAH—NUWHRAIN (JUNE 5, 2009)
for not having been effected with the required notices,
is merely defective. In those cases where we found the NACHURA, J.
retrenchment to be illegal and ordered the employees'
reinstatement and the payment of back wages, the FACTS
validity of the cause for retrenchment, that is the In 2001, HEPI's hotel business suffered a slump due to
existence of imminent or actual serious or substantial the local and international economic slowdown,
losses, was not proven. But here, such a cause is aggravated by the events of September 11, 2001 in the
present as found by both the Labor Arbiter and the United States. An audited financial report made by
NLRC. There is only a violation by GTI of the Sycip Gorres Velayo (SGV) & Co. on January 28, 2002
procedure prescribed in Article 283 of the Labor Code indicated that the hotel suffered a gross operating loss
in effecting the retrenchment of the petitioners. amounting to P16,137,217.00 in 2001, a staggering
decline compared to its P48,608,612.00 gross
operating profit in year 2000. On January 24, 2002,
petitioner met with respondent Union to formally
discuss the downsizing program.

Despite its opposition, a list of the positions declared
redundant and to be contracted out was given by the
management to the Union on March 22, 2002. Notices
of termination were, likewise, sent to 48 employees
whose positions were to be retrenched or declared as
redundant. The notices were sent on April 5, 2002 and
were to take effect on May 5, 2002. A notice of
termination was also submitted by the management to
the Department of Labor and Employment (DOLE)
indicating the names, positions, addresses, and
salaries of the employees to be terminated. Thereafter,
the hotel management engaged the services of
independent job contractors to perform the following
services: (1) janitorial (previously, stewarding and
public area attendants); (2) laundry; (3) sundry shop;
(4) cafeteria; and (5) engineering. Some employees,
including one Union officer, who were affected by the
downsizing plan were transferred to other positions
in order to save their employment.

On May 5, 2002, the hotel management began
implementing its downsizing plan immediately
terminating seven (7) employees due to redundancy
and 41 more due to retrenchment or abolition of
positions. All were given separation pay equivalent to
one (1) month's salary for every year of service.

ISSUES
(1) Was petitioner's downsizing scheme valid?

(2) Does the implementation of the downsizing
scheme preclude petitioner from availing the
services of contractual and agency-hired
employees?

HELD Union failed to consider, the result is indeed a
(1) YES. Retrenchment is the reduction of work staggering deficit of more than P16 million. The hotel
personnel usually due to poor financial returns, aimed was already operating not only on a slump in income,
to cut down costs for operation particularly on salaries but on a huge deficit as well. In short, while the hotel
and wages. did earn, its earnings were not enough to cover its
Redundancy, on the other hand, exists where the expenses and other liabilities; hence, the deficit. With
number of employees is in excess of what is the local and international economic conditions
reasonably demanded by the actual requirements of equally unstable, belt-tightening measures logically
the enterprise. Both are forms of downsizing and are had to be implemented to forestall eventual cessation
often resorted to by the employer during periods of of business.
business recession, industrial depression, or seasonal
fluctuations, and during lulls in production occasioned This Court will not hesitate to strike down a
by lack of orders, shortage of materials, conversion of company's redundancy program structured to
the plant for a new production program, or downsize its personnel, solely for the purpose of
introduction of new methods or more efficient weakening the union leadership. Our labor laws only
machinery or automation. Retrenchment and allow retrenchment or downsizing as a valid exercise
redundancy are valid management prerogatives, of management prerogative if all other else fail. But in
provided they are done in good faith and the employer this case, petitioner did implement various cost-
faithfully complies with the substantive and saving measures and even transferred some of its
procedural requirements laid down by law and employees to other viable positions just to avoid the
jurisprudence. premature termination of employment of its affected
workers. It was when the same proved insufficient and
For a valid retrenchment, the following requisites the amount of loss became certain that petitioner had
must be complied with: (1) the retrenchment is to resort to drastic measures to stave off
necessary to prevent losses and such losses are P9,981,267.00 in losses, and be able to survive.
proven; (2) written notice to the employees and to the
DOLE at least one month prior to the intended date of Losses or gains of a business entity cannot be fully and
retrenchment; and (3) payment of separation pay satisfactorily assessed by isolating or highlighting only
equivalent to one-month pay or at least one-half a particular part of its financial report. There are
month pay for every year of service, whichever is recognized accounting principles and methods by
higher. which a company's performance can be objectively
and thoroughly evaluated at the end of every fiscal or
In case of redundancy, the employer must prove that: calendar year. What is important is that the
(1) a written notice was served on both the employees assessment is accurately reported, free from any
and the DOLE at least one month prior to the intended manipulation of figures to suit the company's needs,
date of retrenchment; (2) separation pay equivalent to so that the company's actual financial condition may
at least one month pay or at least one month pay for be impartially and accurately gauged.
every year of service, whichever is higher, has been
paid; (3) good faith in abolishing the redundant If we see reason in allowing an employer not to keep
positions; and (4) adoption of fair and reasonable all its employees until after its losses shall have fully
criteria in ascertaining which positions are to be materialized, with more reason should we allow an
declared redundant and accordingly abolished. employer to let go of some of its employees to prevent
further financial slide.
It is the employer who bears the onus of proving
compliance with these requirements, retrenchment (2) NO. In Asian Alcohol Corporation v. National Labor
and redundancy being in the nature of affirmative Relations Commission, we answered in the negative.
defenses. Otherwise, the dismissal is not justified. We said: In any event, we have held that an employer's
good faith in implementing a redundancy program is
In respondent's analysis, Hyatt Regency Manila was not necessarily destroyed by availment of the services
still earning because its net income from hotel of an independent contractor to replace the services of
operations in 2001 was P12,230,248.00. However, if the terminated employees. We have previously ruled
provisions for hotel rehabilitation as well as that the reduction of the number of workers in a
replacement of and additions to the hotel's furnishings company made necessary by the introduction of the
and equipments are included, which respondent services of an independent contractor is justified
when the latter is undertaken in order to effectuate 146 UNICORN SAFETY GLASS V. BASARTE
more economic and efficient methods of production. (NOVEMBER 25, 2004)
In the case at bar, private respondent failed to proffer
any proof that the management acted in a malicious or YNARES-SANTIAGO, J.
arbitrary manner in engaging the services of an
independent contractor to operate the Laura FACTS
wells. Absent such proof, the Court has no basis to On March 2, 1998, Hilario Yulo, as general manager of
interfere with the bona fide decision of the Unicorn, issued a Memorandum informing
management to effects more economic and efficient respondents that effective April 13, 1998, their
methods of production. workdays shall be reduced due to economic
considerations. On April 6, 1998, Hilario Yulo issued
another Memorandum announcing the
implementation of a work rotation schedule to take
effect from April 13, 1998 to April 30, 1998, which will
effectively reduce respondents’ workdays to merely
three days a week. A copy of the planned rotation
scheme was sent to the Department of Labor and
Employment. Respondents wrote another letter of
protest dated April 7, 1998 expressing their
frustrations at the apparent lack of willingness on the
part of petitioner company’s management to address
their concerns and objections. On the same day,
respondents met with the Spouses Yulo and inquired
as to the reasons for the imposition of the reduced
workweek. They were told that it was management’s
prerogative to do so.

On April 13, 1998, instead of reporting for work,
respondents filed a complaint against petitioner
company with the NLRC for constructive dismissal
and unfair labor practice, i.e., union busting, non-
payment of five days service incentive leave pay and
payment of moral and exemplary damages as well as
attorney’s fees. Respondents prayed for
reinstatement and payment of full backwages.

Petitioner company replied by asking them to explain
why they have not been reporting for work. However,
respondents neither reported for work nor replied to
petitioner company’s telegrams.

ISSUES
(1) Was there constructive dismissal?

(2) Was there abandonment of work?

HELD
(1) YES. Constructive dismissal or a constructive
discharge has been defined as quitting because
continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay.
Constructive dismissal, however, does not always take
the form of a diminution. In several cases, we have
ruled that an act of clear discrimination, insensibility, 147 ME—SHURN CORP V. ME—SHURN—FSM
or disdain by an employer may become so unbearable (JANUARY 11, 2005)
on the part of the employee so as to foreclose any
choice on his part except to resign from such PANGANIBAN, J.
employment. This constitutes constructive dismissal.
FACTS
In the case at bar, the manner by which petitioners On June 7, 1998, the regular rank and file employees
exercised their management prerogative appears to of Me-Shurn Corporation organized Me-Shurn
be an underhanded circumvention of the law. Workers Union-FSM, an affiliate of the February Six
Petitioners were keen on summarily implementing Movement (FSM). Respondent union had a pending
the rotation plan, obviously singling out respondents application for registration with the Bureau of Labor
who were all union officers. The management’s Relations (BLR) through a letter dated June 11, 1998.
apparent lack of interest to hear what the respondents Ten days later, or on June 17, 1998, petitioner
had to say, created an uncertain situation where corporation started placing on forced leave all the
reporting for work was tantamount to an rank and file employees who were members of the
acquiescence in an unjust situation. union’s bargaining unit.

(2) NO. Petitioners argued that they “exerted diligent On June 23, 1998, respondent union filed a Petition for
and massive efforts” to make respondents return to Certification Election with the Med-Arbitration Unit of
work, highlighting the telegrams and memoranda sent the Department of Labor and Employment (DOLE),
to respondents. It is well established that to constitute Regional Office No. 3. Instead of filing an answer to the
abandonment, two elements must concur: (1) the Petition, the corporation filed on July 27, 1998, a
failure to report for work or absence without valid or comment stating that it would temporarily lay off
justifiable reason, and (2) a clear intention to sever the employees and cease operations, on account of its
employer-employee relationship, with the second alleged inability to meet the export quota required by
element as the more determinative factor and being the Board of Investment.
manifested by some overt acts. Abandoning one’s job
means the deliberate, unjustified refusal of the On August 31, 1998, Chou Fang Kuen (alias Sammy
employee to resume his employment and the burden Chou, the other petitioner herein) and Raquel
of proof is on the employer to show a clear and Lamayra (the Filipino administrative manager of the
deliberate intent on the part of the employee to corporation) imposed a precondition for the
discontinue employment. resumption of operation and the rehiring of laid off
workers. He allegedly required the remaining union
However, petitioners’ charge of abandonment of work officers to sign an Agreement containing a guarantee
by respondents does not hold water when taken in that upon their return to work, no union or labor
light of the complaint for constructive dismissal. We organization would be organized. Instead, the union
have held that a charge of abandonment is totally officers were to serve as mediators between labor and
inconsistent with the filing of a complaint for management. After the signing of the Agreement, the
constructive dismissal— and with reason. operations of the corporation resumed in September
Respondents cannot be said to have abandoned their 1998. On November 5, 1998, the union reorganized
jobs when precisely, the root cause of their protest is and elected a new set of officers. Respondent Rosalina
their demand to maintain their regular work Cruz was elected president.
hours. What is more, respondents even prayed for
reinstatement and backwages. Clearly, these are Respondents charged petitioner corporation with
incompatible with the proposition that respondents unfair labor practice, illegal dismissal, underpayment
sought to abandon their work. of wages and deficiency in separation pay, for which
they prayed for damages and attorney’s fees.

ISSUE
Was the dismissal for authorized cause?

HELD
NO. To justify the closure of a business and the
termination of the services of the concerned
employees, the law requires the employer to prove 148 BANCO FILIPINO V. NLRC (AUGUST 20, 1990)
that it suffered substantial actual losses. The cessation
of a company’s operations shortly after the MEDIALDEA, J.
organization of a labor union, as well as the
resumption of business barely a month after, gives FACTS
credence to the employees’ claim that the closure was The bank argues that Dizon is not entitled to
meant to discourage union membership and to separation pay citing Article 283 of the Labor Code
interfere in union activities. These acts constitute which reads to wit: “x x x. In case of retrenchment to
unfair labor practices. prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to
Elementary is the principle barring a party from serious business losses or financial reverses, the
introducing fresh defenses and facts at the appellate separation pay shall be equivalent to one (1) month
stage. This Court has ruled that matters regarding the pay or at least one-half (1/2) month pay for every year
financial condition of a company -- those that justify of service, whichever is higher. A fraction of at least six
the closing of its business and show the losses in its (6) months shall be considered one (1) whole year.”
operations --are questions of fact that must be proven
below. Petitioners must bear the consequence of their It is the bank’s interpretation of the law that when an
neglect. Indeed, their unexplained failure to present institution is closed due to serious business losses or
convincing evidence of losses at the early stages of the financial reverses its workers are not entitled to
case clearly belies the credibility of their present separation pay.
claim.
ISSUE
Obviously, on the basis of the evidence -- or the lack When an institution is closed due to serious
thereof --the appellate court cannot be faulted for business losses or financial reverses, are its
ruling that the NLRC did not gravely abuse its workers entitled to separation pay?
discretion in finding that the closure of petitioner
corporation was not due to alleged financial losses. HELD
YES. We instead quote with approval the opinion of
All these factors strongly give credence to the respondent Labor Arbiter, thus:
contention of respondents that the real reason behind
the shutdown of the corporation was the formation of “Article 283 (Art. 282) of the Labor Code enumerated
their union. Note that, to constitute an unfair labor the just causes for an employer to terminate an
practice, the dismissal need not entirely and employee. If an employee is dismissed for just cause,
exclusively be motivated by the union’s activities or he is not entitled to termination pay. However, in
affiliations. It is enough that the discrimination was a Article 284 (Art. 283), in case of closure of
contributing factor. If the basic inspiration for the act establishment, the employee is always given
of the employer is derived from the affiliation or termination pay. The reason for the closure is taken
activities of the union, the former’s assignment of into consideration only to determine whether to give
another reason, no matter how seemingly valid, is one month or one-half month pay for every year of
unavailing. service. This provision is based on social justice and
equity. x x x.”
Concededly, the determination to cease operations is
a management prerogative that the State does not Such was Our ruling in International Hardware, Inc. v.
usually interfere in. Indeed, no business can be NLRC, G.R. No. 80770, August 10, 1989. As regards the
required to continue operating at a loss, simply to commutation to cash of Dizon’s accumulated vacation
maintain the workers in employment. That would be and sick leaves, both the Labor Arbiter and the NLRC
a taking of property without due process of law. But found that this was authorized by the Collective
where it is manifest that the closure is motivated not Bargaining Agreement then existing before the bank’s
by a desire to avoid further losses, but to discourage closure and which CBA the liquidators manifested to
the workers from organizing themselves into a union honor. This is a factual issue which We are not inclined
for more effective negotiations with management, the to disturb. Also, since Dizon was forced to litigate, he
State is bound to intervene. is entitled to attorney’s fees.

149 SIHI V. CA (FEBRUARY 19, 1992) 150 JAT GEN SERVICES INC V. NLRC (JANUARY 26,
2004)
GUTIERREZ, J.
QUISUMBING, J.
FACTS
The resolution of this Court rules that if, as the FACTS
petitioners and the movant-intervenors insist, the In October 1997, the sales of heavy equipment
disputed properties really belong to the Philippine declined because of the Asian currency crisis.
Blooming Mills, then the execution must be referred to Consequently, JAT temporarily suspended its
the Securities and Exchange Commission pursuant to operations. It advised its employees, including private
the earlier resolution of this Court. On the other hand, respondent, not to report for work starting on the first
if the properties belong to persons other than the week of March 1998. JAT indefinitely closed shop
Philippine Blooming Mills, the National Labor effective May 1998.
Relations Commission has no jurisdiction because the
matter fall within the jurisdiction of the civil courts. A few days after, private respondent filed a case for
illegal dismissal and underpayment of wages against
Therefore, if the movant-intervenors are correct and petitioners before the NLRC.
the disputed properties belong to the Philippine
Blooming Mills, their action is premature and must In his Complaint, private respondent alleged that he
await a determination by the Securities and Exchange started as helper mechanic of JAT on January 6, 1997
Commission pursuant to the earlier resolutions in the with an initial salary rate of P165.00 per day, which
Philippine Blooming Mills cases. Once the SEC has was increased to P180.00 per day after six (6) months
decided the cases, the execution shall issue from it and in employment. He related that he was one of those
not from the NLRC. retrenched from employment by JAT and was
allegedly required to sign a piece of paper which he
The Court further reiterates its resolution in G. R. No. refused, causing his termination from employment.
80580 and G. R. No. 79202 that the claims of the
Philippine Blooming Mills’ laborers are not denied. On December 14, 1998, JAT filed an Establishment
The Court simply rules that all valid claims including Termination Report with the Department of Labor and
those of the laborers must be submitted in the course Employment (DOLE), notifying the latter of its
of bankruptcy, liquidation and rehabilitation decision to close its business operations due to
proceedings. This is a function of the Securities and business losses and financial reverses.
Exchange Commission for appropriate action.”
ISSUES
From the different resolutions in all the cases (1) Was private respondent validly dismissed
involving PBM properties in relation to SEC Case No. from employment resulting from closure of
2250 (liquidation proceedings of PBM) we reiterate business operations due to substantial losses?
the following: 1) all PBM properties including the
proceeds of the various sales undertaken by the NLRC (1) Was private respondent validly dismissed
to implement its final decision in NCR 9-3296-84 from employment on the ground of closure or
should be turned over to the SEC for disposition cessation of operations for reasons other than
according to law, and 2) for purposes of executing the substantial business losses?
NLRC final decision awarding monetary benefits to the
former workers of PBM, the NLRC has no jurisdiction HELD
over properties belonging to persons other than PBM. (1) NO. In the present case, we find the issues and
contentions more centered on closure of business
operation rather than retrenchment. Closure or
cessation of operation of the establishment is an
authorized cause for terminating an employee under
Article 283 of the Labor Code, to wit: ART.
283. Closure of establishment and reduction of
personnel (refer to codal).

While business reverses or losses are recognized by of employees under the law or a valid agreement such
law as an authorized cause for terminating exercise will be upheld.
employment, it is an essential requirement that
alleged losses in business operations must be proven In the event, under Article 283 of the Labor Code, three
convincingly. Otherwise, said ground for termination requirements are necessary for a valid cessation of
would be susceptible to abuse by scheming employers, business operations, namely: (a) service of a written
who might be merely feigning business losses or notice to the employees and to the DOLE at least one
reverses in their business ventures in order to ease (1) month before the intended date thereof; (b) the
out employees. In this case, the financial statements cessation of business must be bona fide in character;
were not only belatedly submitted but were also and (c) payment to the employees of termination pay
bereft of necessary details on the extent of the alleged amounting to at least one-half (1/2) month pay for
losses incurred, if any. The income statements only every year of service, or one (1) month pay, whichever
indicated a decline in sales in 1998 as compared to is higher.
1997. These fell short of the stringent requirement of
the law that the employer prove sufficiently and The closure of business operation by petitioners, in
convincingly its allegation of substantial losses. While our view, is not tainted with bad faith or other
the comparative income statement shows a net loss of circumstance that arouses undue suspicion of
P207,091 in 1998, the income statement of 1997 still malicious intent. The decision to permanently close
shows JAT posting a net income of P19,361. Both business operations was arrived at after a suspension
statements need interpretation as to their impact on of operation for several months precipitated by a
the company’s termination of certain personnel as slowdown in sales without any prospects of
well as business closure. improving. There were no indications that an
impending strike or any labor-related union activities
(2) YES. A careful examination of Article 283 of the precipitated the sudden closure of business. Further,
Labor Code shows that closure or cessation of contrary to the findings of the Labor Arbiter,
business operation as a valid and authorized ground petitioners had notified private respondent and all
of terminating employment is not limited to those other workers through written letters dated
resulting from business losses or reverses. Said November 25, 1998 of its decision to permanently
provision in fact provides for the payment of close its business and had submitted a termination
separation pay to employees terminated because of report to the DOLE.[27] Generally, review of labor cases
closure of business not due to losses, thus implying elevated to this Court on a petition for review on
that termination of employees other than closure of certiorari is confined merely to questions of law. But
business due to losses may be valid. in certain cases, we are constrained to analyze or
weigh the evidence again if the findings of fact of the
In the present case, while petitioners did not labor tribunals and the appellate court are in conflict,
sufficiently establish substantial losses to justify or not supported by evidence on record or the
closure of the business, its income statement shows judgment is based on a misapprehension of facts.
declining sales in 1998, prompting the petitioners to
suspend its business operations sometime in March In this case, we are persuaded that the closure of JAT’s
1998, eventually leading to its permanent closure in business is not unjustified. Further we hold that
December 1998. Apparently, the petitioners saw the private respondent was validly terminated, because
declining sales figures and the unsustainable business the closure of business operations is justified.
environment with no hope of recovery during the
period of suspension as indicative of bleak business Nevertheless in this case, we must stress that the
prospects, justifying a permanent closure of operation closure of business operation is allowed under the
to save its business from further collapse. On this Labor Code, provided separation pay be paid to the
score, we agree that undue interference with an terminated employee. It is settled that in case of
employer’s judgment in the conduct of his business is closure or cessation of operation of a business
uncalled for. Even as the law is solicitous of the establishment not due to serious business losses or
welfare of employees, it must also protect the right of financial reverses, the employees are always given
an employer to exercise what is clearly a management separation benefits. The amount of separation pay
prerogatives. As long as the company’s exercise of the must be computed from the time private respondent
same is in good faith to advance its interest and not for commenced employment with petitioners until the
the purpose of defeating or circumventing the rights time the latter ceased operations.
PROCEDURE AND CONSEQUENCES OF ruled by the Court of Appeals, Gonzales cannot be
TERMINATION considered to have willfully disobeyed his
employer. Willful disobedience entails the
151 ACESITE CORP V. NLRC (JANUARY 26, 2005) concurrence of at least two (2) requisites: the
CARPIO-MORALES, J. employee’s assailed conduct has been willful or
intentional, the willfulness being characterized by a
FACTS “wrongful and perverse attitude;” and the order
Before the expiration of his 12-day vacation leave or violated must have been reasonable, lawful, made
on April 23, 1998, Gonzales filed an application for known to the employee and must pertain to the duties
emergency leave for 10 days commencing on April 30 which he had been engaged to discharge.
up to May 13, 1998. The application was not, however,
approved. By Acesite’s claim, he received a telegram In Gonzales’ case, his assailed conduct has not been
informing him of the disapproval and asking him to shown to have been characterized by a perverse
report back for work on April 30, 1998. attitude, hence, the first requisite is wanting. His
receipt of the telegram disapproving his application
Gonzales, who claims to have received the May 5, 1998 for emergency leave starting April 30, 1998 has not
telegram only in the afternoon of May 7, 1998, been shown. And it cannot be said that he disobeyed
immediately repaired back to Manila on May 8, 1998 the May 5, 1998 telegram since he received it only on
only to be “humiliatingly and ignominiously barred by May 7, 1998. On the contrary, that he immediately
the guard (a subordinate of [Gonzales]) from entering hied back to Manila upon receipt thereof negates a
the premises.” perverse attitude.

It appears that on May 7, 1998, Angerbauer issued the As to Gonzales’ alleged concealment of his candidacy
following Notice of Termination through an inter- (for provincial board member) as a ground for
office memo: As you continuously disregard our Acesite’s loss of trust and confidence in him, the same
several advices for you to report back to work to is not impressed with merit. It should be noted that
attend to very urgent matters involving Security Acesite’s ground for terminating the services of
Department’s concerns which, as categorically made Gonzales as stated in the Notice of Termination is his
clear to you, imperatively required your personal alleged acts of insubordination/disobedience. The
presence and attention considering that you are its concealment of candidacy angle harped upon by
Department Head, thus adversely affecting the Acesite can only thus be considered as mere
operations of said department, we are left with no afterthought to further justify his illegal dismissal.
recourse but to terminate your services from the Hotel
effective immediately for violations of rule no. 27, With regards to Gonzales’ perceived feigning of illness,
Type C, of the House Code of Discipline – “Acts of gross the same is purely speculatory.
disobedience or insubordination” and provisions of
the Labor Code, specifically Art. 282. Termination by If there is anything that Gonzales can be faulted for, it
Employer, par. (a) x x x willful disobedience by the is his being too presumptuous that his application for
employee of the lawful orders of his employer or leave would be approved. For his unauthorized
representative in connection with his work. absences, this Court finds that Gonzales violated
paragraph 26, Rule 11 of Type B offenses of the
Please be guided accordingly. Company’s House Code of Discipline – unauthorized
absence from work for three consecutive days – which
Gonzales filed on July 13, 1999 his complaint for illegal is punishable by a suspension of 3 days on the first
dismissal against Angerbauer and Kennedy, which he offense – when he did not report for work from May 5-
amended on September 20, 1999, by impleading 7, 1998.
Acesite as respondent.
In illegal dismissal cases, reinstatement to an illegally
ISSUE dismissed employee’s former position may be excused
Was Gonzales validly dismissed? on the ground of “strained relations.” This may be
invoked against employees whose positions demand
HELD trust and confidence, or whose differences with their
NO. Indeed, there appears to have been no just cause employer are of such nature or degree as to preclude
to dismiss Gonzales from employment. As correctly reinstatement. In the case at bar, Gonzales was Chief
of Security, whose duty was to “manage the operation 152 KING OF KINGS V. MAMAC (JUNE 29, 2007)
of the security areas of the hotel to provide and ensure VELASCO, JR., J.
the safety and security of the hotel guests, visitors,
management, staff and their properties according to FACTS
company policies and local laws.” It cannot be gainsaid Petitioner KKTI is a corporation engaged in public
that Gonzales’ position is one of trust and confidence, transportation and managed by Claire Dela Fuente
he being in charge of the over-all security of said and Melissa Lim.
hotel. Thus, reinstatement is no longer possible. In
lieu thereof, Acesite is liable to pay separation pay of 1 Upon audit of the October 28, 2001 Conductor's
month for every year of service. Report of respondent, KKTI noted an irregularity. It
discovered that respondent declared several sold
As to the award of moral and exemplary damages, this tickets as returned tickets causing KKTI to lose an
Court finds it unwarranted. Moral damages are income of eight hundred and ninety pesos. While no
recoverable only where the dismissal of the irregularity report was prepared on the October 28,
employees was attended by bad faith or fraud or 2001 incident, KKTI nevertheless asked respondent to
constituted an act oppressive to labor or was done in explain the discrepancy. In his letter, respondent said
a manner contrary to morals, good customs or public that the erroneous declaration in his October 28, 2001
policy. Exemplary damages on the other hand may be Trip Report was unintentional. He explained that
awarded only if the dismissal was effected in a wanton, during that day's trip, the windshield of the bus
oppressive or malevolent manner. Though these assigned to them was smashed; and they had to cut
grounds have been alleged by Gonzales, they were not short the trip in order to immediately report the
sufficiently proven. matter to the police. As a result of the incident, he got
confused in making the trip report.
As to the deletion of the “fringe benefits or their
monetary equivalent,” this Court agrees with Gonzales On November 26, 2001, respondent received a letter
that it is not in accord with law and jurisprudence. terminating his employment effective November 29,
Article 279 of the Labor Code provides: ART. 279 2001. The dismissal letter alleged that the October 28,
SECURITY OF TENURE. – In cases of regular 2001 irregularity was an act of fraud against the
employment, the employer shall not terminate the company. KKTI also cited as basis for respondent's
services of an employee except for just cause or when dismissal the other offenses he allegedly committed
authorized by this Title. An employee who is unjustly since 1999.
dismissed from work shall be entitled to
reinstatement without loss of seniority rights and On December 11, 2001, respondent filed a Complaint
other privileges and to his full backwages, inclusive of for illegal dismissal, illegal deductions, nonpayment of
allowances, and to his other benefits or their 13th-month pay, service incentive leave, and
monetary equivalent computed from the time his separation pay. He denied committing any infraction
compensation was withheld from him up to the time and alleged that his dismissal was intended to bust
of his actual reinstatement. (Emphasis and union activities. Moreover, he claimed that his
underscoring supplied) dismissal was effected without due process.

As for the award of attorney’s fees, the same is in ISSUE
order, Gonzales having been forced to litigate and Did petitioner KKTI comply with the due process
incur expenses to protect his rights and interest. requirement in terminating respondent’s
employment?

HELD
NO. Non-compliance with the Due Process
Requirements.

Due process under the Labor Code involves two
aspects: first, substantive––the valid and authorized
causes of termination of employment under the Labor
Code; and second, procedural––the manner of
dismissal. In the present case, the CA affirmed the
findings of the labor arbiter and the NLRC that the
termination of employment of respondent was based a. A written notice of termination served on the
on a "just cause." This ruling is not at issue in this case. employee, indicating that upon due
The question to be determined is whether the consideration of all the circumstances,
procedural requirements were complied with. grounds have been established to justify his
termination.
Art. 277 of the Labor Code provides the manner of In case of termination, the foregoing notices shall be
termination of employment, thus: served on the employee's last known address.

Art. 277. Miscellaneous Provisions.––x x x To clarify, the following should be considered in
terminating the services of employees:
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected 1. The first written notice to be served on the
against dismissal except for a just and authorized employees should contain the specific causes
cause without prejudice to the requirement of notice or grounds for termination against them, and
under Article 283 of this Code, the employer shall a directive that the employees are given the
furnish the worker whose employment is sought to be opportunity to submit their written
terminated a written notice containing a statement of explanation within a reasonable period.
the causes for termination and shall afford the latter "Reasonable opportunity" under the Omnibus
ample opportunity to be heard and to defend himself Rules means every kind of assistance that
with the assistance of his representative if he so management must accord to the employees to
desires in accordance with company rules and enable them to prepare adequately for their
regulations promulgated pursuant to guidelines set by defense. This should be construed as a period
the Department of Labor and Employment. Any of at least five (5) calendar days from receipt
decision taken by the employer shall be without of the notice to give the employees an
prejudice to the right of the worker to contest the opportunity to study the accusation against
validity or legality of his dismissal by filing a complaint them, consult a union official or lawyer, gather
with the regional branch of the National Labor data and evidence, and decide on the defenses
Relations Commission. The burden of proving that the they will raise against the complaint.
termination was for a valid or authorized cause shall Moreover, in order to enable the employees to
rest on the employer. intelligently prepare their explanation and
defenses, the notice should contain a detailed
Accordingly, the implementing rule of the aforesaid narration of the facts and circumstances that
provision states: will serve as basis for the charge against the
employees. A general description of the charge
SEC. 2. Standards of due process; requirements of will not suffice. Lastly, the notice should
notice.––In all cases of termination of employment, the specifically mention which company rules, if
following standards of due process shall be any, are violated and/or which among the
substantially observed: grounds under Art. 282 is being charged
against the employees.
I. For termination of employment based on just causes
as defined in Article 282 of the Code: 1. After serving the first notice, the employers
should schedule and conduct a hearing or
a. A written notice served on the employee conference wherein the employees will be
specifying the ground or grounds for given the opportunity to: (1) explain and
termination, and giving said employee clarify their defenses to the charge against
reasonable opportunity within which to them; (2) present evidence in support of their
explain his side. defenses; and (3) rebut the evidence
presented against them by the management.
a. A hearing or conference during which the During the hearing or conference, the
employee concerned, with the assistance of employees are given the chance to defend
counsel if he so desires is given opportunity to themselves personally, with the assistance of a
respond to the charge, present his evidence, or representative or counsel of their choice.
rebut the evidence presented against him. Moreover, this conference or hearing could be
used by the parties as an opportunity to come October 28, 2001 Conductor's Trip Report. He was
to an amicable settlement. unaware that a dismissal proceeding was already
being effected. Thus, he was surprised to receive the
1. After determining that termination of November 26, 2001 termination letter indicating as
employment is justified, the employers shall grounds, not only his October 28, 2001 infraction, but
serve the employees a written notice of also his previous infractions.
termination indicating that: (1) all
circumstances involving the charge against the Sanction for Non-compliance with Due Process
employees have been considered; and (2) Requirements
grounds have been established to justify the
severance of their employment. As stated earlier, after a finding that petitioners failed
to comply with the due process requirements, the CA
In the instant case, KKTI admits that it had failed to awarded full backwages in favor of respondent in
provide respondent with a "charge sheet.” However, it accordance with the doctrine in Serrano v. NLRC.
maintains that it had substantially complied with the However, the doctrine in Serrano had already been
rules, claiming that "respondent would not have abandoned in Agabon v. NLRC by ruling that if the
issued a written explanation had he not been informed dismissal is done without due process, the employer
of the charges against him.” should indemnify the employee with nominal
damages.
We are not convinced.
Thus, for non-compliance with the due process
First, respondent was not issued a written notice requirements in the termination of respondent's
charging him of committing an infraction. The law is employment, petitioner KKTI is sanctioned to pay
clear on the matter. A verbal appraisal of the charges respondent the amount of thirty thousand pesos (PhP
against an employee does not comply with the first 30,000) as damages.
notice requirement. In Pepsi Cola Bottling Co. v. NLRC,
the Court held that consultations or conferences are
not a substitute for the actual observance of notice and
hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,
the Court, sanctioning the employer for disregarding
the due process requirements, held that the
employee's written explanation did not excuse the fact
that there was a complete absence of the first notice.

Second, even assuming that petitioner KKTI was able
to furnish respondent an Irregularity Report notifying
him of his offense, such would not comply with the
requirements of the law. We observe from the
irregularity reports against respondent for his other
offenses that such contained merely a general
description of the charges against him. The reports did
not even state a company rule or policy that the
employee had allegedly violated. Likewise, there is no
mention of any of the grounds for termination of
employment under Art. 282 of the Labor Code. Thus,
KKTI's "standard" charge sheet is not sufficient notice
to the employee.

Third, no hearing was conducted. Regardless of
respondent's written explanation, a hearing was still
necessary in order for him to clarify and present
evidence in support of his defense. Moreover,
respondent made the letter merely to explain the
circumstances relating to the irregularity in his
153 LOADSTAR SHIPPING V. MESANO (AUGUST 7, any of the causes expressed in Art. 282 of the Labor
2003) Code; and (b) the employee must be accorded due
process, basic of which is the opportunity to be heard
SANDOVAL-GUTIERREZ, J. and to defend himself.

FACTS Simply put, the twin requirements of due process,
On November 4, 1980, Romeo R. Mesano, respondent, substantive and procedural, must be complied with
was employed by petitioner as a seaman. before a dismissal can be considered valid.
Subsequently, he occupied the position of
bosun/boatswin in charge of the care and custody of In Cruz vs. NLRC, we held: "The law requires that an
the entire vessel as well as its accessories and cargo. employee sought to be dismissed must be served two
written notices before termination of his employment.
On January 22, 1995, respondent brought out from the The first notice is to apprise the employee of the
vessel M/V Beaver a colored television set and a particular acts or omissions by reason of which his
telescope. This incident prompted petitioner company dismissal has been decided upon; and the second
to conduct an investigation. notice is to inform the employee of the employer's
decision to dismiss him. Failure to comply with the
Immediately, respondent voluntarily submitted his requirement of two notices makes the dismissal
written explanation asking for forgiveness. He illegal. The procedure is mandatory. Non-observance
explained that he intended to have the television thereof renders the dismissal of an employee illegal
repaired. However, when it could not be done, he and void.”
returned the unit to the vessel.
The mandatory first notice is undeniably absent in the
On February 24, 1995, respondent asked from case at bar. Prior to respondent's termination from the
petitioner a disembarking clearance from his service, he was neither apprised of the particular acts
accountabilities. But what petitioner handed to for which his dismissal is sought, nor was he directed
respondent was a disembarkation order dated March to explain why he should not be dismissed for taking
1, 1995 terminating his services effective February 28, out from the vessel company property.
1995.
While it is true that respondent voluntarily submitted
Feeling aggrieved, respondent filed with the Labor his written explanation, nonetheless, he did not
Arbiter a complaint for illegal dismissal against expressly acknowledge that he committed any offense.
petitioner and Teodoro G. Bernardino, its president In fact, being in charge of the company's vessel and its
and/or general manager. accessories and cargo, his intention in taking out the
TV set was to have it repaired.
In this petition for review on certiorari, petitioner
alleged that respondent was not deprived of his right Even granting that by submitting his written
to due process considering that he was given the explanation, he was considered to have been notified
opportunity to present his side through his written of the charge, still there was no investigation or
explanation wherein he admitted his guilt and pleaded hearing conducted wherein he could have presented
for forgiveness. Petitioner further claimed that evidence and adequately defended himself.
respondent failed to live up to the standard of
responsibility and honesty called for by his position. As gleaned from the foregoing circumstances, the
Thus, gauged by any moral standard, his dismissal is Court of Appeals correctly ruled that respondent was
not tainted with illegality. deprived of his right to due process and, therefore, his
termination from the service is illegal.
ISSUE
Did the petitioner comply with due process
requirement?

HELD
NO. A rule deeply embedded in our jurisprudence is
that "(i)n order to constitute a valid dismissal, two
requisites must concur: (a) the dismissal must be for
154 SANTOS V. PEPSI-COLA (JULY 5, 2001) 155 HYATT TAXI SERVICES V. CATINOY (JUNE 26,
2001)
BELLOSILLO, J.
GONZAGA-REYES, J.
FACTS
In a letter dated 26 December 1994, PEPSI informed FACTS
its employees that due to poor performance of its On August 24, 1995 about 25 union members
Metro Manila Sales Operations it would restructure requested the chairman of the Board of the
and streamline certain physical and sales distribution Association to suspend the complainant and Saturnino
systems to improve its warehousing efficiency. Certain for engaging in a fist fight (sic) since both are officers
positions, including that of petitioners, were declared of the union which should be models of discipline for
redundant and abolished. Consequently, employees the rank and file (Annex “A” of Respondent
with affected positions were terminated. Association’s position paper) employees. On August
26, 1995, the Asst. Vice-President of the Respondent
On 15 January 1995 petitioners left their respective company (sic) Melchor Acosta, Jr. (sic) issued a
positions, accepted their separation pays and memorandum preventively suspending for 30 days
executed the corresponding releases and quitclaims. the services of the complainant and Saturnino pending
However, before the end of the year, petitioners investigation in response to the recommendation of
learned that PEPSI created new positions called the Chairman of the Board of the Association.
Account Development Managers (ADM) with
substantially the same duties and responsibilities as Complainant aggrieved by the preventive suspension
the CDS. Aggrieved, on 15 April 1996, petitioners filed since he was not the aggressor, filed a complaint for
a complaint with the Labor Arbiter for illegal dismissal illegal suspension, unpaid wages, and damages against
with a prayer for reinstatement, back wages, moral both the association-union and management on
and exemplary damages and attorney's fees. August 28, 1995 before the National Labor Relations
Commission.
ISSUE
Did Pepsi-Cola comply with the valid procedure After the lapse of his 30 days preventive suspension,
for terminating petitioner’s employment? complainant reported for work but he was not allowed
to resume his duties as a taxi driver allegedly, since he
HELD is pursuing the criminal complainant for physical
YES. We agree with the NLRC in its application of injuries against Saturnino, the associations’ President
International Hardware v. NLRC that the mandated one and the complaint for the illegal suspension with the
(1) month notice prior to termination given to the National Labor Relations Commission.
worker and the DOLE is rendered unnecessary by the
consent of the worker himself. Petitioners assail the On October 12, 1995, since there was no response
voluntariness of their consent by stating that had they from Respondent company, complainant decided to
known of PEPSI's bad faith they would not have amend his complaint to include constructive dismissal
agreed to their termination, nor would they have as an additional cause of action since he was not
signed the corresponding releases and quitclaims. allowed to resume his employment after the lapse of
Having established private respondent's good faith in his preventive suspension.”
undertaking the assailed redundancy program, there
is no need to rule on this contention. ISSUE
Was there constructive dismissal committed by
Finally, in a last ditch effort to plead their case, petitioner?
petitioners would want us to believe that their
termination was illegal since PEPSI did not employ fair HELD
and reasonable criteria in implementing its YES. Clearly, constructive dismissal had already set in
redundancy program. This issue was not raised before when the suspension went beyond the maximum
the Labor Arbiter nor with the NLRC. As it would be period allowed by law. Section 4, Rule XIV, Book V of
offensive to the basic rules of fair play and justice to the Omnibus Rules provides that preventive
allow a party to raise a question which has not been suspension cannot be more than the maximum period
passed upon by both administrative tribunals, it is of 30 days. Hence, we have ruled that after the 30-day
now too late to entertain it. period of suspension, the employee must be reinstated
to his former position because suspension beyond this employment to which he was in the first place
maximum period amounts to constructive dismissal. rightfully entitled.
Moreover, from the time that petitioner failed to recall
Petitioner denies that it constructively dismissed respondent to work after the expiration of the
respondent and alleges that it was respondent who suspension period, taken together with petitioner’s
went AWOL and who refused to resume his work precondition that respondent withdraw the
because he could not account for union funds. Both the complaints against the acting president of the union
Labor Arbiter and the NLRC rejected petitioner’s and against petitioner itself, respondent’s security of
claims. We affirm the rejection. It bears stressing that tenure was already undermined by petitioner.
in illegal dismissal cases, it is the employer who has Petitioner’s actions undoubtedly constitute
the burden of proof. Since petitioner claims that constructive dismissal.
respondent abandoned his work, petitioner has to
establish the concurrence of the following: (1) the
employee’s intention to abandon employment and (2)
overt acts from which such intention may be
inferred—as when the employee shows no desire to
resume work. Petitioner failed to make out its case of
abandonment. Even the NLRC in its modified decision
confirmed that there were no overt acts unerringly
pointing to the fact that respondent had no intention
of returning to work anymore. Also, the fact that
respondent filed a complaint against his employer
within a reasonable period of time belies
abandonment.

The evidence as it stands shows that after the lapse of
the 30-day suspension period, respondent reported
for work but he was not allowed to resume his duties
as a taxi driver. To reiterate, from the time that the 30-
day suspension period had expired, respondent can be
already deemed as constructively dismissed.

Constructive dismissal does not always involve
forthright dismissal or diminution in rank,
compensation, benefit and privileges. There may be
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 could
foreclose any choice by him except to forego his
continued employment.

Here, what made it impossible or unacceptable for
respondent to resume work was petitioner’s
insistence that respondent first desist from filing his
criminal complaint against the acting president of the
union and to withdraw his complaint for illegal
suspension against petitioner before he could be
allowed to return to work. Respondent refused and
amended his complaint to include constructive
dismissal. Respondent’s refusal to yield to petitioner’s
conditioned offer to take him back is understandable
for respondent has every right not to bargain away his
right to prosecute his complaints in exchange for the

156 MAPILI V. PHIL. RABBIT BUS LINES (JULY 27, As petitioner's employment record shows,
2011) this is not the first time that petitioner refused to
collect fares from passengers. In fact, this is already
DEL CASTILLO, J. the third instance that he failed to collect fares from
the riding public. Although petitioner already suffered
FACTS the corresponding penalties for his past misconduct,
On April 7, 1993, PRBLI hired petitioner as bus those infractions are still relevant and may be
conductor with a salary of P510.00 per trip. On considered in assessing his liability for his present
October 7, 2001, while on duty en route from Manila infraction. We thus held in Philippine Rabbit Bus Lines,
to Alaminos, Pangasinan, petitioner was caught by Inc. v. National Labor Relations Commission that: Nor
PRBLI's field inspector extending a free ride to a lady can it be plausibly argued that because the offenses
passenger who boarded at Barangay Magtaking, were already given the appropriate sanctions, they
Labrador, Pangasinan. Upon order of the field cannot be taken against him. They are relevant in
inspector, the lady passenger, who happened to be the assessing private respondent's liability for the present
wife of Julio Ricardo, petitioner's co-employee and one violation for the purpose of determining the
of PRBLI's drivers, was immediately issued a appropriate penalty. To sustain private respondent's
passenger ticket for which she paid P50.00. argument that the past violation should not be
considered is to disregard the warnings previously
On October 9, 2001, petitioner was preventively issued to him.
suspended and was directed to appear in an
administrative investigation. Thereafter, a formal As suspension may not anymore suffice as penalty for
hearing was conducted during which petitioner was the violation done as shown by petitioner's disregard
given an opportunity to present and explain his of previous warnings and propensity to commit the
side. Consequently, through a memorandum dated same infraction over the years of his employment, and
November 9, 2001, petitioner was terminated from to deter other employees who may be wont to violate
employment for committing a serious irregularity by the same company policy, petitioner's termination
extending a free ride to a passenger in violation of from employment is only proper.
company rules. Notably, that was already the third
time that petitioner committed said violation.

On February 19, 2002, petitioner filed with the NLRC
a Complaint for illegal dismissal against PRBLI, Nisce,
and Ricardo Paras (Paras), PRBLI's General Manager.

He insists that his past infractions, unsupported by
proof, and his previous two offenses of not issuing fare
tickets to a police officer and former company
employee cannot be used as bases for his termination
considering that his actuations for the latter offenses
were justified under the circumstances and that he
was already penalized for all these past violations. It is
petitioner's view that his infraction merits only a 30-
day suspension, as imposed by the Labor Arbiter.

ISSUE
Can petitioner’s past offenses be taken against him
despite the fact that he was already given
appropriate sanctions for these past offenses?

HELD
YES. An employee's propensity to commit repetitious
infractions evinces wrongful intent, making him
undeserving of the compassion accorded by law to
labor.
157 TOYOTA V. NLRC (OCTOBER 19, 2007) We hold that henceforth separation pay shall be
allowed as a measure of social justice only in those
VELASCO, JR., J. instances where the employee is validly dismissed for
causes other than serious misconduct or those
FACTS reflecting on his moral character. Where the reason
Anent the grant of severance compensation to legally for the valid dismissal is, for example, habitual
dismissed union members, Toyota assails the turn- intoxication or an offense involving moral turpitude,
around by the CA in granting separation pay in its June like theft or illicit sexual relations with a fellow
20, 2003 Resolution after initially denying it in its worker, the employer may not be required to give the
February 27, 2003 Decision. The company asseverates dismissed employee separation pay, or financial
that based on the CA finding that the illegal acts of said assistance, or whatever other name it is called, on the
union members constitute gross misconduct, not to ground of social justice.
mention the huge losses it suffered, then the grant of
separation pay was not proper. A contrary rule would, as the petitioner correctly
argues, have the effect, of rewarding rather than
ISSUE punishing the erring employee for his offense. And we
In the case at bench, are the 227 striking do not agree that the punishment is his dismissal only
employees entitled to separation pay? and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if
HELD the employee who steals from the company is granted
NO. The general rule is that when just causes for separation pay even as he is validly dismissed, it is not
terminating the services of an employee under Art. unlikely that he will commit a similar offense in his
282 of the Labor Code exist, the employee is not next employment because he thinks he can expect a
entitled to separation pay. The apparent reason like leniency if he is again found out. This kind of
behind the forfeiture of the right to termination pay is misplaced compassion is not going to do labor in
that lawbreakers should not benefit from their illegal general any good as it will encourage the infiltration of
acts. The dismissed employee, however, is entitled to its ranks by those who do not deserve the protection
“whatever rights, benefits and privileges [s/he] may and concern of the Constitution.
have under the applicable individual or collective
bargaining agreement with the employer or voluntary The policy of social justice is not intended to
employer policy or practice” or under the Labor Code countenance wrongdoing simply because it is
and other existing laws. This means that the employee, committed by the underprivileged. At best it may
despite the dismissal for a valid cause, retains the right mitigate the penalty but it certainly will not condone
to receive from the employer benefits provided by law, the offense. Compassion for the poor is an imperative
like accrued service incentive leaves. With respect to of every humane society but only when the recipient
benefits granted by the CBA provisions and voluntary is not a rascal claiming an undeserved privilege. Social
management policy or practice, the entitlement of the justice cannot be permitted to be refuge of scoundrels
dismissed employees to the benefits depends on the any more than can equity be an impediment to the
stipulations of the CBA or the company rules and punishment of the guilty. Those who invoke social
policies. justice may do so only if their hands are clean and their
motives blameless and not simply because they
As in any rule, there are exceptions. One exception happen to be poor. This great policy of our
where separation pay is given even though an Constitution is not meant for the protection of those
employee is validly dismissed is when the court finds who have proved they are not worthy of it, like the
justification in applying the principle of social justice workers who have tainted the cause of labor with the
well entrenched in the 1987 Constitution. blemishes of their own character.

The Court laid down the rule that severance In a long line of cases, the Court declined to grant
compensation shall be allowed only when the cause of termination pay because the causes for dismissal
the dismissal is other than serious misconduct or that recognized under Art. 282 of the Labor Code were
which reflects adversely on the employee’s moral serious or grave in nature and attended by willful or
character. The Court succinctly discussed the wrongful intent or they reflected adversely on the
propriety of the grant of separation pay in this wise: moral character of the employees. We therefore find
that in addition to serious misconduct, in dismissals
based on other grounds under Art. 282 like willful 158 TIRAZONA V. PHILIPPINE EDS-TECHNO
disobedience, gross and habitual neglect of duty, fraud SERVICE, INC (MARCH 14, 2008)
or willful breach of trust, and commission of a crime
against the employer or his family, separation pay CHICO-NAZARIO, J.
should not be conceded to the dismissed employee.
FACTS
In analogous causes for termination like inefficiency, Tirazona claims that her demand letter was merely an
drug use, and others, the NLRC or the courts may opt expression of indignation by a disgruntled employee
to grant separation pay anchored on social justice in against a director, not against the company and, by
consideration of the length of service of the employee, itself, cannot constitute a breach of trust and
the amount involved, whether the act is the first confidence. The company's notice of charge allegedly
offense, the performance of the employee and the like, insinuated Tirazona's guilt in the Balonzo incident;
using the guideposts enunciated in PLDT on the hence, the need to defend herself. Tirazona likewise
propriety of the award of separation pay. asserts that she is an ordinary rank-and-file employee
as she is not vested with the powers and prerogatives
In the case at bench, are the 227 striking employees stated in Article 212(m) of the Labor Code. As such,
entitled to separation pay? her alleged hostility towards her co-workers and the
PET management is not a violation of trust and
A painstaking review of case law renders obtuse the confidence that would warrant her termination from
Union’s claim for separation pay. In a slew of cases, employment. Tirazona next argues that she was
this Court refrained from awarding separation pay or deprived of procedural due process as she was neither
financial assistance to union officers and members served with two written notices, nor was she afforded
who were separated from service due to their a hearing with her participation prior to her dismissal.
participation in or commission of illegal acts during
strikes. Based on existing jurisprudence, the award of ISSUE
separation pay to the Union officials and members in Was Tirazona validly dismissed from
the instant petitions cannot be sustained. employment?

HELD
YES. At the outset, Tirazona is estopped to claim now
that she is [just a] rank and file employee of
respondent PET, especially that she herself admitted
in her pleading that she is a managerial employee.

On the matter of procedure, procedural due process is
simply defined as giving an opportunity to be heard
before judgment is rendered. The twin requirements
of notice and hearing constitute the essential elements
of due process, and neither of those elements can be
eliminated without running afoul of the constitutional
guaranty.

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.

It is fairly obvious in this case that Tirazona was
served with the required twin notices. The first was
embodied in the Notice of Charge dated 25 March
2002 where PET informed Tirazona that it was
considering her termination from employment and
required her to submit a written explanation. In the what happened therein and gave her the chance to
said Notice, PET apprised Tirazona of the ground upon submit a supplemental written explanation. Only
which it was considering her dismissal: (1) her letter when Tirazona again failed to comply with the same
that contained false accusations against the company, did PET terminate her employment.
and (2) her demand for two million pesos in damages,
with a threat of a lawsuit if the said amount was not As a final plea for her case, Tirazona asserts that her
paid. The Notice of Termination dated 22 April 2002 dismissal from employment was too harsh and
given to Tirazona constitutes the second notice arbitrary a penalty to mete out for whatever violation
whereby the company informed her that it found her that she has committed, if indeed there was one.
guilty of breach of trust warranting her dismissal from
service. Tirazona, in this case, has given PET more than enough
reasons to distrust her. The arrogance and hostility
Equally bereft of merit is Tirazona's allegation that she she has shown towards the company and her
was not given the benefit of a fair hearing before she stubborn, uncompromising stance in almost all
was dismissed. instances justify the company's termination of her
employment. Moreover, Tirazona's reading of what
It needs to be pointed out that it was Tirazona herself was supposed to be a confidential letter between the
and her counsel who declined to take part in the counsel and directors of the PET, even if it concerns
administrative hearing set by PET 10 April 2002. her, only further supports her employer's view that
Tirazona rejected the company's appointment of its she cannot be trusted. In fine, the Court cannot fault
external counsel as the investigating panel's presiding the actions of PET in dismissing petitioner.
officer, because her own demands on the panel's
composition were denied. As correctly held by the
NLRC and the Court of Appeals, Tirazona's stance is
without any legal basis.

The right to dismiss or otherwise impose disciplinary
sanctions upon an employee for just and valid cause,
pertains in the first place to the employer, as well as
the authority to determine the existence of said cause
in accordance with the norms of due process. In the
very nature of things, any investigation by the
employer of any alleged cause for disciplinary
punishment of an employee will have to be conducted
by the employer himself or his duly designated
representative; and the investigation cannot be
thwarted or nullified by arguing that it is the
employer who is accuser, prosecutor and judge at
the same time. x x x Of course, the decision of the
employer meting out sanctions against an employee
and the evidentiary and procedural bases thereof may
subsequently be passed upon by the corresponding
labor arbiter (and the NLRC on appeal) upon the filing
by the aggrieved employee of the appropriate
complaint. [Emphasis ours.]

This Court has held that there is no violation of due
process even if no hearing was conducted, where the
party was given a chance to explain his side of the
controversy. What is frowned upon is the denial of the
opportunity to be heard. Tirazona in this case has been
afforded a number of opportunities to defend her
actions. Even when Tirazona failed to attend the
scheduled hearing, PET still informed Tirazona about
159 EASTERN SHIPPING LINES, INC. V. SEDAN regulations; that he applied for optional retirement
(APRIL 7, 2006) under the company's non-contributory plan when his
daughter died and for his own health reasons; and that
QUISUMBING, J. it would appear that he had served the company well,
since even the company said that the reason it refused
FACTS his application for optional retirement was that it still
On December 30, 1973, petitioners hired on a per- needed his services; that he denies receiving the
voyage basis private respondent Dioscoro Sedan as telegram asking him to report back to work; but that
3rd marine engineer and oiler in one of the vessels considering his age and health, he preferred to stay
owned by petitioners. Sedan proceeded to file a home rather than risk further working in a ship at sea.
complaint with the Labor Arbiter against petitioners
demanding payment of his retirement benefits, leave The propriety of awarding financial assistance has
pay, 13th month pay and attorney's fees. long been tackled by this Court. In Philippine Long
Distance Telephone Co. v. NLRC, we laid down the rule
Petitioners contend that by refusing to report for work that henceforth separation pay shall be allowed as a
and insisting on applying for optional retirement, measure of social justice only in the instances where
private respondent wrongly assumed that he was the employee is validly dismissed for causes other
justified in abandoning his job. Petitioners maintain than serious misconduct or those reflecting on his
that private respondent's refusal to report back to moral character. A contrary rule, we said would have
work, despite being duly notified of the need for his the effect of rewarding rather than punishing an erring
service, is tantamount to voluntary resignation. employee.
Therefore, petitioners contend, the respondent should
not be entitled to any financial assistance. In our view, with these special circumstances, we can
call upon the same "social and compassionate justice"
ISSUE cited in several cases allowing financial assistance.
Is petitioner entitled to financial assistance? These circumstances indubitably merit equitable
concessions, via the principle of "compassionate
HELD justice" for the working class. Thus, we agree with the
YES. We are not unmindful of the rule that financial Court of Appeals to grant financial assistance to
assistance is allowed only in instances where the private respondent. Private respondent who has no
employee is validly dismissed for causes other than derogatory record in his 23 years of service should be
serious misconduct or those reflecting on his moral granted equitable assistance equal to one-half month's
character. Neither are we unmindful of this Court's pay for each of his 23 years of service.
pronouncements that when there is no dismissal to
speak of, an award of financial assistance is not in
order.

But we must stress that this Court did allow, in several
instances, the grant of financial assistance. Financial
assistance may be allowed as a measure of social
justice and exceptional circumstances, and as an
equitable concession. The instant case equally calls for
balancing the interests of the employer with those of
the worker, if only to approximate what Justice Laurel
calls justice in its secular sense.

In this instance, our attention has been called to the
following circumstances: that private respondent
joined the company when he was a young man of 25
years and stayed on until he was 48 years old; that he
had given to the company the best years of his youth,
working on board ship for almost 24 years; that in
those years there was not a single report of him
transgressing any of the company rules and
160 J. MARKETING CORP V. TARAN (JUNE 18, In Alfaro v. Court of Appeals, We held that as a general
2009) rule, separation pay need not be paid to an employee
who voluntarily resigns. However, an employer who
PERALTA, J. agrees to expend such benefit as an incident of the
resignation should not be allowed to renege on the
FACTS fulfillment of such commitment.
On July 26, 1993, respondent filed with the National
Labor Relations Commission (NLRC), Regional As aptly held by the NLRC, petitioner, through Caludac,
Arbitration Branch No. VIII, Tacloban City a complaint "sweetened the pot" by promising respondent not
for illegal dismissal and holiday differential. He only an "alternative venue for exit" - voluntary
claimed that there was a verbal arrangement between resignation - but also the payment of his separation
him and petitioner whereby the latter would pay him benefits. There could have been no other reason for
100% separation pay and other benefits, provided respondent to leave his employment other than the
that he would formally tender his resignation from the promise of payment of almost P40,000.00 by way of
company. But after several follow-ups, petitioner separation benefits, which, back in 1993, was already
failed to pay respondent his monetary claims; hence, a substantial amount. In the end, it will all boil down
the latter was constrained to file a complaint. to Caludac's representation that respondent would be
given his separation benefits, and sooner would it be
Petitioner, on the other hand, postulated that awarded to him, only if he would tender his
respondent, as credit collector/investigator, was resignation letter at the pretext that he was physically
given a collection quota per month. However, in 1991 ill, a condition that made him inefficient in his assigned
and 1992, he failed to meet the same. It added that work.
respondent was also subjected to an investigation for
illegal custody of a colored television unit in violation Additional discussion on PRESCRIPTION
of the company rules or policies. In February 1993, Under Article 291 of the Labor Code, all money claims
respondent verbally informed petitioner of his arising from employer-employee relations shall be
decision to resign. On February 15, 1993, he sent a filed within three (3) years from the time the cause of
letter of voluntary resignation, stating that he was action accrued; otherwise, they shall forever be
resigning due to ill health effective March 1, 1993. barred. It is settled jurisprudence that a cause of
Petitioner contended that respondent's dismissal was action has three elements, to wit, (1) a right in favor of
justified, because he failed to meet his collection the plaintiff by whatever means and under whatever
quota, in which poor performance compelled him to law it arises or is created; (2) an obligation on the part
voluntarily resign due to inefficiency. of the named defendant to respect or not to violate
such right; and (3) an act or omission on the part of
ISSUE such defendant violative of the right of the plaintiff or
Is respondent entitled to separation pay in view of constituting a breach of the obligation of the
his voluntary resignation? defendant to the plaintiff.

HELD In the computation of the three-year prescriptive
YES. Significantly, respondent initially filed a period, a determination must be made as to the time
complaint for illegal dismissal. However, he did not when the act constituting a violation of the workers'
pursue such course of action and focused instead on right to the benefits being claimed was committed. For
his claim for separation pay. Clearly, the primary if the cause of action accrued more than three (3)
consideration that impelled respondent to tender his years before the filing of the money claim, said cause
resignation letter was the assurance that he would be of action has already prescribed in accordance with
paid his separation pay. It is thus unlikely for someone Article 291 of the Labor Code. Respondent filed his
to just leave his employer for whom he has worked for claim for rest day differential in July 1993. It follows
twelve (12) years without any expectation of financial then that he is only entitled to his rest day pay within
assistance. This We can glean from respondent's the three-year period counted from the time of the
resignation letter stating: "I hope my resignation be filing of his complaint, or from July 1990. Thus, the
granted and whatever help the management can NLRC correctly ruled that respondent's claim before
extend to me and my family, I would highly appreciate July 1990 had already prescribed in accordance with
it.” Article 291 of the Labor Code.

161 ST. MICHAEL’S INSTITUTE V. SANTOS therefrom which is the means of livelihood of his
(DECEMBER 4, 2001) family.
We agree with the appellate court's conclusion that,
DE LEON, J. under the attendant factual antecedents, the dismissal
meted out on the respondents for dereliction of duty
FACTS for one school day and denouncing school authority,
It is the petitioners' position that the appellate court appears to be too harsh a penalty. It must be noted that
failed to properly appreciate that the willful refusal of the respondents are being held liable for a first time
the respondents to perform the very task they were offense and, in the case of respondent Santos, despite
hired and required to do, that is to teach, was long years of unblemished service. Even when an
tantamount to serious misconduct which gave the employee is found to have transgressed the
petitioners the right to terminate the employment of employer's rules, in the actual imposition of penalties
the respondents. Furthermore, the dismissal of upon the erring employee, due consideration must
respondents for joining the public rally on August 10, still be given to his length of service and the number of
1993 was fully justified because not only were classes violations committed during his employment. Where
disrupted on that day but the public rally was a penalty less punitive would suffice, whatever
accompanied by utterances of obscene, insulting or missteps may have been committed by the employee
offensive words against their immediate superiors, ought not to be visited with a consequence so severe
more specifically petitioner Fr. Nicanor Victorino, such as dismissal from employment. Moreover, the
Director of petitioner school. facts, as further established on appeal in the NLRC,
paint out a picture that the respondents were singled
ISSUE out by the petitioners apparently for being officers of
Is the penalty of dismissal commensurate with the the teachers' union which they formed, despite the
infractions committed by the respondents? fact that several other teachers also joined the August
10, 1993 rally.
HELD
NO. The employer's right to conduct the affairs of his
business, according to its own discretion and
judgment, is well-recognized. An employer has a free
reign and enjoys wide latitude of discretion to regulate
all aspects of employment, including the prerogative
to instill discipline in its employees and to impose
penalties, including dismissal, upon erring employees.
This is a management prerogative, where the free will
of management to conduct its own affairs to achieve
its purpose takes form. The only criterion to guide the
exercise of its management prerogative is that the
policies, rules and regulations on work-related
activities of the employees must always be fair and
reasonable and the corresponding penalties, when
prescribed, commensurate to the offense involved and
to the degree of the infraction.

In the instant case, the reason basically cited for the
dismissal of respondents is serious misconduct or
willful disobedience for dereliction of duty predicated
on their absence for only one day of classes for
attending a public rally and denouncing the school
authority. The magnitude of the infraction must be
weighed and equated with the penalty prescribed and
must be commensurate thereto, in view of the gravity
of the penalty of dismissal or termination from the
service. What is at stake here is not simply the job
itself of the employee but also his regular income
162 WENPHIL CORP V. NLRC (FEBRUARY 8, 1989) afforded the right to an investigation by the labor
arbiter.
GANCAYCO, J.
(2) NO. Although belatedly, private respondent was
FACTS afforded due process before the labor arbiter wherein
Private respondent was hired by petitioner on January the just cause of his dismissal had been established.
18, 1984 as a crew member at its Cubao Branch. He With finding, it would be arbitrary and unfair to order
thereafter became the assistant head of the Backroom his reinstatement with back wages.
department of the same branch. At about 2:30 P.M. on
May 20, 1985 private respondent had an alteration The Court holds that the policy of ordering the
with a co-employee Job Barrameda. As a result of reinstatement to the service of an employee without
which he and Barrameda were suspended on the loss of seniority and the payment of his wages during
following morning and in the afternoon of the same the period of his separation until his actual
day a memorandum was issued by the Operations reinstatement but not exceeding three (3) years
Manager advising private respondent of his dismissal without qualification or when it appears he was not
from the service in accordance with their Personnel afforded due process, although his dismissal was
Manual. The notice of dismissal was served on found to be for just and authorized cause in an
petitioner for unfair labor practice, illegal suspension appropriate proceeding in the Ministry of Labor and
and private respondent on May 25, 1985. Thus private Employment should be re-examined. It will be highly
respondent filed a complaint against illegal dismissal. prejudicial to the interests of the employer to impose
on him the services of an employee who has been
ISSUES shown to be guilty of the charges that warranted his
(1) Is formal investigation necessary when the dismissal from employment. Indeed, it will demoralize
incident which gave rise to respondent’s the rank and file of the undeserving if not undesirable
termination was witnessed by a co-employee? remains in the service.

(2) Is the respondent entitled to reinstatement? Thus in the present case where private respondent
who appears to be violent temper, caused trouble
(3) What is the liability of the petitioner for its during office hours and even defied his superiors as
failure to extend to private respondent his right to they tried to pacify him., should not be rewarded with
an investigation before causing his dismissal? re-employment and back wages. It may encourage him
to do even worse and will render a mockery of the
HELD rules of discipline that employees are required to
(1) YES. The claim of petitioner that a formal observe. Under the circumstances, the dismissal of the
investigation was not necessary because the incident private respondent for just cause should be
which gave rise to, the termination of private maintained. He has no right to return to his former
respondent was witnessed by his co-employees and employment.
supervisors is without merit. The basic requirement of
due process is that which hears before it condemns. (3) However, the petitioner must nevertheless be held
Which process upon inquiry and renders judgment to court for failure to extend to private respondent his
only after trial. right to an investigation before causing his dismissal.
The rule is explicit as above discussed. The dismissal
The failure of petitioner to give private respondent the of an employee must be for just authorized cause and
benefit of a hearing before he was dismissed after due process. Petitioner committed an infraction
constitutes an infringement of his constitutional right of the second requirement. Thus, it must be imposed a
to due process of law and equal protection of the laws. sanction for its failure to give a formal notice and
The standards of due process in judicial as well as conduct an investigation as required by law before
administrative proceedings have long been dismissing petitioner from employment. Considering
established. In its part minimum due process of law the circumstances of this case petitioner must
simply means giving notice and opportunity to be indemnify the private respondent the amount of
heard before judgment is rendered. P1,000.00. The measure of this award depends on the
facts of each case and the gravity of the omission
However, it is a matter of fact that when the private committed by the employer.
respondent filed a complaint against petitioner he was
163 SERRANO V. NLRC & ISETTAN (JANUARY 7, authorized cause, the dismissal or termination is
2000) illegal if effected without notice to the employee. The
shift in doctrine took place in 1989 in Wenphil Corp. v.
MENDOZA, J. NLRC. The fines imposed for violations of the notice
requirement have varied from P1,000.00 to P2,000.00
FACTS to P5,000.00 to P10,000.00.
Petitioner was hired by private respondent Isetann
Department Store as a security checker to apprehend The refusal to look beyond the validity of the initial
shoplifters and prevent pilferage of merchandise. action taken by the employer to terminate
Initially hired on October 4, 1984 on contractual basis, employment either for an authorized or just cause can
petitioner eventually became a regular employee on result in an injustice to the employer. For not giving
April 4, 1985. In 1988, he became head of the Security notice and hearing before dismissing an employee,
Checkers Section of private respondent. Sometime in who is otherwise guilty of, say, theft, or even of an
1991, as a cost-cutting measure, private respondent attempt against the life of the employer, an employer
decided to phase out its entire security section and will be forced to keep in his employ such guilty
engage the services of an independent security employee. This is unjust.
agency.
In sum, we hold that if in proceedings for
The loss of his employment prompted petitioner to file reinstatement under Art. 283, it is shown that the
a complaint on December 3, 1991 for illegal dismissal, termination of employment was due to an authorized
illegal layoff, unfair labor practice, underpayment of cause, then the employee concerned should not be
wages, and nonpayment of salary and overtime pay. ordered reinstated even though there is failure to
comply with the 30-day notice requirement. Instead,
ISSUE he must be granted separation pay in accordance with
What is the sanction for violations of the notice Art. 283 (see Codal).
requirement?
If the employee’s separation is without cause, instead
HELD of being given separation pay, he should be reinstated.
Art. 283 also provides that to terminate the In either case, whether he is reinstated or only granted
employment of an employee for any of the authorized separation pay, he should be paid full backwages if he
causes the employer must serve "a written notice on has been laid off without written notice at least 30
the workers and the Department of Labor and days in advance.
Employment at least one (1) month before the
intended date thereof." In the case at bar, petitioner On the other hand, with respect to dismissals for cause
was given a notice of termination on October 11, 1991. under Art. 282, if it is shown that the employee was
On the same day, his services were terminated. He was dismissed for any of the just causes mentioned in said
thus denied his right to be given written notice before Art. 282, then, in accordance with that article, he
the termination of his employment, and the question should not be reinstated. However, he must be paid
is the appropriate sanction for the violation of backwages from the time his employment was
petitioner’s right. terminated until it is determined that the termination
of employment is for a just cause because the failure
As this Court said: "It is now settled that where the to hear him before he is dismissed renders the
dismissal of one employee is in fact for a just and valid termination of his employment without legal effect.
cause and is so proven to be but he is not accorded his
right to due process, i.e., he was not furnished the twin
requirements of notice and opportunity to be heard,
the dismissal shall be upheld but the employer must
be sanctioned for non-compliance with the
requirements of, or for failure to observe, due
process.”

The rule reversed a long standing policy theretofore
followed that even though the dismissal is based on a
just cause or the termination of employment is for an
164 AGABON V. NLRC (NOVEMBER 17, 2004) two factors should be present: (1) the failure to report
for work or absence without valid or justifiable
YNARES-SANTIAGO, J. reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more
FACTS determinative factor which is manifested by overt acts
Private respondent Riviera Home Improvements, Inc. from which it may be deduced that the employees has
is engaged in the business of selling and installing no more intention to work. The intent to discontinue
ornamental and construction materials. It employed the employment must be shown by clear proof that it
petitioners Virgilio Agabon and Jenny Agabon as was deliberate and unjustified.
gypsum board and cornice installers on January 2,
1992 until February 23, 1999 when they were In February 1999, petitioners were frequently absent
dismissed for abandonment of work. having subcontracted for an installation work for
another company. Subcontracting for another
Petitioners then filed a complaint for illegal dismissal company clearly showed the intention to sever the
and payment of money claims. Petitioners assert that employer-employee relationship with private
they were dismissed because the private respondent respondent. This was not the first time they did
refused to give them assignments unless they agreed this. In January 1996, they did not report for work
to work on a “pakyaw” basis when they reported for because they were working for another
duty on February 23, 1999. They did not agree on this company. Private respondent at that time warned
arrangement because it would mean losing benefits as petitioners that they would be dismissed if this
Social Security System (SSS) members. Petitioners happened again. Petitioners disregarded the warning
also claim that private respondent did not comply and exhibited a clear intention to sever their
with the twin requirements of notice and hearing. employer-employee relationship. The record of an
employee is a relevant consideration in determining
Private respondent, on the other hand, maintained the penalty that should be meted out to him.
that petitioners were not dismissed but had
abandoned their work. In fact, private respondent sent In Sandoval Shipyard v. Clave, we held that an
two letters to the last known addresses of the employee who deliberately absented from work
petitioners advising them to report for work. Private without leave or permission from his employer, for the
respondent’s manager even talked to petitioner purpose of looking for a job elsewhere, is considered
Virgilio Agabon by telephone sometime in June 1999 to have abandoned his job. We should apply that rule
to tell him about the new assignment at Pacific Plaza with more reason here where petitioners were absent
Towers involving 40,000 square meters of cornice because they were already working in another
installation work. However, petitioners did not report company.
for work because they had subcontracted to perform
installation work for another company. Petitioners The law imposes many obligations on the employer
also demanded for an increase in their wage to such as providing just compensation to workers,
P280.00 per day. When this was not granted, observance of the procedural requirements of notice
petitioners stopped reporting for work and filed the and hearing in the termination of employment. On the
illegal dismissal case. other hand, the law also recognizes the right of the
employer to expect from its workers not only good
ISSUES performance, adequate work and diligence, but also
(1) Is the dismissal valid? good conduct and loyalty. The employer may not be
compelled to continue to employ such persons whose
(2) Did private respondent observe the continuance in the service will patently be inimical to
procedural requirements in effecting petitioners’ his interests.
dismissal?
NO. The procedure for terminating an employee is
HELD found in Book VI, Rule I, Section 2(d) of the Omnibus
(1) YES. Abandonment is the deliberate and Rules Implementing the Labor Code:
unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a Standards of due process: requirements of notice. – In
just cause for termination of employment by the all cases of termination of employment, the following
employer. For a valid finding of abandonment, these
standards of due process shall be substantially From the foregoing rules four possible situations may
observed: be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause
I. For termination of employment based on just under Article 283, or for health reasons under Article
causes as defined in Article 282 of the Code: 284, and due process was observed; (2) the dismissal
is without just or authorized cause but due process
a. A written notice served on the employee was observed; (3) the dismissal is without just or
specifying the ground or grounds for authorized cause and there was no due process; and
termination, and giving to said employee (4) the dismissal is for just or authorized cause but due
reasonable opportunity within which to process was not observed.
explain his side;
In the first situation, the dismissal is undoubtedly
a. A hearing or conference during which the valid and the employer will not suffer any liability.
employee concerned, with the assistance of
counsel if the employee so desires, is given In the second and third situations where the
opportunity to respond to the charge, present dismissals are illegal, Article 279 mandates that the
his evidence or rebut the evidence presented employee is entitled to reinstatement without loss of
against him; and seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits
a. A written notice of termination served on the or their monetary equivalent computed from the time
employee indicating that upon due the compensation was not paid up to the time of actual
consideration of all the circumstances, reinstatement.
grounds have been established to justify his
termination. In the fourth situation, the dismissal should be
upheld. While the procedural infirmity cannot be
In case of termination, the foregoing notices shall be cured, it should not invalidate the dismissal. However,
served on the employee’s last known address. the employer should be held liable for non-compliance
Dismissals based on just causes contemplate acts or with the procedural requirements of due process.
omissions attributable to the employee while
dismissals based on authorized causes involve The present case squarely falls under the fourth
grounds under the Labor Code which allow the situation. The dismissal should be upheld because it
employer to terminate employees. A termination for was established that the petitioners abandoned their
an authorized cause requires payment of separation jobs to work for another company. Private
pay. When the termination of employment is declared respondent, however, did not follow the notice
illegal, reinstatement and full backwages are requirements and instead argued that sending notices
mandated under Article 279. If reinstatement is no to the last known addresses would have been useless
longer possible where the dismissal was unjust, because they did not reside there
separation pay may be granted. anymore. Unfortunately for the private respondent,
this is not a valid excuse because the law mandates the
Procedurally, (1) if the dismissal is based on a just twin notice requirements to the employee’s last
cause under Article 282, the employer must give the known address. Thus, it should be held liable for non-
employee two written notices and a hearing or compliance with the procedural requirements of due
opportunity to be heard if requested by the employee process.
before terminating the employment: a notice
specifying the grounds for which dismissal is sought a Where the dismissal is for a just cause, as in the instant
hearing or an opportunity to be heard and after case, the lack of statutory due process should not
hearing or opportunity to be heard, a notice of the nullify the dismissal, or render it illegal, or
decision to dismiss; and (2) if the dismissal is based on ineffectual. However, the employer should indemnify
authorized causes under Articles 283 and 284, the the employee for the violation of his statutory rights,
employer must give the employee and the Department as ruled in Reta v. National Labor Relations
of Labor and Employment written notices 30 days Commission. The indemnity to be imposed should be
prior to the effectivity of his separation. stiffer to discourage the abhorrent practice of “dismiss
now, pay later,” which we sought to deter in the
Serrano ruling. The sanction should be in the nature
of indemnification or penalty and should depend on 165 JAKA FOOD PROCESSING CORP V. PACOT
the facts of each case, taking into special consideration (MARCH 28, 2005)
the gravity of the due process violation of the
employer. GARCIA, J.

Under the Civil Code, nominal damages is adjudicated FACTS
in order that a right of the plaintiff, which has been Respondents Darwin Pacot, Robert Parohinog, David
violated or invaded by the defendant, may be Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan
vindicated or recognized, and not for the purpose of Cagabcab were earlier hired by petitioner JAKA Foods
indemnifying the plaintiff for any loss suffered by him. Processing Corporation (JAKA, for short) until the
latter terminated their employment on August 29,
As enunciated by this Court in Viernes v. National 1997 because the corporation was “in dire financial
Labor Relations Commissions, an employer is liable to straits”. It is not disputed, however, that the
pay indemnity in the form of nominal damages to an termination was effected without JAKA complying
employee who has been dismissed if, in effecting such with the requirement under Article 283 of the Labor
dismissal, the employer fails to comply with the Code regarding the service of a written notice upon
requirements of due process. The Court, after the employees and the Department of Labor and
considering the circumstances therein, fixed the Employment at least one (1) month before the
indemnity at P2,590.50, which was equivalent to the intended date of termination.
employee’s one month salary. This indemnity is
intended not to penalize the employer but to vindicate In time, respondents separately filed with the regional
or recognize the employee’s right to statutory due Arbitration Branch of the National Labor Relations
process which was violated by the employer. Commission (NLRC) complaints for illegal dismissal,
underpayment of wages and nonpayment of service
The violation of the petitioners’ right to statutory due incentive leave and 13th month pay against JAKA and
process by the private respondent warrants the its HRD Manager, Rosana Castelo.
payment of indemnity in the form of nominal
damages. The amount of such damages is addressed ISSUE
to the sound discretion of the court, taking into What are the legal implications of a situation
account the relevant circumstances. Considering the where an employee is dismissed for cause but such
prevailing circumstances in the case at bar, we dismissal was effected without the employer’s
deem it proper to fix it at P30,000.00. We believe compliance with the notice requirement under the
this form of damages would serve to deter employers Labor Code?
from future violations of the statutory due process
rights of employees. At the very least, it provides a HELD
vindication or recognition of this fundamental right In the very recent case of Agabon vs. NLRC, we had the
granted to the latter under the Labor Code and its opportunity to resolve a similar question.
Implementing Rules.
The difference between Agabon and the instant case is
that in the former, the dismissal was based on a just
cause under Article 282 of the Labor Code while in the
present case, respondents were dismissed due to
retrenchment, which is one of the authorized causes
under Article 283 of the same Code.

At this point, we note that there are divergent
implications of a dismissal for just cause under Article
282, on one hand, and a dismissal for authorized cause
under Article 283, on the other.

A dismissal for just cause under Article 282 implies
that the employee concerned has committed, or is
guilty of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is
guilty of some fraud against the employer, or, as in We likewise find the Court of Appeals to have been in
Agabon, he has neglected his duties. Thus, it can be error when it ordered JAKA to pay respondents
said that the employee himself initiated the dismissal separation pay equivalent to one (1) month salary for
process. every year of service. This is because in Reah’s
Corporation vs. NLRC, we made the following
On another breath, a dismissal for an authorized declaration:
cause under Article 283 does not necessarily imply
delinquency or culpability on the part of the “The rule, therefore, is that in all cases of business
employee. Instead, the dismissal process is initiated closure or cessation of operation or undertaking of the
by the employer’s exercise of his management employer, the affected employee is entitled to
prerogative, i.e. when the employer opts to install separation pay. This is consistent with the state policy
labor saving devices, when he decides to cease of treating labor as a primary social economic force,
business operations or when, as in this case, he affording full protection to its rights as well as its
undertakes to implement a retrenchment program. welfare. The exception is when the closure of
business or cessation of operations is due to
The clear-cut distinction between a dismissal for just serious business losses or financial reverses; duly
cause under Article 282 and a dismissal for authorized proved, in which case, the right of affected
cause under Article 283 is further reinforced by the employees to separation pay is lost for obvious
fact that in the first, payment of separation pay, as a reasons.”
rule, is not required, while in the second, the law
requires payment of separation pay.

For these reasons, there ought to be a difference in
treatment when the ground for dismissal is one of the
just causes under Article 282, and when based on one
of the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1) if the dismissal
is based on a just cause under Article 282 but the
employer failed to comply with the notice
requirement, the sanction to be imposed upon him
should be tempered because the dismissal process
was, in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer
failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal
process was initiated by the employer’s exercise of his
management prerogative.

The records before us reveal that, indeed, JAKA was
suffering from serious business losses at the time it
terminated respondents’ employment.

It is, therefore, established that there was ground for
respondents’ dismissal, i.e., retrenchment, which is
one of the authorized causes enumerated under
Article 283 of the Labor Code. Likewise, it is
established that JAKA failed to comply with the notice
requirement under the same Article. Considering the
factual circumstances in the instant case and the above
ratiocination, we, therefore, deem it proper to fix the
indemnity at P50,000.00.

166 INDUSTRIAL TIMBER V. ABABAN (MARCH 30, sufficiently and convincingly prove its allegation of
2006) substantial losses, while under the second kind, the
employer can lawfully close shop anytime as long as
YNARES-SANTIAGO, J. cessation of or withdrawal from business operations
was bona fide in character and not impelled by a
FACTS motive to defeat or circumvent the tenurial rights of
On June 26, 1990, ITC notified the DOLE and its employees, and as long as he pays his employees their
workers of the plant's shutdown due to the non- termination pay in the amount corresponding to their
renewal of anti-pollution permit that expired in April length of service. Just as no law forces anyone to go
1990. This fact and the alleged lack of logs for milling into business, no law can compel anybody to continue
constrained ITC to lay off all its workers until further the same. It would be stretching the intent and spirit
notice. This was followed by a final notice of closure or of the law if a court interferes with management's
cessation of business operations on August 17, 1990 prerogative to close or cease its business operations
with an advice for all the workers to collect the just because the business is not suffering from any loss
benefits due them under the law and CBA. or because of the desire to provide the workers
continued employment.
On October 15, 1990, IPGC took over the plywood
plant after it was issued a Wood Processing Plant In sum, under Article 283 of the Labor Code, three
Permit No. WPR-1004-081791-042, which included requirements are necessary for a valid cessation of
the anti-pollution permit, by the Department of business operations:
Environment and Natural Resources (DENR)
coincidentally on the same day the ITC ceased a. service of a written notice to the employees
operation of the plant. and to the DOLE at least one month before the
intended date thereof;
This prompted Virgilio Ababon, et al. to file a b. the cessation of business must be bona fide in
complaint against ITC and IPGC for illegal dismissal, character; and
unfair labor practice and damages. They alleged, c. payment to the employees of termination pay
among others, that the cessation of ITC's operation amounting to one month pay or at least one-
was intended to bust the union and that both half month pay for every year of service,
corporations are one and the same entity being whichever is higher.
controlled by one owner.
In these consolidated cases, we find that ITC's closure
ISSUES or cessation of business was done in good faith and for
(1) Were Ababon, et al. illegally dismissed due to valid reasons. Having established that ITC's closure of
the closure of ITC's business? the plywood plant was done in good faith and that it
was due to causes beyond its control, the conclusion is
(2) Did ITC comply with notice requirement? inevitable that said closure is valid. Consequently,
Ababon, et al. could not have been illegally dismissed
HELD to be entitled to full backwages. Thus, we find it no
(1) YES. The right to close the operation of an longer necessary to discuss the issue regarding the
establishment or undertaking is one of the authorized computation of their backwages. However, they are
causes in terminating employment of workers, the entitled to separation pay equivalent to one month
only limitation being that the closure must not be for pay or at least one-half month pay for every year of
the purpose of circumventing the provisions on service, whichever is higher.
termination of employment embodied in the Labor
Code. Article 283 of the Labor Code provides: Closure (2) NO. Although the closure was done in good faith
of establishment and reduction of personnel (see and for valid reasons, we find that ITC did not comply
Codal). with the notice requirement. While an employer is
under no obligation to conduct hearings before
A reading of the foregoing law shows that a partial or effecting termination of employment due to
total closure or cessation of operations of authorized cause, however, the law requires that it
establishment or undertaking may either be due to must notify the DOLE and its employees at least one
serious business losses or financial reverses or month before the intended date of closure.
otherwise. Under the first kind, the employer must
In the case at bar, ITC notified its employees and the 167 GLOBE MACKAY V. NLRC (MARCH 3, 1992)
DOLE of the "no plant operation" on March 16, 1990
due to lack of raw materials. This was followed by a ROMERO, J.
"shut down" notice dated June 26, 1990 due to the
expiration of the anti-pollution permit. However, this FACTS
shutdown was only temporary as ITC assured its For private respondent Imelda L. Salazar, it would
employees that they could return to work once the seem that her close association with Delfin Saldivar
renewal is acted upon by the DENR. On August 17, would mean the loss of her job. In May 1982, private
1990, the ITC sent its employees a final notice of respondent was employed by Globe-Mackay Cable and
closure or cessation of business operations to take Radio Corporation (GMCR) as general systems analyst.
effect on the same day it was released. We find that Also employed by petitioner as manager for technical
this falls short of the notice requirement for operations’ support was Delfin Saldivar with whom
termination of employment due to authorized cause private respondent was allegedly very close.
considering that the DOLE was not furnished and the
notice should have been furnished both the employees It appeared in the course of Maramara's investigation
and the DOLE at least one month before the intended that Imelda Salazar violated company regulations by
date of closure. involving herself in transactions conflicting with the
company's interests. Evidence showed that she signed
Where the dismissal is based on an authorized cause as a witness to the articles of partnership between
under Article 283 of the Labor Code but the employer Yambao and Saldivar. It also appeared that she had full
failed to comply with the notice requirement, the knowledge of the loss and whereabouts of the Fedders
sanction should be stiff as the dismissal process was airconditioner but failed to inform her employer.
initiated by the employer's exercise of his
management prerogative, as opposed to a dismissal Consequently, in a letter dated October 8, 1984,
based on a just cause under Article 282 with the same petitioner company placed private respondent Salazar
procedural infirmity where the sanction to be imposed under preventive suspension for one (1) month,
upon the employer should be tempered as the effective October 9, 1984, thus giving her thirty (30)
dismissal process was, in effect, initiated by an act days within which to explain her side. But instead of
imputable to the employee. submitting an explanation, three (3) days later or on
October 12, 1984, private respondent filed a
In light of the factual circumstances of the cases at bar, complaint against petitioner for illegal suspension,
we deem it wise and reasonable to award P50,000.00 which she subsequently amended to include illegal
to each employee as nominal damages. dismissal, vacation and sick leave benefits, 13th month
pay and damages, after petitioner notified her in
R E S O L U T I O N writing that effective November 8, 1984, she was
(G.R. No. 164518 March 30, 2006 ) considered dismissed "in view of (her) inability to
YNARES-SANTIAGO, J.: refute and disprove these findings.”
In the case at bar, there was valid authorized cause
considering the closure or cessation of ITC’s business ISSUE
which was done in good faith and due to Was Salazar’s eventual separation for cause?
circumstances beyond ITC’s control. Moreover, ITC
had ceased to generate any income since its closure on HELD
August 17, 1990. Several months prior to the closure, NO. There was no evidence to show an authorized,
ITC experienced diminished income due to high much less a legal, cause for the dismissal of private
production costs, erratic supply of raw materials, respondent. Thus, she had every right, not only to be
depressed prices, and poor market conditions for its entitled to reinstatement, but as well, to full
wood products. It appears that ITC had given its backwages.
employees all benefits in accord with the CBA upon
their termination. Thus, considering the In lieu of reinstatement, the Court has variously
circumstances obtaining in the case at bar, we deem it ordered the payment of backwages and separation
wise and just to reduce the amount of nominal pay or solely separation pay. In the case at bar, the law
damages to be awarded for each employee to is on the side of private respondent. In the first place,
P10,000.00 each instead of P50,000.00 each. the wording of the Labor Code is clear and
unambiguous: "An employee who is unjustly
dismissed from work shall be entitled to
reinstatement . . . and to his full backwages . . .” Under In the instant case, petitioner has predicated its
the principles of statutory construction, if a statute is dismissal of Salazar on loss of confidence. As we have
clear, plain and free from ambiguity, it must be given held countless times, while loss of confidence or
its literal meaning and applied without attempted breach of trust is a valid ground for termination, it
interpretation. This plain-meaning rule or verba legis must rest on some basis which must be convincingly
derived from the maxim index animi sermo est established. An employee may not be dismissed on
(speech is the index of intention) rests on the valid mere presumptions and suppositions. Petitioner's
presumption that the words employed by the allegation that since Salazar and Saldivar lived
legislature in a statute correctly express its intent or together in the same apartment, it "presumed
will and preclude the court from construing it reasonably that complainant's sympathy would be
differently. The legislature is presumed to know the with Saldivar" and its averment that Saldivar's
meaning of the words, to have used words advisedly, investigation although unverified, was probably true,
and to have expressed its intent by the use of such do not pass this Court's test. While we should not
words as are found in the statute. Verba leqis non est condone the acts of disloyalty of an employee, neither
recedendum, or from the words of a statute there should we dismiss him on the basis of suspicion
should be no departure. Neither does the provision derived from speculative inferences.
admit of any qualification. If in the wisdom of the
Court, there may be a ground or grounds for non-
application of the above-cited provision, this should
be by way of exception, such as when the
reinstatement may be inadmissible due to ensuing
strained relations between the employer and the
employee.

In such cases, it should be proved that the employee
concerned occupies a position where he enjoys the
trust and confidence of his employer; and that it is
likely that if reinstated, an atmosphere of antipathy
and antagonism may be generated as to adversely
affect the efficiency and productivity of the employee
concerned.

Obviously, the principle of "strained relations" cannot
be applied indiscriminately. Otherwise, reinstatement
can never be possible simply because some hostility is
invariably engendered between the parties as a result
of litigation. That is human nature.

Besides, no strained relations should arise from a valid
and legal act of asserting one's right; otherwise an
employee who shall assert his right could be easily
separated from the service, by merely paying his
separation pay on the pretext that his relationship
with his employer had already become strained.

Here, it has not been proved that the position of
private respondent as systems analyst is one that may
be characterized as a position of trust and confidence
such that if reinstated, it may well lead to strained
relations between employer and employee. Hence,
this does not constitute an exception to the general
rule mandating reinstatement for an employee who
has been unlawfully dismissed.
168 D. V. QUIJANO V. BARTOLABAC (JANUARY 27, YES. The Court is unyielding in its adjudication that
2006) complainant must be reinstated to his former position
as warehouseman or to a substantially equivalent
TINGA, J. position. This was stated in its Decision dated 8 July
1998, reiterated in the Resolution dated 5 July 1999,
FACTS and again stressed in the Resolution dated 17
Complainant was dismissed from service by the November 1999. In the latter resolution, it was
Mercury Drug Corporation (corporation). He filed a particularly expressed that: Indeed, private
complaint for illegal dismissal before the NLRC. respondent's [Mercury Drug Corporation] contention,
Eventually, the case was elevated to this Court. On 8 as erroneously upheld by the labor arbiter, that there
July 1998, the Court promulgated its Decision in favor is no substantially equivalent position for petitioner's
of herein complainant ordering, among others, his reinstatement has been categorically discounted by
reinstatement. The corporation's motion for this Court. We took judicial notice of the fact that
reconsideration was denied by this Court in its private respondent Mercury Drug Corporation
Resolution dated 5 July 1999. operates nationwide and has numerous branches
all over the Philippines. Petitioner, as
Complainant relates that he filed with respondent warehouseman, occupied a clerical/rank and file
Labor Arbiter Bartolabac a motion for execution on 9 position in said company and we find it highly
December 1998 but despite the final resolution of his inconceivable that no other substantially equivalent
case, Bartolabac issued an order that in effect changed position exists to effect his reinstatement.
the tenor of the final judgment. While the decision of
this Court had mandated complainant's Clearly, the Court is unwilling to accept the
reinstatement, Bartolabac instead awarded corporation and respondent labor arbiter's reason
backwages and separation pay. that reinstatement is no longer feasible because the
position of warehouseman had already been
The Court, upon learning this, issued a Resolution on abolished and there is no substantially equivalent
17 November 1999 directing Bartolabac to fully position in the corporation.
comply with its Decision dated 8 July 1998 and
Resolution dated 5 July 1999 within a non-extendible Both respondents labor arbiter and commissioner do
period of five (5) days from receipt thereof and to not have any latitude to depart from the Court's ruling.
explain in writing why he should not be punished for The Decision in G.R. No. 126561 is final and executory
indirect contempt for his actuations in handling the and may no longer be amended. It is incumbent upon
case and defiance of the Court's directives. respondents to order the execution of the judgment
and implement the same to the letter. Respondents
Pursuant to the Resolution of this Court, Bartolabac have no discretion on this matter, much less any
issued an alias writ of execution on 18 February 2000. authority to change the order of the Court. The acts of
However, respondent Bartolabac allegedly again respondent cannot be regarded as acceptable
unilaterally issued another order dated 5 April 2000, discretionary performance of their functions as labor
amending his previous order and assigning the arbiter and commissioner of the NLRC, respectively,
complainant to the position of self-service attendant of for they do not have any discretion in executing a final
the corporation instead of his original position of decision. The implementation of the final and
warehouseman. Subsequently, respondent executory decision is mandatory.
Commissioner Quimpo overturned the above order of
Bartolabac and directed the payment of separation As held in Siy v. National Labor Relations Commission
pay rather than reinstatement to a substantially and Embang: Once the case is decided with finality, the
similar position as ordered by this Court. controversy is settled and the matter is laid to rest.
The prevailing party is entitled to enjoy the fruits of
ISSUE his victory while the other party is obliged to respect
Are the respondents are liable for their acts in the court's verdict and to comply with it.
deviating from the final and executory judgment of
this Court in G.R. No. 126561. We reiterate our pronouncement in Salicdan v. Court
of Appeals: "well-settled is the principle that a
HELD decision that has acquired finality becomes immutable
and unalterable and may no longer be modified in any
respect even if the modification is meant to correct 169 TRIAD SECURITY V. ORTEGA (FEBRUARY 6,
erroneous conclusions of fact or law and whether it 2006)
will be made by the court that rendered it or by the
highest court of the land. CHICO-NAZARIO, J.
The reason for this is that litigation must end and
terminate sometime and somewhere, and it is FACTS
essential to an effective and efficient administration of According to respondents, during the time that they
justice that, once a judgment has become final, the were in the employ of petitioners, they were receiving
winning party be not deprived of the fruits of the compensation which was below the minimum wage
verdict. Courts must guard against any scheme fixed by law. They were also made to render services
calculated to bring about that result and must frown everyday for 12 hours but were not paid the requisite
upon any attempt to prolong the controversies. overtime pay, nightshift differential, and holiday
pay. Respondents likewise lamented the fact that
Our Constitution mandates that no person shall be petitioners failed to provide them with weekly rest
deprived of life, liberty, and property without due period, service incentive leave pay, and 13th month
process of law. It should be borne in mind that pay. As a result of these perceived unfairness,
employment is considered a property right and cannot respondents filed a complaint before the Labor
be taken away from the employee without going Standards Enforcement Division of the Department of
through legal proceedings. In the instant case, Labor on 6 January 1999. Upon learning of the
respondents wittingly or unwittingly dispossessed complaint, respondents' services were terminated
complainant of his source of living by not without the benefit of notice and hearing.
implementing his reinstatement. In the process,
respondents also run afoul of the public policy For their part, petitioners denied respondents' claim
enshrined in the Constitution ensuring the protection of illegal dismissal. Moreover, they are now before this
of the rights of workers and the promotion of their Court insisting that they have fully disposed of their
welfare. legal obligation to respondents when they paid the
latter's separation pay.
Premises considered, the Court finds respondents
liable for violating Canon 1 and Rule 1.01 of the Code ISSUE
of Professional Responsibility. Respondents Labor Is the petitioners’ act of paying the respondents
Arbiter Geobel A. Bartolabac and Commissioner separation pay compliant with LA’s immediately
Alberto R. Quimpo are hereby SUSPENDED from the executory judgment for respondents’
practice of law for a period of THREE (3) months. reinstatement thereby freeing them (petitioners)
from any further liabilities accruing in favor of
respondents?

HELD
NO. In this case, the labor arbiter ordered the
reinstatement of respondents and the payment of
their backwages until their actual reinstatement and
in case reinstatement is no longer viable, the payment
of separation pay. Under Article 223 of the Labor
Code, "the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall be
immediately executory, even pending appeal." The
same provision of the law gives the employer the
option of either admitting the employee back to work
under the same terms and conditions prevailing
before his dismissal or separation from employment
or the employer may choose to merely reinstate the
employee to the payroll. It bears emphasizing that the
law mandates the prompt reinstatement of the
dismissed or separated employee. This, the
petitioners failed to heed. They are now before this 170 ROQUERO V. PAL (APRIL 22, 2003)
Court insisting that they have fully disposed of their
legal obligation to respondents when they paid the PUNO, J.
latter's separation pay. We do not agree.
FACTS
It should be pointed out that an order of reinstatement Roquero, along with Rene Pabayo, were ground
by the labor arbiter is not the same as actual equipment mechanics of respondent Philippine
reinstatement of a dismissed or separated Airlines, Inc. (PAL for brevity). From the evidence on
employee. Thus, until the employer continuously fails record, it appears that Roquero and Pabayo were
to actually implement the reinstatement aspect of the caught red-handed possessing and using
decision of the labor arbiter, their obligation to Methampethamine Hydrochloride or shabu in a raid
respondents, insofar as accrued backwages and other conducted by PAL security officers and NARCOM
benefits are concerned, continues to accumulate. It is personnel.
only when the illegally dismissed employee receives
the separation pay that it could be claimed with They were also brought to the security office of PAL
certainty that the employer-employee relationship where they executed written confessions without the
has formally ceased thereby precluding the possibility benefit of counsel. On March 30, 1994, Roquero and
of reinstatement. In the meantime, the illegally Pabayo received a “notice of administrative charge”
dismissed employee's entitlement to backwages, 13th for violating the PAL Code of Discipline. They were
month pay, and other benefits subsists. Until the required to answer the charges and were placed under
payment of separation pay is carried out, the employer preventive suspension.
should not be allowed to remain unpunished for the
delay, if not outright refusal, to immediately execute In a Memorandum dated July 14, 1994, Roquero and
the reinstatement aspect of the labor arbiter's Pabayo were dismissed by PAL. Thus, they filed a case
decision. for illegal dismissal.

The records of this case are bereft of any indication The Labor Arbiter found both parties at fault – PAL for
that respondents were actually reinstated to their applying means to entice the complainants into
previous jobs or to the company payroll. Instead, they committing the infraction and the complainants for
were given, albeit with much resistance from giving in to the temptation and eventually indulging in
petitioners, the full amount of the money judgment the prohibited activity. Nonetheless, the Labor Arbiter
stated in the 28 February 2000 decision of the labor awarded separation pay and attorney’s fees to the
arbiter, inclusive of separation pay, more than two complainants.
years after the labor arbiter had issued his decision on
the illegal dismissal case filed by respondents. As the The NLRC ruled in favor of complainants as it likewise
law clearly requires petitioners to pay respondents' found PAL guilty of instigation. It ordered
backwages until actual reinstatement, we resolve that reinstatement to their former positions but without
petitioners are still liable to respondents for accrued backwages. PAL however did not reinstate Roquero in
backwages and other benefits from 25 February 2000 view of the appeal pending with CA.
until 16 December 2002, the day before the labor
arbiter ordered the release to respondents of ISSUE
P603,794.77 representing the full satisfaction of 28 Is PAL’s refusal to reinstate Roquero justified?
February 2000 judgment, including separation pay.
Nor can we give credence to petitioners claim that HELD
they could not reinstate respondents as the latter had NO. The order of reinstatement is immediately
already found jobs elsewhere. It is worthy to note executory. The unjustified refusal of the employer to
here that respondents were minimum wage earners reinstate a dismissed employee entitles him to
who were left with no choice after they were illegally payment of his salaries effective from the time the
dismissed from their employment but to seek new employer failed to reinstate him despite the issuance
employment in order to earn a decent living. Surely, of a writ of execution. Unless there is a restraining
we could not fault them for their perseverance in order issued, it is ministerial upon the Labor Arbiter
looking for and eventually securing new employment to implement the order of reinstatement. In the case at
opportunities instead of remaining idle and awaiting bar, no restraining order was granted. Thus, it was
the outcome of this case. mandatory on PAL to actually reinstate Roquero or
reinstate him in the payroll. Having failed to do so, PAL 171 GARCIA V. PAL (JANUARY 20, 2009)
must pay Roquero the salary he is entitled to, as if he
was reinstated, from the time of the decision of the CARPIO MORALES, J.
NLRC until the finality of the decision of this Court.
We reiterate the rule that technicalities have no room FACTS
in labor cases where the Rules of Court are applied The case stemmed from the administrative charge
only in a suppletory manner and only to effectuate the filed by PAL against its employees-herein petitioners
objectives of the Labor Code and not to defeat them. after they were allegedly caught in the act of sniffing
Hence, even if the order of reinstatement of the Labor shabu when a team of company security personnel
Arbiter is reversed on appeal, it is obligatory on the and law enforcers raided the PAL Technical Center's
part of the employer to reinstate and pay the wages of Toolroom Section on July 24, 1995.
the dismissed employee during the period of appeal
until reversal by the higher court. On the other hand, After due notice, PAL dismissed petitioners on
if the employee has been reinstated during the appeal October 9, 1995 for transgressing the PAL Code of
period and such reinstatement order is reversed with Discipline, prompting them to file a complaint for
finality, the employee is not required to reimburse illegal dismissal and damages which was, by Decision
whatever salary he received for he is entitled to such, of January 11, 1999, resolved by the Labor Arbiter in
more so if he actually rendered services during the their favor, thus ordering PAL to, inter alia,
period. immediately comply with the reinstatement aspect of
the decision.
IN VIEW WHEREOF, the dismissal of petitioner
Roquero is AFFIRMED, but respondent PAL is ordered Prior to the promulgation of the Labor Arbiter's
to pay the wages to which Roquero is entitled from the decision, the Securities and Exchange Commission
time the reinstatement order was issued until the (SEC) placed PAL (hereafter referred to as
finality of this decision. respondent), which was suffering from severe
financial losses, under an Interim Rehabilitation
Receiver, who was subsequently replaced by a
Permanent Rehabilitation Receiver on June 7, 1999.

ISSUE
May petitioners collect their wages during the
period between the Labor Arbiter's order of
reinstatement pending appeal and the NLRC
decision overturning that of the Labor Arbiter,
now that respondent has exited from
rehabilitation proceedings.

HELD
ORDINARILY YES. BUT IN VIEW OF THE PECULIAR
CIRCUMSTANCES (as discussed below) the Court
resolved the issue in the negative. The provision of
Article 223 is clear that an award [by the Labor
Arbiter] for reinstatement shall be immediately
executory even pending appeal and the posting of a
bond by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious,
i.e., to make an award of reinstatement immediately
enforceable, even pending appeal. To require the
application for and issuance of a writ of execution
as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to
the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. The
reason is simple. An application for a writ of execution
and its issuance could be delayed for numerous The new NLRC Rules of Procedure, which took effect
reasons. A mere continuance or postponement of a on January 7, 2006, now require the employer to
scheduled hearing, for instance, or an inaction on the submit a report of compliance within 10 calendar days
part of the Labor Arbiter or the NLRC could easily from receipt of the Labor Arbiter's decision,
delay the issuance of the writ thereby setting at naught disobedience to which clearly denotes a refusal to
the strict mandate and noble purpose envisioned by reinstate. The employee need not file a motion for the
Article 223. In other words, if the requirements of issuance of the writ of execution since the Labor
Article 224 [including the issuance of a writ of Arbiter shall thereafter motu proprio issue the writ.
execution] were to govern, as we so declared in With the new rules in place, there is hardly any
Maranaw, then the executory nature of a difficulty in determining the employer's
reinstatement order or award contemplated by Article intransigence in immediately complying with the
223 will be unduly circumscribed and rendered order.
ineffectual. In enacting the law, the legislature is In the case at bar, petitioners exerted efforts to
presumed to have ordained a valid and sensible law, execute the Labor Arbiter's order of reinstatement
one which operates no further than may be necessary until they were able to secure a writ of execution,
to achieve its specific purpose. Statutes, as a rule, are albeit issued on October 5, 2000 after the reversal by
to be construed in the light of the purpose to be the NLRC of the Labor Arbiter's decision. Technically,
achieved and the evil sought to be remedied. x x x In there was still actual delay which brings to the
introducing a new rule on the reinstatement aspect of question of whether the delay was due to respondent's
a labor decision under Republic Act No. 6715, unjustified act or omission.
Congress should not be considered to be indulging in
mere semantic exercise. x x x It is apparent that there was inaction on the part of
respondent to reinstate them, but whether such
The Court reaffirms the prevailing principle that even omission was justified depends on the onset of the
if the order of reinstatement of the Labor Arbiter is exigency of corporate rehabilitation.
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the It is settled that upon appointment by the SEC of a
dismissed employee during the period of appeal until rehabilitation receiver, all actions for claims before
reversal by the higher court. It settles the view that the any court, tribunal or board against the corporation
Labor Arbiter's order of reinstatement is immediately shall ipso jure be suspended. As stated early on, during
executory and the employer has to either re-admit the pendency of petitioners' complaint before the
them to work under the same terms and conditions Labor Arbiter, the SEC placed respondent under an
prevailing prior to their dismissal, or to reinstate them Interim Rehabilitation Receiver. After the Labor
in the payroll, and that failing to exercise the options Arbiter rendered his decision, the SEC replaced the
in the alternative, employer must pay the employee's Interim Rehabilitation Receiver with a Permanent
salaries. Rehabilitation Receiver.

HOWEVER, Case law recognizes that unless there is a restraining
order, the implementation of the order of
After the labor arbiter's decision is reversed by a reinstatement is ministerial and mandatory. This
higher tribunal, the employee may be barred from injunction or suspension of claims by legislative fiat
collecting the accrued wages, if it is shown that the partakes of the nature of a restraining order that
delay in enforcing the reinstatement pending appeal constitutes a legal justification for respondent's non-
was without fault on the part of the employer. compliance with the reinstatement order.
Respondent's failure to exercise the alternative
The test is two-fold: (1) there must be actual delay or options of actual reinstatement and payroll
the fact that the order of reinstatement pending reinstatement was thus justified. Such being the case,
appeal was not executed prior to its reversal; and (2) respondent's obligation to pay the salaries pending
the delay must not be due to the employer's appeal, as the normal effect of the non-exercise of the
unjustified act or omission. If the delay is due to the options, did not attach.
employer's unjustified refusal, the employer may still
be required to pay the salaries notwithstanding the While reinstatement pending appeal aims to avert the
reversal of the Labor Arbiter's decision. continuing threat or danger to the survival or even the
life of the dismissed employee and his family, it does
not contemplate the period when the employer-
corporation itself is similarly in a judicially monitored
state of being resuscitated in order to survive.
The parallelism between a judicial order of
corporation rehabilitation as a justification for the
non-exercise of its options, on the one hand, and a
claim of actual and imminent substantial losses as
ground for retrenchment, on the other hand, stops at
the red line on the financial statements. Beyond the
analogous condition of financial gloom, as discussed
by Justice Leonardo Quisumbing in his Separate
Opinion, are more salient distinctions. Unlike the
ground of substantial losses contemplated in a
retrenchment case, the state of corporate
rehabilitation was judicially pre-determined by a
competent court and not formulated for the first time
in this case by respondent.

More importantly, there are legal effects arising from
a judicial order placing a corporation under
rehabilitation. Respondent was, during the period
material to the case, effectively deprived of the
alternative choices under Article 223 of the Labor
Code, not only by virtue of the statutory injunction but
also in view of the interim relinquishment of
management control to give way to the full exercise of
the powers of the rehabilitation receiver. Had there
been no need to rehabilitate, respondent may have
opted for actual physical reinstatement pending
appeal to optimize the utilization of resources. Then
again, though the management may think this wise,
the rehabilitation receiver may decide otherwise, not
to mention the subsistence of the injunction on claims.

In sum, the obligation to pay the employee's salaries
upon the employer's failure to exercise the alternative
options under Article 223 of the Labor Code is not a
hard and fast rule, considering the inherent
constraints of corporate rehabilitation.

RESIGNATION but within organizations as well, including work sites.
An employee is expected to extend due respect to
172 PHILIPPINES TODAY INC. V. NLRC (JANUARY management, the employer being the "proverbial hen
30, 1997) that lays the golden egg,” so to speak. An aggrieved
employee who wants to unburden himself of his
PANGANIBAN, J. disappointments and frustrations in his job or
relations with his immediate superior would normally
FACTS approach said superior directly or otherwise ask some
On October 20, 1988, Respondent Alegre filed a other officer possibly to mediate and discuss the
request for a thirty-day leave of absence effective on problem with the end in view of settling their
the same date, citing the advice of his personal differences without causing ferocious conflicts. No
physician for him to undergo further medical matter how the employee dislikes his. employer
consultations abroad. Four days later, on October 24, professionally, and even if he is in a confrontational
1988, he wrote a "Memorandum for File” addressed to disposition, he cannot afford to be disrespectful and
Petitioner Betty Go-Belmonte with copies furnished to dare to talk with an unguarded tongue and/or with a
members of the board of directors of PTI. Betty Go baleful pen. Here, respondent Alegre was anything but
Belmonte replied through a letter informing Alegre of respectful and polite. His memorandum is too
the Board’s acceptance of his resignation. The affrontive, combative and confrontational. It certainly
following day, Respondent Alegre wrote Petitioner causes resentment, even when read by an objective
Belmonte expressing surprise over the acceptance of reader. His incendiary words and sarcastic remarks
his "resignation" as stated in the above-quoted letter. negate any desire to improve work relations with
On May 17, 1989, Respondent Alegre filed a complaint Petitioner Soliven and other PTI executives. Such
for illegal dismissal and damages against herein strongly worded letter constituted an act of "burning
petitioners. his bridges" with the officers of the company.

ISSUE Commonsense dictates that Alegre meant to resign
Did the Memorandum for File Constitute when he wrote the memorandum. Otherwise, he
Voluntary Resignation? should have used a more tempered language and a less
confrontational tone. Moreover, he held a position of
HELD evident responsibility requiring the utmost
YES. After a thorough scrutiny of the Memorandum for confidence of his immediate superior. As assistant to
File of Respondent Alegre and a careful deliberation the publisher doing, in his very own words,
on the peculiar circumstances attendant to its writing "administration and operations functions, apart from
and the antecedent, contemporaneous and (my) journalistic duties," it is apparent that Alegre was
subsequent actions of private respondent, we hold not employed simply for his writing skills. Top
that said memorandum juridically constituted a letter management certainly reposed full trust and
of resignation. confidence in him and placed him in a position of
considerable management influence. The use of
Alegre's choice of words and way of expression betray offensive language can only mean expression of
his allegation that the memorandum was simply an disloyalty and disrespect. It renders the writer
"opportunity to open the eyes of (Petitioner) unworthy of the trust and confidence demanded by his
Belmonte to the work environment in petitioners' position. It is beyond human nature to expect two
newspaper with the end in view of persuading (her) to persons with underlying mistrust in each other to
take a hand at improving said environment." continue to work together effectively, not to say,
Apprising his employer (or top-level management) of harmoniously.
his frustrations in his job and differences with his
immediate superior is certainly not done in an The conclusion is inevitable that he had more than
abrasive, offensive and disrespectful manner. A enough sense to anticipate the consequences and
cordial or, at the very least, civil attitude, according effects of his words and actions. Indeed, what a man
due deference to one's superiors, is still observed, sows, he reaps.
especially among high-ranking management officers.
The Court takes judicial notice of the Filipino values of Side Issue: May a Resignation Be Unilaterally
pakikisama and paggalang which are not only Withdrawn?
prevalent among members of a family and community
NO. Resignations, once accepted, may not be
withdrawn without the consent of the employer. If the
employer accepts the withdrawal, the employee
retains his job. If the employer does not, the employee
cannot claim illegal dismissal. To say that an employee
who has resigned is illegally dismissed, is to encroach
upon the right of employers to hire persons who will
be of service to them.

Obviously, this is a recognition of the contractual
nature of employment which requires mutuality of
consent between the parties. An employment contract
is consensual and voluntary. Hence, if the employee
"finds-himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the
exigency of the service, then he has no other choice but
to disassociate himself from his employment”. If
accepted by the employer, the consequent effect of
resignation is severance of the contract of
employment.

A resigned employee who desires to take his job back
has to re-apply therefor and he shall have the status of
a stranger who cannot unilaterally demand an
appointment. He cannot arrogate unto himself the
same position which he earlier decided to leave. To
allow him to do so would be to deprive the employer
of his basic right to choose whom to employ. Such is
tantamount to undue oppression of the employer. It
has been held that an employer is free to regulate,
according to his own discretion and judgment, all
aspects of employment including hiring. The law, in
protecting the rights of the laborer, impels neither the
oppression nor self-destruction of the employer.

Consistent with our ruling in Intertrod, the resignation
of respondent Alegre after its acceptance by
petitioners can no longer be withdrawn without the
consent of the latter. In fairness to the employer, an
employee cannot backtrack on his resignation at his
whim and without the conformity of the former.

RETIREMENT management. The questioned retirement provisions
cannot be deemed as an imposition foisted on the
173 PAL V. AIRLINE PILOTS OF THE PHILIPPINES Union, which very well had the right to have refused
(JANUARY 15, 2002) to agree to allowing management to retire retire
employees with at least 20 years of service.
YNARES-SANTIAGO, J. It should not be taken to mean that retirement
provisions agreed upon in the CBA are absolutely
FACTS beyond the ambit of judicial review and nullification.
On June 13, 1998, the Secretary issued the assailed A CBA, as a labor contract, is not merely contractual in
order upholding PAL’s action of unilaterally retiring nature but impressed with public interest. If the
Captain Collantes and recognizing the same as a valid retirement provisions in the CBA run contrary to law,
exercise of its option under Section 2, Article VII, of the public morals, or public policy, such provisions may
1967 PAL-ALPAP Retirement Plan. The Secretary very well be voided. Certainly, a CBA provision or
further ordered that the basis of the computation of employment contract that would allow management
Captain Collantes’ retirement benefits should be to subvert security of tenure and allow it to
Article 287 of the Labor Code (as amended by Republic unilaterally "retire" employees after one month of
Act No. 7641) and not Section 2, Article VII, of the PAL- service cannot be upheld. Neither will the Court
ALPAP Retirement Plan. The Secretary added that in sustain a retirement clause that entitles the retiring
the exercise of its option to retire pilots, PAL should employee to benefits less than what is guaranteed
first consult the pilot concerned before implementing under Article 287 of the Labor Code, pursuant to the
his retirement. provision's express proviso thereto in the provision.

ISSUE Yet the CBA in the case at bar contains no such
Should petitioner consult the pilot concerned infirmities which must be stricken down. There is no
before exercising its option to retire pilots? essential difference between the CBA provision in this
case and those we affirmed in Pantranco and
HELD Progressive. Twenty years is a more than ideal length
NO. Article 287 of the Labor Code provides: of service an employee can render to one employer.
Under ordinary contemplation, a CBA provision
Art. 287. Retirement. – Any employee may be retired entitling an employee to retire after 20 years of service
upon reaching the retirement age established in the and accordingly collect retirement benefits is "reward
collective bargaining agreement or other applicable for services rendered since it enables an employee to
employment contract. reap the fruits of his labor - particularly retirement
benefits, whether lump-sum or otherwise - at an
Thus, retirement of an employee may be done upon earlier age, when said employee, in presumably better
initiative and option of the management. And where physical and mental condition, can enjoy them better
there are cases of voluntary retirement, the same is and longer."
effective only upon the approval of management.

Surely, the requirement to consult the pilots prior to
their retirement defeats the exercise by management
of its option to retire the said employees. It gives the
pilot concerned an undue prerogative to assail the
decision of management. Due process only requires
that notice be given to the pilot of petitioner’s decision
to retire him. Hence, the Secretary of Labor
overstepped the boundaries of reason and fairness
when he imposed on petitioner the additional
requirement of consulting each pilot prior to retiring
him.

By their acceptance of the CBA, the Union and its
members are obliged to abide by the commitments
and limitations they had agreed to cede to
174 PROGRESSIVE DEVELOPMENT CORPORATION service, said policy is within the bounds contemplated by
V. NLRC (OCTOBER 30, 2000) the Labor Code. Moreover, the manner of computation
of retirement benefits depends on the stipulation
BELLOSILLO, J. provided in the company retirement plan.”

FACTS This pronouncement made by no less than the DOLE
In 1980 PDC implemented its Employees' Non- must be given substantial weight, as what the Labor
Contributory Retirement Plan (The Plan) which took Arbiter did, in the absence of any contrary evidence.
effect on 1 April 1980. Thereafter, a number of Moreover, the undisputed fact that a number of
employees was retired pursuant to the optional employees of petitioner company had availed of The
retirement provision of The Plan - Section 3. Optional Plan since its effectivity only confirms that The Plan
Retirement. - Any participant with twenty (20) years has already been part of the employment contract of
of service, regardless of age, may be retired at his petitioner company for a long time. Private
option or at the option of the Company and shall be respondents, particularly Andres, may not now feign
entitled to the following benefits x x x x ignorance of The Plan considering that she was the
chairman of the union of rank-and-file employees of
On 8 October 1990, Department of Labor and petitioner company and, as such, was considered to be
Employment, confirmed the validity of The Plan, familiar with the policies of the company.
particularly its provision on optional retirement.
Obviously, private respondents failed to substantiate
On 28 November 1994 PDC notified its employees their allegation that The Plan was invalid.
who had rendered more than twenty (20) years of
service in the Company of its decision to retire them
effective 31 December 1994. On 7 December 1994,
Jose Riego and private respondent Rholanda Andres,
two (2) of those who were retired (management
compulsorily retired these two employees with more
than 20 years of service, at the ages of 45 and 38), filed
a complaint for illegal retirement and unfair labor
practices against petitioners. They contended that
their retirement from PDC was done by the latter as a
retaliatory measure for their union activities. They
assailed the validity of The Plan under which they
were retired claiming lack of knowledge thereof
absent any collective bargaining agreement and any
applicable employment contract.

ISSUE
Is the Retirement Plan valid?

HELD
YES. The retirement plan under which private
respondents were retired is valid for it forms part of
the employment contract of petitioner company.
Director Augusto G. Sanchez of the Bureau of Working
Conditions of the DOLE recognized and affirmed the
validity of The Plan. Thus:

“Considering therefore the fact that your client's
retirement plan now forms part of the employment
contract since it is made known to the employees and
accepted by them, and such plan has an express
provision that the company has the choice to retire an
employee regardless of age, with twenty (20) years of
175 CAINTA CATHOLIC SCHOOL V. CAINTA be met by the employer validly exercising the
CATHOLIC SCHOOL EMPLOYEES UNION (MAY 4, prerogative to dismiss for just or authorized causes. In
2006) those two instances, it is

TINGA, J. indispensable that the employer establish the
existence of just or authorized causes for dismissal as
FACTS spelled out in the Labor Code. Retirement, on the other
On 15 October 1993, the School retired Llagas and hand, is the result of a bilateral act of the parties, a
Javier, who had rendered more than twenty (20) years voluntary agreement between the employer and the
of continuous service, pursuant to Section 2, Article X employee whereby the latter after reaching a certain
of the CBA, to wit: age agrees and/or consents to sever his employment
with the former.
An employee may be retired, either upon application
by the employee himself or by the decision of the Article 287 of the Labor Code, as amended, governs
Director of the School, upon reaching the age of sixty retirement of employees, stating: “Any employee may
(60) or after having rendered at least twenty (20) be retired upon reaching the retirement age
years of service to the School the last three (3) years established in the collective bargaining agreement or
of which must be continuous. other applicable employment contract (see codal for
complete provision).”
On 27 July 1994, the Union filed a complaint for unfair
labor practice before the NLRC. The Union argues that The exercise by management of its retirement
the retirement of the two union officers is a mere prerogative is less susceptible to dubitability as to the
subterfuge to bust the union. For its part, the School question whether an employee could be validly
avers that the retirement of Llagas and Javier was retired. The only factual matter to consider then is
clearly in accordance with a specific right granted whether the employee concerned had attained the
under the CBA. Clearly, the CBA provision allows the requisite age or number of years in service pursuant
employee to be retired by the School even before to the CBA or employment agreement, or if none,
reaching the age of 60, provided that he/she had pursuant to Article 287 of the Labor Code. In fact, the
rendered 20 years of service. question of the amount of retirement benefits is more
likely to be questioned than the retirement itself.
ISSUE Evidently, it more clearly emerges in the case of
Would such a stipulation be valid? retirement that management would anyway have the
right to retire an employee, no matter the degree of
HELD involvement of said employee in union activities.
YES. The main issue for resolution hinges on the
validity of a stipulation in a Collective Bargaining
Agreement (CBA) that allows management to retire an
employee in its employ for a predetermined lengthy
period but who has not yet reached the minimum
compulsory retirement age provided in the Labor
Code. Jurisprudence has answered the question in the
affirmative a number of times and our duty calls for
the application of the principle of stare decisis.

Pursuant to the existing CBA, the School has the option
to retire an employee upon reaching the age limit of
sixty (60) or after having rendered at least twenty (20)
years of service to the School, the last three (3) years
of which must be continuous. Retirement is a different
specie of termination of employment from dismissal
for just or authorized causes under Articles 282 and
283 of the Labor Code. While in all three cases, the
employee to be terminated may be unwilling to part
from service, there are eminently higher standards to
176 JACULBE V. SILIMAN UNIVERSITY (MARCH 16, imposition of a retirement age below the compulsory
2007) age of 65 was deemed acceptable because this was
part of the CBA between the employer and the
CORONA, J. employees. The consent of the employees, as
represented by their bargaining unit, to be
FACTS
Sometime in 1958, petitioner began working for retired even before the statutory retirement age of 65
respondent's university medical center as a nurse. was laid out clearly in black and white and was
therefore in accord with Article 287.
In a letter dated December 3, 1992, respondent,
through its Human Resources Development Office, In this case, neither the CA nor the respondent cited
informed petitioner that she was approaching her any agreement, collective or otherwise, to justify the
35th year of service with the university and was due latter's imposition of the early retirement age in its
for automatic retirement on November 18, 1993, at retirement plan, opting instead to harp on petitioner's
which time she would be 57 years old. This was alleged "voluntary" contributions to the plan, which
pursuant to respondent's retirement plan for its was simply untrue. The truth was that petitioner had
employees which provided that its members could be no choice but to participate in the plan, given that the
automatically retired "upon reaching the age of 65 or only way she could refrain from doing so was to resign
after 35 years of uninterrupted service to the or lose her job. It is axiomatic that employer and
university.” Respondent required certain documents employee do not stand on equal footing, a situation
in connection with petitioner's impending retirement. which often causes an employee to act out of need
instead of any genuine acquiescence to the employer.
Petitioner emphatically insisted that the compulsory This was clearly just such an instance.
retirement under the plan was tantamount to a
dismissal and pleaded with respondent to be allowed Not only was petitioner still a good eight years away
to work until the age of 60 because this was the from the compulsory retirement age but she was also
minimum age at which she could qualify for SSS still fully capable of discharging her duties as shown
pension. But respondent stood pat on its decision to by the fact that respondent's board of trustees
retire her, citing "company policy.” seriously considered rehiring her after the effectivity
of her "compulsory retirement.
On November 15, 1993, petitioner filed a complaint in
the National Labor Relations Commission (NLRC) for As already stated, an employer is free to impose a
"termination of service with preliminary injunction retirement age less than 65 for as long as it has the
and/or restraining order.” On November 18, 1993, employees' consent. Stated conversely, employees are
respondent compulsorily retired petitioner. free to accept the employer's offer to lower the
retirement age if they feel they can get a better deal
ISSUE with the retirement plan presented by the employer.
Is petitioner bound under the retirement Thus, having terminated petitioner solely on the basis
contract? of a provision of a retirement plan which was not
freely assented to by her, respondent was guilty of
HELD illegal dismissal.
NO. The retirement plan came into being in 1970 or 12
years after petitioner started working for respondent. At this point, reinstatement is out of the question.
In short, it was not part of the terms of employment to Petitioner is now 71 years old and therefore well over
which petitioner agreed when she started working for the statutory compulsory retirement age. For this
respondent. Neither did it become part of those terms reason, we grant her separation pay in lieu of
shortly thereafter, as the CA would have us believe. reinstatement. It is also for this reason that we modify
the award of backwages in her favor, to be computed
Retirement is the result of a bilateral act of the parties, from the time of her illegal dismissal on November 18,
a voluntary agreement between the employer and the 1993 up to her compulsory retirement age.
employee whereby the latter, after reaching a certain
age agrees to sever his or her employment with the
former. In Pantranco North Express, Inc. v. NLRC, to
which both the CA and respondent refer, the
177 ORO ENTERPRISES V. NLRC (NOVEMBER 14, half (1/2) month salary for every year of service, a
1994) fraction of at least six (6) months being considered as
one whole year.
VITUG, J.
Unless the parties provide for broader inclusions, the
FACTS term "one half (1/2) month salary" shall mean fifteen
a On 26 September 1990, private respondent filed her (15) days plus one twelfth (1/12) of the 13th month
complaint with the Office of the Labor Arbiter pay and the cash equivalent of not more than five (5)
(docketed as NLRC Case No. 00-09-05167-90). In her days of service incentive leaves.
position paper, she reiterated . . . that she has been
employed and faithfully worked for petitioner Violation of this provision is hereby declared unlawful
continuously for forty-one (41) years until she and subject to the penal provisions under Article 288
reached the age of 65 on 19 August 1990; that when of this Code.
she requested petitioner for her "retirement or
termination pay," the President of the company On 22 March 1993, the NLRC rendered its decision
refused to comply; and that the lot being offered to her awarding to private respondent a retirement pay on
which is located in Bulacan would not meet her basic the basis of Republic Act 7641.
needs for subsistence in the remaining years of her
life.” ISSUE
The pivotal issue is whether or not R.A. 7641 can
On 04 October 1990, petitioner filed its own position favorably apply to private respondent's case.
paper, stating that . . . private respondent was not
dismissed from the service but voluntarily stopped HELD
working on September 15, 1990; that it has no YES. RA 7641 is undoubtedly a social legislation. The
collective bargaining agreement or any other law has been enacted as a labor protection measure
agreement or established policy concerning payment and as a curative statute that — absent a retirement
of retirement benefits to employees who reach a plan devised by, an agreement with, or a voluntary
certain age except that which is required by the Social grant from, an employer — can respond, in part at
Security Law; that it has not agreed, whether expressly least, to the financial well-being of workers during
or impliedly, to pay any retirement benefit to private their twilight years soon following their life of labor.
respondent or any of its employees; and that in Llora There should be little doubt about the fact that the law
Motors case this Honorable Court . . . ruled that can apply to labor contracts still existing at the time the
payment of retirement benefits cannot be required in statute has taken effect, and that its benefits can be
the absence of a collective bargaining agreement or reckoned not only from the date of the law's
other contractual basis or any established employer enactment but retroactively to the time said
policy providing the grant of such retirement benefits. employment contracts have started.

During the pendency of the appeal TO NLRC, or on 07 On this score, the case of Allied Investigation Bureau,
January 1993, Republic Act ("R.A.") No. 7641 took Inc., vs. Ople, 91 SCRA 265, finds strong relevance:
effect, providing among other things, thusly: There is no question that petitioner had agreed to
grant retirement benefits to private respondent. It
Art. 287. Retirement. — Any employee may be retired would, however, limit such retirement benefits only
upon reaching the retirement age established in the from the date of the effectivity of the Labor Code. That
collective bargaining agreement or other applicable is its contention. The refutation given in the Comment
employment contract. of Solicitor General Estelito P. Mendoza is persuasive.
As was pointed out, "in the computation thereof,
In the absence of a retirement plan or agreement public respondents acted judiciously in reckoning the
providing for retirement benefits of employees in the retirement pay from the time private respondent
establishment, an employee upon reaching the age of started working with petitioner since respondent
sixty (60) years or more, but not beyond sixty five (65) employee's application for retirement benefits and the
years which is hereby declared the compulsory company's approval of the same make express
retirement age, who has served at least five (5) years mention of Sections 13 and 14, Rule 1, Book VI of the
in the said establishment, may retire and shall be Implementing Rules and Regulations of the Labor
entitled to retirement pay equivalent to at least one Code as the basis for retirement pay. Section 14 (a) of
said rule provides that an employee who is retired 178 UE V. UE FACULTY ASSOCIATION (JULY 31,
pursuant to a bona-fide retirement plan or in 1987)
accordance with the applicable individual or collective
agreement or established employer policy shall be GUTIERREZ, JR., J.
entitled to all the retirement benefits provided therein
or to termination pay equivalent to at least one-half FACTS
month salary for every year of service, whichever is On April 23, 1983 and May 4, 1983, the then president
higher, a fraction of at least six (6) months being of the University of the East (UE) announced the
considered as one whole year.'' Further it was stated: phase-out of the College of Secretarial Education and
"This position taken by public respondents squares the High School Department respectively, starting
with the principle that social legislation should be with the school year 1983-1984 on the grounds of lack
interpreted in favor of workers in the light of the of economic viability and financial losses.
Constitutional mandate that the State shall afford
protection to labor.” On September 25, 1985, the respondent Minister ruled
that the phase-out of the two departments was
Petitioner's insistence that the retirement benefits arbitrary and that the accrued benefits under the
should date only from the time that the present Labor collective bargaining agreement (CBA) are not
Code came into force could be based on the affected by the phase-out of the two
assumption that it should not be given a retroactive departments. Hence, the petitioner is liable for the
effect. That would be to ignore the well-settled payment of separation pay in addition to the payment
principle that police power legislation intended to of retirement benefits to those entitled under the CBA.
promote public welfare applies to existing contracts. It
was held in Ongsiako v. Gamboa, decided in 1950, that The petitioner maintains that there can only be one
a police power measure being remedial in character mode of termination of employment with respect to
covers existing situations; otherwise, it would be self- one and the same employee. It argues that the faculty
defeating. Abe v. Foster Wheeler Corporation, this members of the phased out departments cannot be
Court, speaking through Justice Barrera, is even more considered retired and, therefore, entitled to retire-
in point. In that case, the contracts of employment ment benefits and at the same time retrenched with
were entered into at a time when there was no law the right to separation pay. In short, it maintains that
granting the workers said right. Such being the case, it the award of separation pay pursuant to the
was then contended that the application as to them of Termination Pay Law necessarily excludes retirement
the subsequent enactment would amount to an benefits.
impairment of contractual obligations. In refuting
such a view, it was made clear in the opinion that The public respondent argues that the faculty
"constitutional guaranty of non-impairment . . . is members affected by the phase-out were awarded
limited by the exercise of the police power of the State, separation pay because the petitioner failed to show
in the interest of public health, safety, morals and that their separation from employment was due to a
general welfare.” valid or authorized cause; while the award for
retirement benefits was by virtue of the provisions of
the CBA, regardless of the cause of separation.

ISSUE
Did the respondent Minister of Labor and
Employment commit grave abuse of discretion in
awarding both retirement benefits and separation
pay to the faculty members affected by the phase-
out.

HELD
NO. If there is no provision contained in the collective
bargaining agreement to the effect that benefits
received under the Termination Pay Law shall
preclude the employee from receiving other benefits
from the agreement, then said employee is entitled to
the benefits embodied in the agreement in addition to 179 R&E TRANSPORT V. LATAG (FEBRUARY 13,
whatever benefits are mandated by statute. In the 2004)
case at bar, there is no such provision. We cannot
presume that it forms an implicit part of either the CBA PANGANIBAN, J.
or the law. Separation pay arising from a forced
termination of employment and benefits given as a FACTS
contractual right due to many years of faithful service Petitioners do not dispute the fact that the late Pedro
are not necessarily antagonistic to each other, M. Latag is entitled to retirement benefits. Rather, the
especially where there are strong equitable bone of contention is the number of years that he
considerations as in this case. should be credited with in computing those benefits.
On the one hand, we have the findings of the labor
Clearly, the only situation contemplated in the parties’ arbiter, which the CA affirmed. According to those
CBA wherein an employee shall be precluded from findings, the 23 years of employment of Pedro with La
receiving retirement benefits is when said employee is Mallorca Taxi must be added to his 14 years with R &
not separated from service but transferred instead E Transport, Inc., for a total of 37 years. On the other,
from one college or department to another. There is we also have the findings of the NLRC that Pedro must
no provision to the effect that teachers who are be credited only with his service to R & E Transport,
forcibly dismissed are not entitled to retirement Inc., because the evidence shows that the
benefits if the MOLE awards them separation aforementioned companies are two different entities.
pay. Furthermore, since the above provision has
become in effect part of the petitioner's policy, the ISSUE
same should be enforced separately from the (1) Should the grant cover a total of 37 years?
provisions of the Termination Pay Law.
(2) How should his retirement benefits be
computed?

HELD
(1) YES. Respondent has not shown by competent
evidence that one taxi company had stock control and
complete domination over the other or vice versa. In
fact, no evidence was presented to show the alleged
renaming of “La Mallorca Taxi” to “R & E Transport,
Inc.” The seven-year gap between the time the former
closed shop and the date when the latter came into
being also casts doubt on any alleged intention of
petitioners to commit a wrong or to violate a statutory
duty. This lacuna in the evidence compels us to reverse
the Decision of the CA affirming the labor arbiter’s
finding of fact that the basis for computing Pedro’s
retirement pay should be 37 years, instead of only 14
years.

(2) Article 287 of the Labor Code, as amended by
Republic Act No. 7641, provides:

“Art. 287. Retirement.
“In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years
in said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at 180 SALOMON ET AL V. ASSOCIATION OF
least six (6) months being considered as one whole year. INTERNATIONAL SHIPPING LINES (APRIL 26,
2005)
“Unless the parties provide for broader inclusions, the
term one half-month salary shall mean fifteen (15) days SANDOVAL-GUTIERREZ, J.
plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service FACTS
incentive leaves. As a result of a decline in the volume of cargo
measuring activities and shipping transactions,
The rules implementing the New Retirement Law respondent adopted an organizational streamlining
similarly provide the above-mentioned formula for program that resulted in the closure of its Measuring
computing the one-half month salary. Since Pedro was Department and retrenchment or termination from
paid according to the “boundary” system, he is not the service of seventeen (17) workers. Aggrieved,
entitled to the 13th month and the service incentive petitioners filed with the NCMB a complaint for illegal
pay; hence, his retirement pay should be computed on dismissal and payment of retirement benefits against
the sole basis of his salary. respondent.

It is accepted that taxi drivers do not receive fixed During the conciliation proceedings, respondent paid
wages, but retain only those sums in excess of the petitioners their retirement pay at the rate of 1
“boundary” or fee they pay to the owners or operators month salary per year of service. After having been
of their vehicles. Thus, the basis for computing their paid their retirement pay, they executed and signed
benefits should be the average daily income. In this separate Releases and Quitclaims. Consequently, the
case, the CA found that Pedro was earning an average above case was considered closed and terminated.
of five hundred pesos (P500) per day. We thus
compute his retirement pay as follows: P500 x 15 days Surprisingly, petitioners filed with the Labor Arbiter a
x 14 years of service equals P105,000. Compared with complaint for payment of retirement benefits,
this amount, the P38,850 he received, which damages and attorney’s fees against respondent. They
represented just over one third of what was legally alleged that what each received was a separation pay,
due him, was unconscionable. not retirement benefits.

ISSUE
Are the petitioners still entitled to retirement
benefits despite having received separation pay?

HELD
NO. Obviously, petitioners, as prescribed by the
parties’ CBA, are entitled only to either the separation
pay, if they are terminated for cause, or optional
retirement benefits, if they rendered at least 15 years
of continuous services.

Here, petitioners were separated from the service
for cause. Consequently, pursuant to the CBA, what
each actually received is a separation pay. Accordingly
and considering their Releases and Quitclaims, they
are no longer entitled to retirement benefits.

It bears stressing that as held by the Labor Arbiter, the
NLRC and the Court of Appeals, there is no provision
in the parties’ CBA authorizing the grant to petitioners
of retirement benefits in addition to their
retrenchment pay; and that there is no indication that
they were forced by respondent to sign the Releases
and Quitclaims. Thus, their petition is DENIED.
181 E. RAZON V. NLRC (MAY 7, 1990) Services, Inc. for the payment of the disputed
retirement claim?
FERNAN, C.J.
HELD
FACTS (1) NO. It must be stressed that the words "upon the
On February 28, 1986, because of failing health and discretion of management" are not synonymous with
having qualified for compulsory retirement at age 65, absolute or unlimited discretion. In other words,
private respondent, then the company's chief management discretion may not be exercised
accountant, submitted a letter-request for arbitrarily or capriciously especially with regards to
retirement. Petitioners withheld action on said the implementation of the retirement plan. We believe
request pending completion of the audit of company that upon acceptance of employment, a contractual
books undertaken by the accounting firm of Sycip, relationship was established giving private
Gorres and Velayo. respondent an enforceable vested interest in the
retirement fund. Verily, the retirement scheme
In the course of such audit, petitioners discovered that became an integral part of his employment package
some books of account allegedly in the custody of and the benefits to be derived therefrom constituted
private respondent as chief accountant were missing. as it were a continuing consideration for services
As consequence thereof, petitioner Enrique Razon, Jr. rendered, as well as an effective inducement for
issued on March 19, 1986 a memorandum terminating remaining with the firm.
the services of private respondent on the ground of
loss of trust and confidence. Having rendered twenty years of service with
Metroport Services, Inc., it can be said that private
It is the perception of petitioners that management is respondent has already acquired a vested right to the
vested with discretion to approve or disapprove an retirement fund, a right which can only be withheld
employee's claim for retirement benefits. They anchor upon a clear showing of good and compelling reasons.
this view on Article II (B) of the Retirement Plan which
states that "(a)ny official and employee who is 65 In the case at bar, petitioners' rejection of the subject
years old, and upon discretion of management, shall claim cannot be justifiably sustained. The reported
be qualified or subject to compulsory retirement from loss of confidence was due to the disappearance of
the company with benefits as provided in this plan." certain books of account which petitioners directly
Thus, when petitioners discovered the loss of vital attributed to private respondent. Petitioners were
books of account while in private respondent's convinced that simply because private respondent
custody and found him "guilty of breach of trust as could not produce the needed books on demand, he
chief accountant", they claim to have a valid ground to was no longer worthy of their trust and
terminate private respondent's services and as a confidence. They abruptly dismissed him without
consequence to deny his claim for retirement pay. giving him a chance to explain his side. In short, there
was not the slightest pretense at fair play. Had
In further support of their refusal to give private petitioners been less hasty and conducted an
respondent his retirement benefits, petitioners investigation, they would have found out that on
argued that the discharged employee impliedly November 30, 1982, a fire gutted the western portion
withdrew his intention to retire when he joined of petitioners' warehouse in front of Pier 5, destroying
Marina Port Services, Inc. records, books, vouchers and general ledgers. The
circumstances surrounding the fire were duly
ISSUES investigated and reported to the Commissioner of
(1) May the petitioner deny private respondent of Internal Revenue. But whatever documents might
his retirement benefits on this interpretation? have been salvaged from that conflagration were
subsequently lost during the flood on July 25, 1985.
(2) Does having another employment imply a
withdrawal of an intention to retire? Thus, the resulting dismissal of private respondent
was in itself marked by arbitrariness and lack of due
(3) Should petitioner Razon in his capacity as process. Petitioners cannot now be allowed to use that
president and majority stockholder be held as their legal excuse for denying the employee's
solidarily liable with co-petitioner Metroport legitimate claim for retirement pay.

(2) NO. The fact that private respondent sought
employment elsewhere should not hinder him from
claiming his retirement benefits. It is an inexorable
fact that at 65 years, he reached the Mandatory age for
retirement and, therefore, qualified to retire. We have
here an ironic situation where instead of enjoying the
fruits of his retirement, private respondent was forced
to seek reemployment for his survival. Surely, private
respondent does not deserve such a pathetic end to his
long and faithful service with petitioners.

(3) YES. Under Sec. 31 of the Corporation Code,
"directors or trustees who willfully and knowingly
vote for or assent to patently unlawful acts of the
corporation or who are guilty of gross negligence or
bad faith in directing the affairs of the corporation x x
x shall be liable jointly and severally for all damages
resulting therefrom suffered by the corporation, its
Stockholders or members or other persons." The
manner of dismissal of private respondent by
petitioner Enrique Razon, Jr. smacks of high-
handedness, caprice and arbitrariness. No regard was
given to private respondent's long and faithful service
to the corporation, nor opportunity afforded him to
explain the loss imputed to him through a properly-
conducted investigation. The willingness and alacrity
on the part of petitioner Enrique Razon, Jr. to
terminate the services of private respondent without
taking into consideration private respondent's service
to the company and without affording him his right to
due process, to our mind, suffice to taint the act
complained of with bad faith.

PRESCRIPTION HELD
NO. The applicable law is Article 291 of the Labor
182 R. SERRANO V. CA, NLRC, MAERSK FILIPINOS Code: All money claims arising from employer-
AND A.P. MOLLER (AUGUST 15, 2001) employee relations accruing during the effectivity of
this Code shall be filed within three years from the
PUNO, J. time the cause of action accrued, otherwise they
shall be forever barred.”
FACTS
As petitioner was on board a ship most of the time, The pivotal question is when petitioner's cause of
respondent Maersk offered to send portions of action accrued for this will determine the reckoning
petitioner’s salary to his family in the Philippines. date of the three-year prescriptive period.
Petitioner agreed and from 1977 to 1978, he
instructed respondent Maersk to send money orders Petitioner contends that his cause of action accrued
to his family. only in 1993 when respondent A.P. Moller wrote to
him that its accounting records showed it had no
It appears that petitioner's family failed to receive the outstanding money orders and that his case was
money orders petitioner sent through respondent considered outdated. Thus, the three (3) year
Maersk. Upon learning this in 1978, petitioner prescriptive period should be counted from 1993 and
demanded that respondent Maersk pay him the not 1978 and since his complaint was filed in 1994, he
amounts the latter deducted from his salary. claims that it has not prescribed.
Respondent Maersk assured him that they would look
into the matter, then assigned him again to board one We agree. Petitioner's cause of action accrued in
of their vessels. November 1993 upon respondent Maersk's definite
denial of his money claims following this Court's
Whenever he returned to the Philippines, petitioner ruling in the similar case of Baliwag Transit , Inc. v.
would go to the office of respondent Maersk to follow Ople: It is settled jurisprudence that a cause of action
up his money claims but he would be told to return has three elements, to wit, (1) a right in favor of the
after several weeks as respondent Maersk needed plaintiff by whatever means and under whatever law
time to verify its records and to bring up the matter it arises or is created; (2) an obligation on the part of
with its principal employer, respondent A.P. Moller. the named defendant to respect or not to violate such
Meantime, respondent Maersk would hire him again right; and (3) an act or omission on the part of such
to board another one of their vessels for about a year. defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the
Finally, in October 1993, petitioner wrote to defendant to the plaintiff. The problem in the case at
respondent Maersk demanding immediate payment to bar is with the third element as the first two are
him of the total amount of the money orders deducted deemed established. We agree with private
from his salary from 1977 to 1978. On November 11, respondent that May 10, 1980, is the date when his
1993, respondent A.P. Moller replied to petitioner that cause of action accrued, for it was then that the
they keep accounting documents only for a certain petitioner denied his demand for reinstatement and so
number of years, thus data on his money claims from committed that act or omission "constituting a breach
1977 to 1978 were no longer available. Likewise, it of the obligation of the defendant to the plaintiff." The
was claimed that it had no outstanding money orders. earlier requests by him having been warded off with
A.P. Moller declined petitioner's demand for payment. indefinite promises, and the private respondent not
yet having decided to assert his right, his cause of
In April 1994, petitioner filed a complaint for action could not be said to have then already accrued.
collection of the total amount of the unsent money The issues had not yet been joined, so to speak. This
orders and illegal salary deductions against the happened only when the private respondent finally
respondent Maersk in the Philippine Overseas demanded reinstatement on May 2, 1980, and his
Employment Agency (POEA). The case was demand was categorically rejected by the petitioner
transferred to the NLRC. on May 10, 1980.”

ISSUE The facts in the case at bar are similar to the Baliwag
Has the claim of the petitioner prescribed? case. Petitioner repeatedly demanded payment from
respondent Maersk but similar to the actuations of
Baliwag Transit in the above cited case, respondent 183 LUDO CORP. V. SAORNIDO (JANUARY 20,
Maersk warded off these demands by saying that it 2003)
would look into the matter until years passed by. In
October 1993, Serrano finally demanded in writing QUISUMBING, J.
payment of the unsent money orders. Then and only
then was the claim categorically denied by respondent FACTS
A.P. Moller in its letter dated November 22, 1993. On April 13, 1992, respondent union entered into a
Following the Baliwag Transit ruling, petitioner’s collective bargaining agreement with LUDO which
cause of action accrued only upon respondent A.P. provides certain benefits to the employees, the
Moller's definite denial of his claim in November 1993. amount of which vary according to the length of
Having filed his action five (5) months thereafter or in service rendered by the availing employee.
April 1994, we hold that it was filed within the three-
year (3) prescriptive period provided in Article 291 of Thereafter, the union requested LUDO to include in its
the Labor Code. members’ period of service the time during which they
rendered arrastre services to LUDO through the CLAS
so that they could get higher benefits. LUDO failed to
act on the request. Thus, the matter was submitted for
voluntary arbitration.

Petitioner contends that the money claim is barred by
prescription. Respondents aver that the three-year
prescriptive period is reckoned only from the time the
obligor declares his refusal to comply with his
obligation in clear and unequivocal terms. In this case,
respondents maintain that LUDO merely promised to
review the company records in response to
respondents’ demand for adjustment in the date of
their regularization without making a categorical
statement of refusal.

ISSUE
Are respondents’ money claims barred by
prescription?

HELD
NO. It took some time for respondent employees to
ventilate their claims because of the repeated
assurances made by the petitioner that it would
review the company records and determine therefrom
the validity of the claims, without expressing a
categorical denial of their claims.

“The cause of action accrues until the party obligated
refuses xxx to comply with his duty. Being warded off
by promises, the workers not having decided to assert
[their] right[s], [their] causes of action had not
accrued…”

Since the parties had continued their negotiations
even after the matter was raised before the Grievance
Procedure and the voluntary arbitration, the
respondents had not refused to comply with their
duty. They just wanted the complainants to present
some proofs. The complainant’s cause of action had
not therefore accrued yet. Besides, in the earlier 184 ACCESSORIES SPECIALISTS V. ABLAZA (JULY
voluntary arbitration case aforementioned involving 23, 2008)
exactly the same issue and employees similarly
situated as the complainants’, the same defense was NACHURA, J.
raised and dismissed by Honorable Thelma Jordan,
Voluntary Arbitrator. FACTS
Petitioners aver that the action of the respondents for
In fact, the respondents’ promised to correct their the recovery of unpaid wages, separation pay and 13th
length of service and grant them the back CBA benefits month pay has already prescribed since the action was
if the complainants can prove they are entitled filed almost five years from the time Jones severed his
rendered the former in estoppel, barring them from employment from ASI. Jones filed his resignation on
raising the defense of laches or prescription. To hold October 31, 1997, while the complaint before the LA
otherwise amounts to rewarding the respondents for was instituted on September 29, 2002. Petitioners
their duplicitous representation and abet them in a contend that the three-year prescriptive period under
dishonest scheme against their workers. Article 291 of the Labor Code had already set-in,
thereby barring all of respondent's money claims
Indeed, as the Court of Appeals concluded, under the arising from their employer-employee relations.
equitable principle of estoppel, it will be the height of
injustice if we will brush aside the employees’ claims ISSUE
on a mere technicality, especially when it is Has respondents’ cause of action already
petitioner’s own action that prevented them from prescribed?
interposing the claims within the prescribed period.
HELD
NO. Based on the findings of facts of the LA, it was ASI
which was responsible for the delay in the institution
of the complaint. When Jones filed his resignation, he
immediately asked for the payment of his money
claims. However, the management of ASI promised
him that he would be paid immediately after the
claims of the rank-and-file employees had been paid.
Jones relied on this representation. Unfortunately, the
promise was never fulfilled even until the time of
Jones' death.

In light of these circumstances, we can apply the
principle of promissory estoppel, which is a
recognized exception to the three-year prescriptive
period enunciated in Article 291 of the Labor Code.

Promissory estoppel may arise from the making of a
promise, even though without consideration, if it was
intended that the promise should be relied upon, as in
fact it was relied upon, and if a refusal to enforce it
would virtually sanction the perpetration of fraud or
would result in other injustice. Promissory estoppel
presupposes the existence of a promise on the part of
one against whom estoppel is claimed. The promise
must be plain and unambiguous
and sufficiently specific so that the court can
understand the obligation assumed and enforce the
promise according to its terms.

In order to make out a claim of promissory estoppel, a
party bears the burden of establishing the following
elements: (1) a promise was reasonably expected to
induce action or forbearance; (2) such promise did, in
fact, induce such action or forbearance; and (3) the
party suffered detriment as a result.
All the requisites of promissory estoppel are present
in this case. Jones relied on the promise of ASI that he
would be paid as soon as the claims of all the rank-and-
file employees had been paid. If not for this promise
that he had held on to until the time of his death, we
see no reason why he would delay filing the complaint
before the LA. Thus, we find ample justification not to
follow the prescriptive period imposed under Article
291 of the Labor Code. Great injustice will be
committed if we will brush aside the employee's
claims on a mere technicality, especially when it was
petitioner's own action that prevented respondent
from interposing the claims within the required
period.

GRIEVANCE MACHINERY AND VOLUNTARY himself/herself without the power or aid of someone
ARBITRATION else, specifically, his/her mother. Therefore, the fetus
was already a dependent, although he/she died during
185 CONTINENTAL STEEL MANUFACTURING V. the labor or delivery. There was also no question that
MONTANO (OCTOBER 13, 2009) Hortillano and his wife were lawfully married, making
their dependent, unborn child, legitimate.
CHICO-NAZARIO, J.
Continental Steel persistently argues that the CBA is
FACTS clear and unambiguous, so that the literal and legal
Hortillano, an employee of petitioner Continental Steel meaning of death should be applied. Only one with
Manufacturing Corporation (Continental Steel) and a juridical personality can die and a dead fetus never
member of respondent Nagkakaisang Manggagawa ng acquired a juridical personality.
Centro Steel Corporation-Solidarity of Trade Unions in
the Philippines for Empowerment and Reforms ISSUE
(Union) filed on 9 January 2006, a claim for Paternity Does fetus qualify as a dependent under the CBA?
Leave, Bereavement Leave and Death and Accident
Insurance for dependent, pursuant to the Collective HELD
Bargaining Agreement (CBA) concluded between YES. the unborn child can be considered a dependent
Continental and the Union. under the CBA. As Continental Steel itself defines, a
dependent is "one who relies on another for support;
Continental Steel immediately granted Hortillano's one not able to exist or sustain oneself without the
claim for paternity leave but denied his claims for power or aid of someone else." Under said general
bereavement leave and other death benefits, definition, even an unborn child is a dependent of its
consisting of the death and accident insurance. On 20 parents. Hortillano's child could not have reached 38-
November 2007, Atty. Montaño, the appointed 39 weeks of its gestational life without depending
Accredited Voluntary Arbitrator, issued a Resolution upon its mother, Hortillano's wife, for sustenance.
ruling that Hortillano was entitled to bereavement Additionally, it is explicit in the CBA provisions in
leave with pay and death benefits. question that the dependent may be the parent,
spouse, or child of a married employee; or the parent,
Atty. Montaño identified the elements for entitlement brother, or sister of a single employee. The CBA did not
to said benefits, thus: This Office declares that for the provide a qualification for the child dependent, such
entitlement of the benefit of bereavement leave with that the child must have been born or must have
pay by the covered employees as provided under acquired civil personality, as Continental Steel avers.
Article X, Section 2 of the parties' CBA, three (3) Without such qualification, then child shall be
indispensable elements must be present: (1) there is understood in its more general sense, which includes
"death"; (2) such death must be of employee's the unborn fetus in the mother's womb. In the present
"dependent"; and (3) such dependent must be case, it was not disputed that Hortillano and his wife
“legitimate”. were validly married and that their child was
conceived during said marriage, hence, making said
On the otherhand, for the entitlement to benefit for child legitimate upon her conception.
death and accident insurance as provided under
Article XVIII, Section 4, paragraph (4.3) of the parties' Given the existence of all the requisites for
CBA, four (4) indispensable elements must be present: bereavement leave and other death benefits under the
(a) there is "death"; (b) such death must be of CBA, Hortillano's claims for the same should have
employee's "dependent"; (c) such dependent must be been granted by Continental Steel. Being for the
"legitimate"; and (d) proper legal document to be benefit of the employee, CBA provisions on
presented. bereavement leave and other death benefits should be
interpreted liberally to give life to the intentions
Atty. Montaño found that there was no dispute that the thereof. Time and again, the Labor Code is specific in
death of an employee's legitimate dependent enunciating that in case of doubt in the interpretation
occurred. The fetus had the right to be supported by of any law or provision affecting labor, such should be
the parents from the very moment he/she was interpreted in favor of labor. In the same way, the CBA
conceived. The fetus had to rely on another for and CBA provisions should be interpreted in favor of
support; he/she could not have existed or sustained labor.
186 UNITED KIMBERLY CLARK UNION V. 7. It is contrary to public policy.
KIMBERLY CLARK (MARCH 6, 2006)
A CBA is more than a contract; it is a generalized code
CALLEJO, SR., J. to govern a myriad of cases which the draftsmen
cannot wholly anticipate. It covers the whole
FACTS employment relationship and prescribes the rights
In the present case, the parties are in agreement that, and duties of the parties. It is a system of industrial
on its face, Article XX, Section 1 of their 1997 CBA does self-government with the grievance machinery at the
not contain any provision relative to the employment very heart of the system. The parties solve their
qualification standards of recommendees of problems by molding a system of private law for all the
retired/resigned, deceased or disabled employees of problems which may arise and to provide for their
respondent who are members of petitioner. solution in a way which will generally accord with the
variant needs and desires of the parties.
Thus, the VA ruled that since the CBA is the law
between the parties, KCPI could not just unilaterally If the terms of a CBA are clear and have no doubt upon
change or suspend the implementation of the existing the intention of the contracting parties, the literal
employment requirements, even in the light of the meaning of its stipulation shall prevail. However, if, in
business situation then prevailing in the Philippines. a CBA, the parties stipulate that the hirees must be
Moreover, an unambiguous CBA provision must be presumed of employment qualification standards but
interpreted according to its literal meaning and not fail to state such qualification standards in said CBA,
beyond the parties' actual intendment, and, in case of the VA may resort to evidence extrinsic of the CBA to
doubts, the same should be resolved in favor of labor. determine the full agreement intended by the parties.
The VA declared that management prerogative does When a CBA may be expected to speak on a matter, but
not give license to a company to set aside or ignore does not, its sentence imports ambiguity on that
what had been agreed upon through negotiation. subject. The VA is not merely to rely on the cold and
cryptic words on the face of the CBA but is mandated
ISSUE to discover the intention of the parties. Recognizing
Is the VA confined to rely on the cold and cryptic the inability of the parties to anticipate or address all
words of the CBA in deciding a dispute between an future problems, gaps may be left to be filled in by
employer and an employee? reference to the practices of the industry, and the step
which is equally a part of the CBA although not
HELD expressed in it. In order to ascertain the intention of
NO. As a general proposition, an arbitrator is confined the contracting parties, their contemporaneous and
to the interpretation and application of the collective subsequent acts shall be principally considered. The
bargaining agreement. He does not sit to dispense his VA may also consider and rely upon negotiating and
own brand of industrial justice: his award is legitimate contractual history of the parties, evidence of past
only in so far as it draws its essence from the CBA, i.e., practices interpreting ambiguous provisions. The VA
when there is a rational nexus between the award and has to examine such practices to determine the scope
the CBA under consideration. It is said that an arbitral of their agreement, as where the provision of the CBA
award does not draw its essence from the CBA; hence, has been loosely formulated. Moreover, the CBA must
there is an unauthorized amendment or alteration be construed liberally rather than narrowly and
thereof, if: technically and the Court must place a practical and
realistic construction upon it.
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and In the present case, the parties are in agreement that,
purpose of the agreement; on its face, Article XX, Section 1 of their 1997 CBA does
3. It is without factual support in view of its not contain any provision relative to the employment
language, its context, and any other indicia of qualification standards of recommendees of
the parties' intention; retired/resigned, deceased or disabled employees of
4. It ignores or abandons the plain language of respondent who are members of petitioner. However,
the contract; in determining the employment qualification
5. It is mistakenly based on a crucial assumption standards for said recommendees, the VA should have
which concededly is a nonfact; relied on the November 7, 1995 Guidelines issued by
6. It is unlawful, arbitrary or capricious; and respondent.
Respondent issued said Guidelines in light of the 187 SAMAHAN NG MANGGAGAWA SA TOP FORM V.
ruling of this Court in Kimberly Clark Philippines v. NLRC (SEPTEMBER 7, 1998)
Lorredo. Respondent saw it imperative to do away
with its practice of accommodating recommendees ROMERO, J.
who were mere high school graduates, and to require
higher employment standards for them. FACTS
The issue in this petition for certiorari is whether or
By agreement of the parties, the implementation of the not an employer committed an unfair labor practice by
Guidelines was deferred until January 1, 1997, unless bargaining in bad faith and discriminating against its
revoked or amended by the 1997 CBA. Petitioner employees. The charge arose from the employer’s
proposed that the practice of hiring recommendees of refusal to grant across-the-board increases to its
retired/resigned, deceased or disabled employees employees in implementing Wage Orders Nos. 01 and
who were union members, who were at least high 02 of the Regional Tripartite Wages and Productivity
school graduates, be included in their CBA, but Board of the National Capital Region (RTWPB-NCR).
respondent did not agree. Hence, Article XX, Section 1 Such refusal was aggravated by the fact that prior to
of the 1997 CBA of the parties remained intact. There the issuance of said wage orders, the employer
was thus no more legal bar for respondent to allegedly promised at the collective bargaining
implement the November 7, 1995 Guidelines. By conferences to implement any government-mandated
executing the 1997 CBA, in its present form, petitioner wage increases on an across-the-board basis.
is bound by the terms and conditions therein set forth.
ISSUE
The VA, however, ignored the plain language of the Does Minutes of the collective bargaining
1997 CBA of the parties, as well as the Guidelines negotiation meeting form part of the entire
issued by respondent. He capriciously based his agreement?
resolution on the respondent's practice of hiring
which, however, by agreement of petitioner and HELD
respondent, was discontinued. NO. The basic premise of this argument is definitely
untenable. To start with, if there was indeed a promise
The Court has recognized in numerous instances the or undertaking on the part of private respondent to
undoubted right of the employer to regulate, obligate itself to grant an automatic across-the-board
according to his own discretion and best judgment, all wage increase, petitioner union should have
aspects of employment, including but not limited to, requested or demanded that such "promise or
work assignments and supervision, working methods undertaking" be incorporated in the CBA. After all,
and regulations, time, place and manner of work, petitioner union has the means under the law to
processes to be followed, and hiring, supervision, compel private respondent to incorporate this specific
transfer, discipline, lay off, dismissal and recall of economic proposal in the CBA. It could have invoked
workers. Encompassing though it could be, the Article 252 of the Labor Code defining "duty to
exercise of this right is not absolute. Management bargain," thus, the duty includes "executing a contract
prerogative must be exercised in good faith for the incorporating such agreements if requested by either
advancement of the employer's interest and not for party." Petitioner union’s assertion that it had insisted
the purpose of defeating or circumventing the rights on the incorporation of the same proposal may have a
of the employees under special laws, valid agreements factual basis considering the allegations in the
such as the individual contract of employment and the aforementioned joint affidavit of its members.
collective bargaining agreement, and general However, Article 252 also states that the duty to
principles of justice and fair play.. In this case, the bargain "does not compel any party to agree to a
Court finds that respondent acted in accord with the proposal or make any concession." Thus, petitioner
CBA and the November 7, 1995 Guidelines, which, by union may not validly claim that the proposal
agreement of the parties, may be implemented by embodied in the Minutes of the negotiation forms part
respondent after January 1, 1997. of the CBA that it finally entered into with private
respondent.

The CBA is the law between the contracting parties"
the collective bargaining representative and the
employer-company. Compliance with a CBA is
mandated by the expressed policy to give protection 188 SUNDOWNER DEVELOPMENT CORP V. DRILON
to labor. Where a proposal raised by a contracting (DECEMBER 6, 1989)
party does not find print in the CBA, it is not a part
thereof and the proponent has no claim whatsoever to GANCAYCO, J.
its implementation.
FACTS
Hence, petitioner union’s contention that the Minutes Mabuhay offered to sell its assets and personal
of the collective bargaining negotiation meeting forms properties in the premises to petitioner to which
part of the entire agreement is pointless. The Minutes petitioner agreed. A deed of assignment of said assets
reflects the proceedings and discussions undertaken and personal properties was executed by Mabuhay on
in the process of bargaining for worker benefits in the April 29, 1987 in favor of petitioner. On same date
same way that the minutes of court proceedings show Syjuco formally turned over the possession of the
what transpired therein. At the negotiations, it is but leased premises to petitioner who actually took
natural for both management and labor to adopt possession and occupied the same on May 1, 1987.
positions or make demands and offer proposals and
counter-proposals. However, nothing is considered On May 4, 1987, respondent National Union of
final until the parties have reached an agreement. In Workers in Hotel, Restaurant and Allied Services
fact, one of management’s usual negotiation strategies (NUWHRAIN for short) picketed the leased premises,
is to "x x x agree tentatively as you go along with the barricaded the entrance to the leased premises and
understanding that nothing is binding until the entire denied petitioner’s officers, employees and guests free
agreement is reached.” If indeed private respondent access to and egress from said premises. On May 14,
promised to continue with the practice of granting 1987, an order was issued by public respondent
across-the-board salary increases ordered by the Secretary of Labor assuming jurisdiction over the
government, such promise could only be demandable labor dispute pursuant to Article 263(g) of the Labor
in law if incorporated in the CBA. Code as amended … The parties were also directed to
submit their respective position papers within ten
Moreover, by making such promise, private (10) days from receipt of the order.
respondent may not be considered in bad faith or at
the very least, resorting to the scheme of feigning to Respondent NUWHRAIN on July 13, 1987 filed its
undertake the negotiation proceedings through empty position paper alleging connivance between Mabuhay
promises. As earlier stated, petitioner union had, and petitioner in selling the assets and closing the
under the law, the right and the opportunity to insist hotel to escape its obligations to the employees of
on the foreseeable fulfillment of the private Mabuhay and so it prays that petitioner accept the
respondent’s promise by demanding its incorporation workforce of Mabuhay and pay backwages from April
in the CBA. Because the proposal was never embodied 15, 1986 to April 28, 1987, the day Mabuhay stopped
in the CBA, the promise has remained just that, a operation.
promise, the implementation of which cannot be
validly demanded under the law. ISSUE
Can the purchaser of the assets of an employer
corporation be considered a successor employer
of the latter's employees?

HELD
NO. The rule is that unless expressly assumed, labor
contracts such as employment contracts and collective
bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties. A
labor contract merely creates an action in personam
and does not create any real right which should be
respected by third parties. This conclusion draws its
force from the right of an employer to select his
employees and to decide when to engage them as
protected under our Constitution, and the same can
only be restricted by law through the exercise of the same premises. There can be no implied acceptance of
police power. the employees of Mabuhay by petitioner and
As a general rule, there is no law requiring a bona fide acceptance of statutory wrong as it is expressly
purchaser of assets of an on-going concern to absorb provided in the agreement that petitioner has no
in its employ the employees of the latter. commitment or duty to absorb them.

However, although the purchaser of the assets or Moreover, the court does not subscribe to the theory
enterprise is not legally bound to absorb in its employ of public respondent that petitioner should have
the employees of the seller of such assets or informed NUWHRAIN of its lease of the premises and
enterprise, the parties are liable to the employees if its purchase of the assets and personal properties of
the transaction between the parties is colored or Mabuhay therein so that said employees could have
clothed with bad faith. taken steps to protect their interest. The court finds
no such duty on the part of petitioner and its failure to
In the case at bar, contrary to the claim of the public notify said employees cannot be an indicium of bad
respondent that the transaction between petitioner faith.
and Mabuhay was attended with bad faith, the court
finds no cogent basis for such contention. Thus, the What is obvious is that the petitioner, by purchasing
absorption of the employees of Mabuhay may not be the assets of respondent Mabuhay in the hotel
imposed on petitioner. premises, enabled Mabuhay to pay its obligations to its
employees. There being no employer-employee
Indeed, in the deed of assignment that was executed relationship between the petitioner and the Mabuhay
by Mabuhay in favor of petitioner on April 14, 1987 for employees, the petition must fail. Petitioner can not
and in consideration of P2,500,000.00, it is specifically be compelled to absorb the employees of Mabuhay
provided therein that the same is "purely for and in and to pay them backwages.
consideration of the sale/transfer and assignment of
the personal properties and assets of Hotel Mabuhay,
Inc. listed x x x" and "in no way involves any
assumption or undertaking on the part of Second
Party (petitioner) of any debts or liabilities
whatsoever of Hotel Mabuhay, Inc."[9] The liabilities
alluded to in this agreement should be interpreted to
mean not only any monetary liability of Mabuhay but
any other liability or obligation arising from the
operation of its business including its liability to its
employees.

Moreover, in the tri-partite agreement that was
entered into by petitioner with respondents
NUWHRAIN and Mabuhay, it is clearly stipulated as
follows:

"8. That, immediately after the execution of this
Agreement, the FIRST PARTY shall give a list of its
members to the THIRD PARTY that it desires to
recommend for employment so that the latter can
consider them for employment, with no commitment
whatsoever on the part of the THIRD PARTY to hire
them in the business that it will operate in the
premises formerly occupied by the Hotel Mabuhay;”

From the foregoing, it is clear that petitioner has no
liability whatsoever to the employees of Mabuhay and
its responsibility if at all, is only to consider them for
re-employment in the operation of the business in the
189 APALISOK V. RPN (MAY 29, 2003) 190 SANYO PHILIPPINES UNION V. CANIZARES
(JULY 8, 1992)
CARPIO-MORALES, J.
MEDIALDEA, J.
FACTS
On May 31, 1995, petitioner received another FACTS
memorandum from the Administrative Manager of In a letter dated February 7, 1990, PSSLU, through its
RPN, informing her of the termination of her services national president, informed the management of
effective the close of regular office hours of June 15, Sanyo that a number of its employees were notified
1995. that their membership with PSSLU were cancelled for
anti-union, activities, economic sabotage, threats,
By letter of June 5, 1995, petitioner informed RPN, by coercion and intimidation, disloyalty and for joining
letter of June 5, 1995, of her decision to waive her right another union. The company received no information
to resolve her case through the grievance machinery on whether or not said employees appealed to PSSLU.
of RPN as provided for in the Collective Bargaining Hence, it considered them dismissed as of March 23,
Agreement (CBA) and to lodge her case to voluntary 1991. On May 20, 1991, the dismissed employees filed
arbitration on the issue of whether petitioner's a complaint with the NLRC for illegal dismissal. Named
dismissal was valid and to abide by the decision of the respondents were PSSLU and Sanyo.
voluntary arbitrator.
On September 19, 1991, PSSLU filed this petition
Respondents on the other hand prayed for the alleging that public respondent Labor Arbiter cannot
dismissal of the complaint, arguing that the voluntary assume jurisdiction over the complaint of public
arbitrator had no jurisdiction over the case. Voluntary respondents because it had no jurisdiction over the
Arbitrator ruled that the dismissal of complainant dispute subject of said complaint. It is their
was invalid. The Court of Appeals, finding that the submission that under Article 217(c) of the Labor
option of petitioner not to subject the dispute to the Code, in relation to Article 261 thereof, as well as
grievance machinery provided for in the CBA was Policy Instruction No. 6 of the Secretary of Labor,
tantamount to relinquishing her right to avail of the respondent Arbiter has no jurisdiction and authority
aid of a voluntary arbitrator in settling the dispute to take cognizance of the complaint brought by private
which "likewise converted an unresolved grievance respondents which involves the implementation of the
into a resolved one," held that the voluntary arbitrator union security clause of the CBA. The function of the
did not have jurisdiction over petitioner's complaint Labor Arbiter under the same law and rule is to refer
and accordingly nullified and set aside, by Decision of this case to the grievance machinery and voluntary
October 30, 1998, the voluntary arbitration award. arbitration.

ISSUE For its part, public respondent, through the Office of
Does LA have jurisdiction over the controversy? the Solicitor General, is of the view that a distinction
should be made between a case involving
HELD "interpretation or implementation of collective
YES. Under ARTICLE 262: JURISDICTION OVER bargaining agreement or "interpretation" or
OTHER LABOR DISPUTES. The Voluntary Arbitrator "enforcement" of company personnel policies, on the
or panel of Voluntary Arbitrators, upon agreement of one hand and a case involving termination, on the
the parties, shall hear and decide all other labor other hand. It argued that the case at bar does not
disputes including unfair labor practices and involve an "interpretation or implementation" of a
bargaining deadlocks. Article 262 of the Labor Code collective bargaining agreement or "interpretation or
provides that upon agreement of the parties, the enforcement" of company policies but involves a
voluntary arbitrator can hear and decide all other "termination." Where the dispute is just in the
labor disputes. Contrary to the finding of the Court of interpretation, implementation or enforcement stage,
Appeals, voluntary arbitration as a mode of settling it may be referred to the grievance machinery set up
the dispute was not forced upon respondents. Both in the CBA or by voluntary arbitration. Where there
parties indeed agreed to submit the issue of validity of was already actual termination, i.e., violation of rights,
the dismissal of petitioner to the jurisdiction of the it is already cognizable by the Labor Arbiter.
voluntary arbitrator by the Submission Agreement
duly signed by their respective counsels.
ISSUE grievances be ventilated before an impartial body.
Which has jurisdiction? LA or Grievance Since there has already been an actual termination, the
Machinery? matter falls within the jurisdiction of the Labor
Arbiter.
HELD
The LA, it is. We agree with the Solicitor General’s ACCORDINGLY, the petition is DISMISSED.
position that “since there has been an actual
termination, the matter falls within the jurisdiction of
the Labor Arbiter.” Moreover, while it appears that the
dismissal of the private respondents was made upon
the recommendation of PSSLU pursuant to the union
security clause provided in the CBA, We are of the
opinion that these facts do not come within the phrase
"grievances arising from the interpretation or
implementation of (their) Collective Bargaining
Agreement and those arising from the interpretation
or enforcement of company personnel policies," the
jurisdiction of which pertains to the Grievance
Machinery or thereafter, to a voluntary arbitrator or
panel of voluntary arbitrators. Article 260 of the Labor
Code on grievance machinery and voluntary arbitrator
states that "(t)he parties to a Collective Bargaining
Agreement shall include therein provisions that will
ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising from
the interpretation or implementation of their
Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company
personnel policies". It is further provided in said
article that the parties to a CBA shall name or
designate their respective representatives to the
grievance machinery and if the grievance is not settled
in that level, it shall automatically be referred to
voluntary arbitrators (or panel of voluntary
arbitrators designated in advance by the parties. It
need not be mentioned that the parties to a CBA are
the union and the company. Hence, only disputes
involving the union and the company shall be referred
to the grievance machinery or voluntary arbitrators.

In the instant case, both the union and the company
are united or have come to an agreement regarding
the dismissal of private respondents. No grievance
between them exists which could be brought to
grievance machinery. The problem or dispute in the
present case is between the union and the company on
the one hand and some union and non-union members
who were dismissed, on the other hand. The dispute
has to be settled before an impartial body. The
grievance machinery with members designated by the
union and the company cannot be expected to be
impartial against the dismissed employees. Due
process demands that the dismissed workers
191 MANEJA V. NLRC (JUNE 5, 1998) the termination of petitioner is not an unresolved
grievance.
MARTINEZ, J.
Moreover, the dismissal of petitioner does not fall
FACTS within the phrase “grievances arising from the
Petitioner Rosario Maneja worked with private interpretation or implementation of collective
respondent Manila Midtown Hotel beginning January, bargaining agreement and those arising from the
1985 as a telephone operator. She was a member of interpretation or enforcement of company personnel
(NUWHRAIN) with an existing Collective Bargaining policies,” the jurisdiction of which pertains to the
Agreement (CBA) with private respondent. grievance machinery or thereafter, to a voluntary
arbitrator or panel of voluntary arbitrators.
On February 15, 1990, a hotel cashier inquired about
the P1,000.00 deposit made by a hotel guest for the It can be deduced from Article 260 of the LC that only
latter’s Request for Long Distance Call (RLDC). When disputes involving the union and the company shall be
petitioner saw that the second RLDC form was not referred to the grievance machinery or voluntary
time-stamped, she immediately placed it inside the arbitrators. In the case at bar, the union does not come
machine which stamped the date “February 15, 1990.” into the picture, not having objected or voiced any
Realizing that the RLDC was filed 2 days earlier, she dissent to the dismissal of the herein petitioner. The
wrote and changed the date to February 13, 1990. reason for this, according to petitioner is that “the
practice in said Hotel in cases of termination is that the
Petitioner has been charged with a very serious latter cases are not referred anymore to the grievance
offense - dishonesty. On March 23, 1990, petitioner committee;” and that “the terminated employee who
was served a notice of dismissal effective April 1, wishes to question the legality of his termination
1990. Petitioner refused to sign the notice and wrote usually goes to the Labor Arbiter for arbitration,
therein "under protest.” Petitioner filed a complaint whether the termination arose from the
for illegal dismissal against private respondent before interpretation or enforcement of the company
the Labor Arbiter who ruled in her favor. personnel policies or otherwise.”

Private respondent appealed the decision to the As we ruled in Sanyo, “Since there has been an actual
respondent commission on the ground inter alia that termination, the matter falls within the jurisdiction of
the Labor Arbiter erred in “assuming jurisdiction over the Labor Arbiter.” The aforequoted doctrine is
the illegal dismissal case after finding that the case applicable foursquare in petitioner’s case. The
falls within the jurisdictional ambit of the grievance dismissal of the petitioner does not call for the
procedure under the CBA, and if unresolved, proper interpretation or enforcement of company personnel
for voluntary arbitration.” policies but is a termination dispute which comes
under the jurisdiction of the Labor Arbiter.
ISSUE
Which has jurisdiction? LA or VA?

HELD
The LA. As can be seen from Article 217 of the LC,
termination cases fall under the original and exclusive
jurisdiction of the Labor Arbiter. It should be noted,
however, that in the opening paragraph there appears
the phrase: “Except as otherwise provided under this
Code x x x.” Thus, Article 217 (c) should be read in
conjunction with Article 261 of the Labor Code which
grants to voluntary arbitrators original and exclusive
jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or
implementation of the collective bargaining
agreement and those arising from the interpretation
or enforcement of company personnel policies. Note
the phrase “unresolved grievances.” In the case at bar,
192 UNION OF NESTLE WORKERS V. NESTLE jurisdiction. Well-settled is the rule that jurisdiction is
PHILIPPINES (OCTOBER 17, 2002) determined by the allegations in the complaint.

SANDOVAL-GUTIERREZ, J. It is indubitable from petitioners’ allegations that they
are not per se questioning “whether or not the person
FACTS will undergo the drug test” or the constitutionality or
On August 1, 1999, Nestle Philippines, Inc. (Nestle) legality of the Drug Abuse Policy. They are assailing
adopted Policy No. HRM 1.8, otherwise known as the the manner by which respondents are implementing
“Drug Abuse Policy.” Pursuant to this policy, the the policy. According to them, it is “arbitrary in
management shall conduct simultaneous drug tests on character” because: (1) the employees were not
all employees from different factories and plants. consulted prior to its implementation; (2) the policy is
punitive inasmuch as an employee who refuses to
However, there was resistance to the policy in the abide with the policy may be dismissed from the
Nestle Cagayan de Oro factory. Out of 496 employees, service; and (3) such implementation is subject to
only 141 or 28.43% submitted themselves to drug limitations provided by law which were disregarded
testing. On August 20, 1999, the Union of Nestle by the management.
Workers Cagayan de Oro Factory and its officers,
petitioners, wrote Nestle challenging the Respondent Nestle’s Drug Abuse Policy states that
implementation of the policy and branding it as a mere “(i)llegal drugs and use of regulated drugs beyond the
subterfuge to defeat the employees’ constitutional medically prescribed limits are prohibited in the
rights. workplace. Illegal drug use puts at risk the integrity of
Nestle operations and the safety of our products. It is
On August 23, 1999, petitioners filed with the RTC, detrimental to the health, safety and work-
Branch 40, Cagayan de Oro City, a complaint for performance of employees and is harmful to the
injunction with prayer for the issuance of a temporary welfare of families and the surrounding community.”
restraining order against Nestle, Rudy P. Trillanes, This pronouncement is a guiding principle adopted by
Factory Manager of the Cagayan de Oro City Branch, Nestle to safeguard its employees’ welfare and ensure
and Francis L. Lacson, Cagayan de Oro City Human their efficiency and well-being. To our minds, this is a
Resources Manager. company personnel policy. In San Miguel Corp. vs.
NLRC, this Court held: “Company personnel policies
The RTC issued a temporary restraining order are guiding principles stated in broad, long-range
enjoining respondents from proceeding with the drug terms that express the philosophy or beliefs of an
test. Forthwith, respondents filed a motion to dismiss organization’s top authority regarding personnel
the complaint on the ground that the RTC has no matters. They deal with matter affecting efficiency and
jurisdiction over the case as it involves a labor dispute well-being of employees and include, among others,
or enforcement of a company personnel policy the procedure in the administration of wages, benefits,
cognizable by the Voluntary Arbitrator or Panel of promotions, transfer and other personnel movements
Voluntary Arbitrators. which are usually not spelled out in the collective
agreement.”
Petitioners filed their opposition, contending that the
RTC has jurisdiction since the complaint raises purely Considering that the Drug Abuse Policy is a company
constitutional and legal issues. personnel policy, it is the Voluntary Arbitrators or
Panel of Voluntary Arbitrators, not the RTC, which
ISSUE exercises jurisdiction over this case. Article 261 of the
Is the complaint, on the basis of its allegations, Labor Code, as amended, pertinently provides: Art.
cognizable by the RTC? 261. Jurisdiction of Voluntary Arbitrators or Panel of
Voluntary Arbitrators. – The Voluntary Arbitrator or
HELD panel of Voluntary Arbitrators shall have original and
NO. We hold that petitioners’ insistence that the RTC exclusive jurisdiction to hear and decide all
has jurisdiction over their complaint since it raises unresolved grievances arising from the
constitutional and legal issues is sorely misplaced. The interpretation or implementation of the Collective
fact that the complaint was denominated as one for Bargaining Agreement and those arising from the
injunction does not necessarily mean that the RTC has interpretation or enforcement of company
personnel policies x x x.”
193 SIME DARBY V. MAGSALIN (DECEMBER 15, to arbitrate may be seen to be quite cryptic. There is
1989) no indication at all that the parties to the arbitration
agreement regarded "the issue of performance bonus"
FELICIANO, J. as a two-tiered issue, only one tier of which was being
submitted to arbitration. Possibly, Sime Darby's
FACTS counsel considered that issue as having dual aspects
On 13 June 1989, petitioner Sime Darby and private and intended in his own mind to submit only one of
respondent SDEA executed a Collective Bargaining those aspects to the Arbitrator; if he did, however, he
Agreement (CBA) providing, among others, that: failed to reflect his thinking and intent in the
arbitration agreement.
"Article X, Section 1. A performance bonus shall be
granted, the amount of which [is] to be determined by It is thus essential to stress that the Voluntary
the Company depending on the return of [sic] capital Arbitrator had plenary jurisdiction and authority to
investment as reflected in the annual financial interpret the agreement to arbitrate and to determine
statement.” the scope of his own authority subject only, in a proper
case, to the certiorari jurisdiction of this Court. The
On 31 July 1989, the Sime Darby Salaried Employees Arbitrator, as already indicated, viewed his authority
Association-ALU (SDSEA-ALU) wrote petitioner as embracing not merely the determination of the
demanding the implementation of a provision abstract question of whether or not a performance
identical to the above contained in their own CBA with bonus was to be granted but also, in the affirmative
petitioner. On 1 August 1989, the parties were called case, the amount thereof.
to a conciliation meeting and in such meeting, both
parties agreed to submit their dispute to voluntary Analysis of the relevant provisions of the CBA cited
arbitration. supra between the parties and examination of the
record of the instant case lead us to the conclusion that
The Voluntary Arbitrator held that a reading of the the Arbitrator's reading of the scope of his own
CBA provision on the performance bonus would show authority must be sustained.
that said provision was mandatory hence the only
issue to be resolved was the amount of performance Article X, Section 1 of the CBA is, grammatically
bonus. Thereafter, VA issued an award which declared speaking, cast in mandatory terms: "A performance
respondent union entitled to a performance bonus bonus shall be granted x x x." The CBA provision goes
equivalent to 75% of the monthly basic pay of its on, however, immediately to say that the amount of
members. the performance bonus "(is) to be determined by the
Company." Thus, notwithstanding the literal or
Petitioner Sime Darby urges that the Arbitrator grammatical tenor of Article X, Section 1, as a practical
gravely abused his discretion in passing upon not only matter, only the issue relating to the amount of the
the question of whether or not a performance bonus is bonus to be declared appears important. Not much
to be granted but also, in the affirmative case, the reflection is needed to show that the critical issue is
matter of the amount thereof. The position of the scope of authority of the company to determine
petitioner, to the extent we can understand it, is that the amount of any bonus to be granted. If the
the Arbitrator was authorized to determine only the company's discretionary authority were to be
question of whether or not a performance bonus was regarded as unlimited and if the company may declare
to be granted, the second question being reserved for in any event a merely nominal bonus, the use of
determination by the employer Sime Darby. mandatory language in Article X, Section 1, would
seem largely illusory and cosmetic in
ISSUE effect. Alternatively, even if one were to disregard the
Does VA possess the power not only to determine use of "shall" rather than "may" in Article X, Section 1,
whether or not performance bonus is to be the question of whether or not a performance bonus is
granted but also the amount thereof? to be granted, still cannot realistically be dissociated
from the intensely practical issue of the amount of the
HELD bonus to be granted. It is noteworthy that petitioner
YES. In their agreement to arbitrate, the parties Sime Darby itself did not spend much time discussing
submitted to the Voluntary Arbitrator "the issue of as an abstract question whether or not the grant of a
performance bonus." The language of the agreement performance bonus is per se obligatory upon the
company. Petitioner instead focused upon the 194 NIPPON PAINT UNION V. CA (NOVEMBER 19,
production performance of the company's employees 2004)
as bearing upon the appropriateness of any amount of
bonus. Further, if petitioner Sime Darby's argument PUNO, J.
were to be taken seriously, one must conclude that the
parties to the arbitration agreement intended to refer FACTS
only a theoretical and practically meaningless issue to Nippon Paint Employees Union (NPEU) and Nippon
the Voluntary Arbitrator, a conclusion that we find Paint Phils., Inc. (NPPI) were engaged in collective
thoroughly unacceptable. bargaining negotiations. While a labor dispute
between them was pending, NPEU Secretary Adonis
Guansing was interviewed by a reporter of the
Philippine Daily Inquirer (PDI). The interview was
subsequently published in the PDI in its issue dated 1
April 2002. NPPI viewed the interview as a violation of
its rules and regulations, particularly as “engaging in
any activity which is conflict (sic) with the Company’s
interests, either directly or indirectly” and ordered Mr.
Guansing to explain why he should not be penalized
for violation of company rules and regulations.

After the submission of Mr. Guansing’s reply and
unsuccessful efforts by NPPI to organize a conference
between them, the latter issued a memorandum on 16
May 2002 terminating the former’s employment
effective 20 May 2002. Thereafter, Mr. Guansing,
represented by NPEU, filed a complaint for illegal
dismissal with the National Labor Relations
Commission. Both parties agreed to submit the
dispute to voluntary arbitration. On 18 December
2002, Voluntary Arbitrator Bernardino Volante
promulgated a decision in favor of NPPI declaring Mr.
Guansing’s dismissal as legally effected but awarding
P40,000.00 to the latter in the name of
“compassionate justice.” NPEU, acting on behalf of Mr.
Guansing, challenged the said decision in the Court of
Appeals by filing a Rule 65 petition for certiorari on 14
April 2003. The Court of Appeals dismissed NPEU’s
petition in its decision dated 25 April 2003. It is the
view of the Court of Appeals that NPEU should have
appealed the voluntary arbitrator’s decision by
petition for review under Rule 43 instead of Rule 65.
Hence, the present petition for certiorari.

ISSUE
Did the Court of Appeals properly dismissed its
petition for certiorari under Rule 65 for being an
improper mode of appeal?

HELD
YES. It is elementary in remedial law that the use of an
erroneous mode of appeal is cause for dismissal of the
petition for certiorari and it has been repeatedly
stressed that a petition for certiorari is not a substitute
for a lost appeal. This is due to the nature of a Rule 65
petition for certiorari which lies only where there is 195 SAMAHAN NG MANGGAGAWA SA HYATT V.
“no appeal,” and “no plain, speedy and adequate BACUNGAN (MARCH 25, 2009)
remedy in the ordinary course of law.”
TINGA, J.
As previously ruled by this Court:
FACTS
x x x We have time and again reminded members of Petitioner union argues that the proper remedy to
the bench and bar that a special civil action for assail a decision of a voluntary arbitrator is a special
certiorari under Rule 65 lies only when "there is no civil action for certiorari under Rule 65 of the Rules of
appeal nor plain, speedy and adequate remedy in the Court and not an appeal via a petition for review under
ordinary course of law." Certiorari can not be allowed Rule 43. Petitioner union's theory is based on the
when a party to a case fails to appeal a judgment following ratiocinations: first, the decision of the
despite the availability of that remedy, certiorari not voluntary arbitrator is similar to the decisions
being a substitute for lost appeal. The remedies of rendered by the National Labor Relations Commission
appeal and certiorari are mutually exclusive and not (NLRC) and the Secretary of Labor and Employment,
alternative or successive. x x x which become final and executory after ten (10)
calendar days from receipt of notice, in that the Labor
The fact that the NPEU used the Rule 65 modality as a Code expressly disallows an appeal from their
substitute for a lost appeal is made plainly manifest judgment or final order; second, Section 2 of Rule 43,
by: a) its filing the said petition 45 days after the which exempts judgments or final orders issued under
expiration of the 15-day reglementary period for filing the Labor Code from an appeal via Rule 43, should
a Rule 43 appeal; and b) its petition which makes apply with equal force to decisions of labor voluntary
specious allegations of “grave abuse of discretion” but arbitrators.
asserts the failure of the voluntary arbitrator to
properly appreciate facts and conclusions of law. ISSUE
What is the proper recourse to assail a decision of
This salutary rule has been disregarded on occasion by a voluntary arbitrator?
this Court in instances where valid and compelling
circumstances warrant. However, NPEU has not HELD
provided this Court any compelling reason why it Appeal to CA via Rule 43. The question on the proper
must disregard the mandate of the Rules of Court. recourse to assail a decision of a voluntary arbitrator
has already been settled in Luzon Development Bank v.
Association of Luzon Development Bank Employees,
where the Court held that the decision or award of the
voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line
with the procedure outlines in Revised Administrative
Circular No. 1-95 (now embodied in Rule 43 of the
1997 Rules of Civil Procedure), just like those of the
quasi-judicial agencies, boards and commissions
enumerated therein, and consistent with the original
purpose to provide a uniform procedure for the
appellate review of adjudications of all quasi-judicial
entities.

In the case of Luzon Development Bank vs.
Association of Luzon Development Bank
Employees, this Court ruled that a voluntary
arbitrator partakes of the nature of a “quasi-judicial
instrumentality” and is within the ambit of Section
9(3) of the Judiciary Reorganization Act, as amended,
which provides:

“(3) Exclusive appellate jurisdiction over all final beyond the reglementary period for filing a petition
judgments, decisions, resolutions, orders or awards of for review under Rule 43. It is elementary in remedial
Regional Trial Courts and quasi-judicial agencies, law that the use of an erroneous mode of appeal is a
instrumentalities, boards or commissions, including the cause for dismissal of the petition for certiorari and it
Securities and Exchange Commission, the Employees’ has been repeatedly stressed that a petition for
Compensation Commission and the Civil Service certiorari is not a substitute for a lost appeal.
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with
the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.”

As such, the decisions of a voluntary arbitrator fall
within the exclusive appellate jurisdiction of the Court
of Appeals. Indeed, this Court took this decision into
consideration in approving the 1997 Rules of Civil
Procedure, the pertinent provision of which states as
follows:

SECTION 1. Scope. — “This Rule shall apply to appeals
from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions.
Among these are … voluntary arbitrators
authorized by law.”

Subsequently, in Alcantara, Jr. v. Court of Appeals, and
Nippon Paint Employees Union v. Court of Appeals, the
Court reiterated the aforequoted ruling. In Alcantara,
the Court held that notwithstanding Section 2 of Rule
43, the ruling in Luzon Development Bank still stands.
The Court explained, thus:

The provisions may be new to the Rules of Court but it
is far from being a new law. Section 2, Rules 42 of the
1997 Rules of Civil Procedure, as presently worded, is
nothing more but a reiteration of the exception to the
exclusive appellate jurisdiction of the Court of
Appeals, as provided for in Section 9, Batas Pambansa
Blg. 129, as amended by Republic Act No. 7902.

The Court took into account this exception in Luzon
Development Bank but, nevertheless, held that the
decisions of voluntary arbitrators issued pursuant to
the Labor Code do not come within its ambit.

On some occasions, rules of procedure may be relaxed
and on that basis the Court of Appeals could have
treated the petition for certiorari as a petition for
review under Rule 43. However, as correctly pointed
out by the Court of Appeals, the petition was filed

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