G.R. No. L-53515 February 8, 1989 SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner, vs. HON.

BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents. Lorenzo F. Miravite for petitioner. Isidro D. Amoroso for New San Miguel Corp. Sales Force Union. Siguion Reyna, Montecillo & Ongsiako for private respondent.

Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to the workers' [benefit] and therefore management must adopt a new system of marketing. But what the petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing technique is the effort of the company to compensate whatever loss the workers may suffer because of the new plan over and above than what has been provided in the collective bargaining agreement. To us, this is one indication that the action of the management is devoid of any anti-union hues. (pp. 24-25, Rollo.) The dispositive part of the Minister's Order reads: WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an additional three (3) months back adjustment commissions over and above the adjusted commission under the complementary distribution system. (p. 26, Rollo.) The petition has no merit. Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives: Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.) (Emphasis ours.) Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled: ... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their union. WHEREFORE, the petition for certiorari is dismissed for lack of merit. G.R. No. 133259 February 10, 2000

GRIO-AQUINO, J.: This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the "Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint for unfair labor practice. On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows: Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.) In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices. The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products from them, not from the company. It was alleged that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly competing with them. The complaint filed by the petitioner against the respondent company raised two issues: (1) whether the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting the union. In its order of February 28, 1980, the Minister of Labor found: ... We see nothing in the record as to suggest that the unilateral action of the employer in inaugurating the new sales scheme was designed to discourage union organization or diminish its influence, but rather it is undisputable that the establishment of such scheme was part of its overall plan to improve efficiency and economy and at the same time gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the change however was too insignificant as to convince this Office to interpret that the innovation interferred with the worker's right to self-organization.

WINIFREDO FARROL, petitioner, vs. THE HONORABLE COURT OF APPEALS and RADIO COMUNICATIONS of the PHILIPPINES INC. (RCPI), respondents.

YNARES-SANTIAGO, J.: Petitioner Wenifredo Farrol was employed as station cashier at respondent RCPI's Cotabato City station. On June 18, 1993, respondent RCPI's district manager in Cotabato City informed their main office that "Peragram funds"1 from said branch were used for the payment of retirement benefits of five employees. On October 1, 1993, petitioner verified as correct RCPI's Field Auditor's report that there was a shortage of P50,985.37 in their branch's Peragram, Petty and General Cash Funds. Consequently, petitioner was required by the Field Auditor to explain the cash shortage within 24 hours from notice.2 The next day, petitioner paid to RCPI P25,000.00 of the cash shortage.1wphi1.nt On October 10, 1993, RCPI required petitioner to explain why he should not be dismissed from employment.3 Two days thereafter, petitioner wrote a letter to the Field Auditor stating that the missing funds were used for the payment of the retirement benefits earlier referred to by the branch manager and that he had already paid P25,000.00 to RCPI. After making two more payments of the cash shortage to RCPI, petitioner was informed by the district manager that he is being placed under preventive suspension.4 Thereafter, he again paid two more sum's on different dates to RCPI leaving a balance of P6,995.37 of the shortage. Respondent RCPI claims that it sent a letter to petitioner on November 22, 1993 informing him of the termination of his services as of November 20, 1993 due to the following reasons: a) Your allegation that part of your cash shortages was used for payment of salaries/wages and retirement benefits is not true because these have been accounted previously per auditor's report; b) As Station Cashier you must be aware of our company Circular No. 63 which strictly requires the daily and up-to-date preparation of Statistical Report and depositing of cash collections twice a day. But these procedures more particularly on depositing of cash collections twice a day was completely disregarded by you; c) Deliberate withholding of collections to hide shortages/malversation or misappropriation in any form, as emphasized under Section No. 20 of our Rules and Regulations, is penalized by immediate dismissal; d) The position of Station Cashier is one which requires utmost trust and confidence.5 Unaware of the termination letter, petitioner requested that he be reinstated considering that the period of his preventive suspension had expired. Sometime in September 1995, petitioner manifested to RCPI his willingness to settle his case provided he is given his retirement benefits. However, RCPI informed petitioner that his employment had already been terminated earlier as contained in the letter dated November 22, 1993. The conflict was submitted to the grievance committee. Despite the lapse of more than two years, the case remained unresolved before the grievance committee, hence, it was submitted for voluntary arbitration. After hearing, the Voluntary Arbitrator ruled that petitioner was illegally dismissed from employment and ordered RCPI to pay him backwages, separation pay, 13th month pay and sick leave benefits. 6 Aggrieved, RCPI filed a petition for certiorari before the Court of Appeals (CA), which reversed the ruling of the arbitrator and dismissed the complaint for illegal dismissal. 7 Upon denial of petitioner's motion for reconsideration by the CA,8 he filed the instant petition for review on certiorari on the grounds that his dismissal was illegal because he was not afforded due process and that he "cannot be held liable for the loss of trust and confidence reposed in him" by RCPI.9 The Court is called upon to resolve the validity of petitioner's dismissal. In cases involving the illegal termination of employment, it is fundamental that the employer must observe the mandate of the Labor Code, i.e., the employer has the burden of proving that the dismissal is for a cause provided by the law10 and that it afforded the employee an opportunity to be heard and to defend himself. 11

Anent the procedural requirement, Book V, Rule XIV, of the Omnibus Rules Implementing the Labor Code existing at the time petitioner was discharged from work, outlines the procedure for termination of employment, to wit: Sec. 1. Security of tenure and due process. No worker shall be dismissed except for a just or authorized cause provided by law and after due process. Sec. 2. Notice of Dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omissions constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the worker's last known address. xxx xxx xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representatives, if he so desires. Sec. 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor. Sec. 7. Right to contest dismissal. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the Regional Branch of the Commission. xxx xxx xxx

Sec. 11. Report on dismissal. The employer shall submit a monthly report to the Regional Office having jurisdiction over the place of work all dismissals effected by him during the month, specifying therein the names of the dismissed workers, the reasons for their dismissal, the dates of commencement and termination of employment, the positions last held by them and such other information as may be required by the Ministry (Department) for policy guidance and statistical purposes. (Emphasis supplied). As set forth in the foregoing procedures, the employer must comply with the twin requirements of two notices and hearing.12 The first notice is that which apprises the employee of the particular acts or omissions for which his dismissal is sought, and after affording the employee an opportunity to be heard, a subsequent notice informing the latter of the employer's decision to dismiss him from work.13 As regards the first notice, RCPI simply required petitioner to "explain in writing why he failed to account" for the shortage and demanded that he restitute the same.14 On the assumption that the foregoing statement satisfies the first notice, the second notice not "clearly" cite the reasons for the dismissal, contrary to the requirements set by the above-quoted Section 6 of Book V, Rule XIV of the Omnibus Rules. A perusal of RCPI's dismissal notice reveals that it merely stated a conclusion to the effect that the withholding was deliberately done to hide alleged malversation or misappropriation without, however, stating the circumstances in support thereof. It further mentioned that the position of cashier requires utmost trust and confidence but failed to allege the breach of trust on the part of petitioner and how the alleged breach was committed. On the assumption that there was indeed a breach, there is no evidence that petitioner was a managerial employee of respondent RCPI. It should be facts noted that the term 'trust and managerial employees.15 It may not even be presumed that when there is a shortage, there is also a corresponding breach of trust. Cash shortages in a cashier's work may happen, and when there is no proof that the same was deliberately done for a fraudulent or wrongful purpose, it cannot constitute breach of trust so as to render the dismissal from work invalid.

Assuming further that there was breach of trust and confidence, it appears that this is the first infraction committed by petitioner. Although the employer has the prerogative to discipline or dismiss its employee, such prerogative cannot be exercised wantonly, but must be controlled by substantive due process and tempered by the fundamental policy of protection to labor enshrined in the Constitution. 16 Infractions committed by an employee should merit only the corresponding sanction demanded by the circumstances. The penalty must be commensurate with the act, conduct or omission imputed to the employee17 and imposed in connection with the employer's disciplinary authority. RCPI alleged that under its rules, petitioner's infraction is punishable by dismissal. However, employer's rules cannot preclude the State from inquiring whether the strict and rigid application or interpretation thereof would be harsh to the employee. Petitioner has no previous record in his twenty-four long years of service this would have been his first offense. The Court thus holds that the dismissal imposed on petitioner is unduly harsh and grossly disproportionate to the infraction which led to the termination of his services. A lighter penalty would have been more just, if not humane. In any case, petitioner paid back the cash shortage in his accounts. Considering, however, that the latter is about to retire or may have retired from work, it would no longer be practical to order his reinstatement. Accordingly, in lieu of reinstatement, the award of separation pay computed at one-month salary for every year of service, with a fraction of at least six (6) months considered as one whole year, is proper.18 In the computation of separation pay, the period wherein backwages are awarded must be included.19 WHEREFORE, in view of the foregoing, the assailed decision of the Court of Appeals is REVERSED and SET ASIDE and new one entered REINSTATING the decision of the Voluntary Arbitrator subject to the MODIFICATION that petitioner's separation pay be recomputed to include the period within which backwages are due. For this purpose, this case is REMANDED to the Voluntary Arbitrator for proper computation of backwages, separation pay, 13th month pay, sick leave conversion and vacation leave conversion. SO ORDERED. ZEL T. ZAFRA and EDWIN B. ECARMA, petitioners, vs. HON. COURT OF APPEALS, PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., AUGUSTO COTELO, and ERIBERTO MELLIZA, respondents. DECISION QUISUMBING, J.: For review on certiorari is the decision[1] of the Court of Appeals dated December 22, 1998, in CA-G.R. SP. No. 48578, reversing that of the voluntary arbitrator which ordered respondent Philippine Long Distance Telephone Co. (PLDT) to reinstate petitioners. Also impugned is the resolution dated May 24, 1999, denying petitioners motion for reconsideration. The undisputed facts, as set forth in the decision of the Court of Appeals, are as follows: Petitioner Zel T. Zafra was hired by PLDT on October 1, 1984 as Operations Analyst II with a monthly salary of P14,382 while co-petitioner Edwin B. Ecarma was hired as Junior Operations Analyst I on September 16, 1987 at a monthly rate of P12,032. Both were regular rank-and-file employees assigned at the Regional Operations and Maintenance Control Center (ROMCC) of PLDTs Cebu Provincial Division. They were tasked to maintain the operations and maintenance of the telephone exchanges in the Visayas and Mindanao areas.[2] In March 1995, petitioners were chosen for the OMC Specialist and System Software Acceptance Training Program in Germany in preparation for ALCATEL 1000 S12, a World

Bank-financed PLDT project in line with its Zero Backlog Program. ALCATEL, the foreign supplier, shouldered the cost of their training and travel expenses. Petitioners left for Germany on April 10, 1995 and stayed there until July 21, 1995.[3] On July 12, 1995, while petitioners were in Germany, a certain Mr. R. Relucio, SwitchNet Division Manager, requested advice, through an inter-office memorandum, from the Cebu and Davao Provincial Managers if any of the training participants were interested to transfer to the Sampaloc ROMCC to address the operational requirements therein. The transfer was to be made before the ALCATEL exchanges and operations and maintenance center in Sampaloc would become operational. Upon petitioners return from Germany, a certain Mr. W.P. Acantillado, Senior Manager of the PLDT Cebu Plant, informed them about the memorandum. They balked at the idea, but PLDT, through an inter-office memorandum dated December 21, 1995, proceeded to transfer petitioners to the Sampaloc ROMCC effective January 3, 1996.[4] Petitioners left Cebu for Manila on December 27, 1995 to air their grievance to PLDT and to seek assistance from their union head office in Mandaluyong. PLDT ordered petitioners to report for work on January 16, 1996, but they asked for a deferment to February 1, 1996. Petitioners reported for work at the Sampaloc office on January 29, 1996. Meanwhile PLDT moved the effectivity date of their transfer to March 1, 1996. On March 13, 1996, petitioners again appealed to PLDT to no avail. And, because all their appeals fell on deaf ears, petitioners, while in Manila, tendered their resignation letters on March 21, 1996. Consequently, the expenses for their training in Germany were deducted from petitioners final pay. On September 11, 1996, petitioners filed a complaint with the National Labor Relations Commission Regional Arbitration Branch No. 7 for alleged constructive dismissal and nonpayment of benefits under the Collective Bargaining Agreement.[5] In an order dated November 10, 1996, the presiding labor arbiter referred the complaint to the National Conciliation and Mediation Board, Cebu City, for appropriate action.[6] On January 17, 1997, the parties agreed to designate lawyer Rolando M. Lim as their voluntary arbitrator. [7] In their complaint, petitioners prayed that their dismissal from employment be declared illegal. They also asked for reinstatement with full backwages, refund of unauthorized deductions from their final pay, including damages, costs of litigation, and attorneys fees. [8] Respondent PLDT, for its part, averred that petitioners agreed to accept any assignment within PLDT in their application for employment[9] and also in the undertaking[10] they executed prior to their training in Germany. It prayed that petitioners complaint be dismissed. After submission of their respective position papers and admission of facts, the case was set for hearing. Petitioners presented their witnesses and made their formal offer of documentary evidence. PLDT, however, requested for a re-setting of the hearing from October 9 and 10, 1997 to November 10 and 11, 1997.[11] But on those dates PLDT did not appear. Nor did it file any notice of postponement or motion to cancel the hearings. [12] Upon petitioners motion and pursuant to Article 262-A of the Labor Code,[13] the voluntary arbitrator issued an order admitting all documentary exhibits offered in evidence by petitioners and submitting the case for resolution.[14] In said order, PLDT was declared

to have waived its right to present evidence on account of its unjustified failure to appear in the November 10 to 11 hearings. On December 1, 1997, the voluntary arbitrator issued a decision which reads: IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in the above case, in favor of complainants Zel Zafra and Edwin Ecarma and against respondent PLDT, as follows: 1. Declaring that complainants were illegally dismissed by reason of the forced resignations or constructive discharge from their respective employment with PLDT; 2. Ordering the reinstatement of complainants without loss of seniority rights and other privileges, and granting the award of full backwages from April 22, 1996, inclusive of allowances granted in the CBA or their monetary equivalent computed from the time complainants compensation were withheld up to the time of their actual reinstatement, or in lieu thereof, ordering the payment of separation pay with full backwages; 3. Ordering the refund of P35,721.81 to complainant Zafra and P24,186.67 to complainant Ecarma, which amounts constitute as unauthorized deductions from their final pay; 4. Ordering payment of P50,000.00 as moral damages; P20,000.00 as exemplary damages and P20,000.00 as refund for litigation expenses; 5. Ordering payment of 10% Attorneys Fees computed on all adjudicated claims. SO ORDERED.[15] PLDTs motion for reconsideration of the above decision was denied on July 10, 1998.[16] On August 7, 1998, PLDT initiated a special civil action for certiorari with the Court of Appeals,[17] which was treated as a petition for review.[18] On December 22, 1998, the CA ruled in favor of PLDT and reversed the voluntary arbitrators decision, in this wise: WHEREFORE, the instant petition is hereby given due course. Accordingly, the assailed Order is hereby REVERSED with the exception of the refund, which is hereby ordered, of the amount of P35,721.81 to respondent Zafra and P24,186.67 to respondent Ecarma representing unauthorized deductions from their final pay. SO ORDERED.[19] Zafra and Ecarma as respondents below moved for reconsideration of the CA decision which, however, was denied on May 24, 1999.[20] Petitioners now anchor their petition on the following grounds: I. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN THE RESPONDENTS PETITION IN A WAY PROBABLY NOT IN ACCORD WITH THE LAW OR THE APPLICABLE DECISIONS OF THE SUPREME COURT. A. THE COURT A QUO, INSTEAD OF RESOLVING ERRORS OF JURISDICTION ALLEGED IN THE RESPONDENTS PETITION ERRED IN RENDERING THE DECISION ON ITS MERITS, IN EFFECT NOT ACCORDING RESPECT AND SETTING ASIDE THE VOLUNTARY ARBITRATORS EVALUATION OF THE EVIDENCE AND FACTUAL FINDINGS BASED THEREON.

B. THE COURT A QUO, IN GIVING DUE COURSE TO THE RESPONDENTS PETITION ERRED IN PROCEEDING TO RESOLVE THE SAME ON THE MERITS, WITHOUT FIRST REVIEWING THE ENTIRE RECORD OF THE PROCEEDINGS OF THE VOLUNTARY ARBITRATOR. II. THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR AN EXERCISE OF THE HONORABLE SUPREME COURTS SUPERVISION. A. THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION IN RENDERING THE DECISION THROUGH ITS UTTER DISREGARD OF THE APPROPRIATE MODE OF APPEAL TO BE TAKEN BY THE RESPONDENTS FROM THE JUDGMENT OF THE VOLUNTARY ARBITRATOR. B. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS DISCRETION IN TREATING JOINTLY THE RESPONDENTS PETITION EITHER AS AN APPEAL UNDER RULE 43, OR IN THE ALTERNATIVE, A SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE 65.

C. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS DISCRETION IN FAILING TO DISMISS THE RESPONDENTS PETITION FOR CERTIORARI OUTRIGHTLY FOR FAILURE TO COMPLY WITH THE STRICT REQUIREMENTS IN THE FILING THEREOF.[21] Briefly, the issues in this case may be restated as follows: (1) whether or not the CA erred in treating the special civil action for certiorari filed by respondent as a petition for review, and (2) whether or not the CA erred in its appreciation of facts and the decision it rendered. Petitioners invoke Luzon Development Bank vs. Association of Luzon Development Bank Employees, et al.[22] and Rule 43 of the 1997 Rules of Civil Procedure[23] in arguing that an appeal and not a petition for certiorari should be the proper remedy to question the decision or award of the voluntary arbitrator. Even assuming that Rule 65 applies, petitioners argue that PLDT, nevertheless, erred in not including the voluntary arbitrator as one of the respondents in the petition and in not serving him a copy thereof.[24] These procedural flaws, they aver, merit the outright dismissal by the CA of the petition.[25]

A perusal of the petition before the CA shows that the mode chosen by PLDT was a petition for review under Rule 43 and not a special civil action for certiorari under Rule 65. While it was captioned as a petition for certiorari, it is not the caption of the pleading but the allegations therein that determine the nature of the action.[26] The appellate court was not precluded from granting relief as warranted by PLDTs allegations in the petition and the evidence it had presented to support the petition. A perusal of the petition before the CA discloses the following: First, under the heading Nature of the Action, the PLDT averred it was a petition for review on certiorari of the Decision dated December 1, 1997 and Order dated July 10, 1998 of Voluntary Arbitrator Atty. Rolando M. Lim.[27] Second, while the assigned errors alleged that the voluntary arbitrator acted with grave abuse of discretion, nevertheless, the issue set forth was whether or not there existed sufficient evidence to show that complainants [herein petitioners] were constructively dismissed, and whether they were entitled to reinstatement, back wages and other monetary awards.[28] Clearly, the issue was factual and not limited to questions of jurisdiction and grave abuse of discretion. Third, the petition was filed within the 15-day period to perfect an appeal and did not implead the voluntary arbitrator as a respondent. All of these indicate that the petition below was indeed one for review.

Moreover, contrary to petitioners contention that the voluntary arbitrator was not furnished a copy of the petition, the records reveal otherwise. Attached to the petition filed before the appellate court was a registry receipt of the copy sent to the voluntary arbitrator.[29] Coming now to the substantive merits of the petition before us. Considering that the CAs findings of fact clash with those of the voluntary arbitrator, with contradictory results, this Court is compelled to go over the records of the case as well as the submissions of the parties. Having done so carefully, we are not convinced that the voluntary arbitrator erred in his factual conclusions so as to justify reversal thereof by the appellate court. We are persuaded to rule in favor of the complaining workers, herein petitioners, following the well-established doctrine in labor-management relations that in case of doubt, labor should prevail. The fact that petitioners, in their application for employment,[30] agreed to be transferred or assigned to any branch[31] should not be taken in isolation, but rather in conjunction with the established company practice in PLDT. The standard operating procedure in PLDT is to inform personnel regarding the nature and location of their future assignments after training abroad. This prevailing company practice is evidenced by the inter-office memorandum[32] of a certain PLDTs First Vice President (Reyes), dated May 3, 1996 to PLDTs Chief Operating Officer (Perez), dulyacknowledged by private respondents: xxx To Thru From : : : Atty. E.D. Perez, SEVP & COO J.P. de Jesus, EVP - Meet Demand Group FVP - Program Planning & Engineering Sector

exchanges, slots were opened both for Provincial and Metro Manila Operations. Please note that all these relevant informations were disseminated to concerned parties as inputs, to enable them to recommend the appropriate training participants. The choice of trainees were made by Network and, therefore, it is incumbent upon them to brief the participants or trainees they selected on the nature and assignment of their employment after training. To prevent similar instances in the future, we strongly recommend the following: 1. Prior to the training, all concerned groups should conform with the standard practice of informing personnel regarding the nature and/or location of their future assignments after the training.

2. The contractual obligation of the trainees should include a provision on their willingness and commitment to perform the related training functionalities required by the company. x x x (Underscoring supplied.) The want of notice of transfer to petitioners was the subject of another inter-office memorandum dated November 24, 1995, from one Mr. Relucio, SwitchNet Division Manager, to a certain Mr. Albania, First Vice President-Regional & Toll Network. It states: As the cheaper option is to relocate personnel who have attended the training already, we have solicited the desire of the Cebu and Davao-based provincial personnel to transfer to SwitchNet Sampaloc ROMCC which they declined, x x x We should note that these personnel were not made aware prior to start of training, that they will be transferred to Manila.[33] A third inter-office memorandum dated November 29, 1995 confirmed this procedural flaw, thus: Alternative 1: Require the four Jones and Davao ROMCC personnel to transfer [to] the Sampaloc ROMCC, as service requirement. This is the least cost alternative. x x x We should note however, that these personnel were not aware that they would relocate after training. [34] Under these circumstances, the need for the dissemination of notice of transfer to employees before sending them abroad for training should be deemed necessary and later to have ripened into a company practice or policy that could no longer be peremptorily withdrawn, discontinued, or eliminated by the employer. Fairness at the workplace and settled expectations among employees require that we honor this practice and commend this policy. The appellate courts justification that petitioners transfer was a management prerogative did not quite square with the preceding evidence on record, which are not disputed. To say that petitioners were not constructively dismissed inasmuch as the transfer was effected without demotion in rank or diminution of salary benefits is, to our mind, inaccurate. It is well to remember that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefits, and privileges. For an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.[35] The insensibility of private respondents is at once deducible from the foregoing circumstances.

Subject: NON-ASSIGNABLE TRAINED PERSONNEL ===================================================== During the Group Heads Meeting on 03 April 1996, Mr. R.R. Zarate reported on the case of some provincial personnel who had foreign training for functions intended for Manila Operations but refused to be relocated and assigned to Manila, and who eventually resigned on account of the said transfer. In view of this situation, two (2) issues were raised as follows: 1. Network Services to be involved in the planning of facilities, specially when this involves trainees from Network. 2. Actual training to be undertaken only after the sites where such training will be utilized have been determined. xxx A total of 53 slots (for the Exchange O&M, System Software/Acceptance Engineering and OMC Specialist Courses) were allocated to Network Services by the Steering Committee composed of representatives from ProgPlan and TechTrain. The O&M slots were equally distributed to Provincial Operations on the basis where Alcatel switches will be geographically installed. With regards to NSC, since the contract has defined its location to be in Sampaloc and considering that its monitoring function would focus on provincial

Despite their knowledge that the lone operations and maintenance center of the 33 ALCATEL 1000 S12 Exchanges would be homed in Sampaloc,[36] PLDT officials neglected to disclose this vital piece of information to petitioners before they acceded to be trained abroad. On arriving home, they did not give complaining workers any other option but placed them in an either/or straightjacket, that appeared too oppressive for those concerned. As pointed out in the abovementioned inter-office memorandum by Mr. Reyes: All sites where training will be utilized are already pre-determined and pinpointed in the contract documents and technical protocols signed by PLDT and the contractor. Hence, there should be no reason or cause for the misappointment of the training participants. [37] Needless to say, had they known about their pre-planned reassignments, petitioners could have declined the foreign training intended for personnel assigned to the Manila office. The lure of a foreign trip is fleeting while a reassignment from Cebu to Manila entails major and permanent readjustments for petitioners and their families. We are not unaware that the transfer of an employee ordinarily lies within the ambit of management prerogatives. However, a transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient, or prejudicial to the employee, and involves a demotion in rank or diminution of salaries, benefits, and other privileges.[38] In the present case, petitioners were unceremoniously transferred, necessitating their families relocation from Cebu to Manila. This act of management appears to be arbitrary without the usual notice that should have been done even prior to their training abroad. From the employees viewpoint, such action affecting their families are burdensome, economically and emotionally. It is no exaggeration to say that their forced transfer is not only unreasonable, inconvenient, and prejudicial, but to our mind, also in defiance of basic due process and fair play in employment relations. WHEREFORE, this petition for review is GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 48578, dated December 22, 1998, is REVERSED and SET ASIDE. The decision of the Voluntary Arbitrator dated December 1, 1997, is REINSTATED. No pronouncement as to costs. JEAN C. AURELIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NORTHWESTERN COLLEGE, BEN A. NICOLAS, ERNESTO B. ASUNCION, JOFFREY AURELIO, JOSE G. CASTRO, FRANCISCO SANTELLA, ALBA B. CADAY, LILIA PAZ, WILFRED A. NICOLAS, GLENN AQUINO, LUCIDIA RUIZ-FLOREZ, respondents. Pedro Q. Qadra for petitioner. Ponce, Enrile, Cayetano, & Reyes & Manalastas for private respondents. SYLLABUS 1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; RULES OF EMPLOYMENT REGARDING MANAGERIAL EMPLOYEES; EMPLOYERS ALLOWED A GREATER LATITUDE. The rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not necessarily the same as those applicable to termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing

functions which by their nature require the employer's trust and confidence, than in the case of ordinary rank-and-file employees (Cruz vs. Medina, 177 SCRA 565 [1989]). 2. ID.; ID.; ID.; LOSS OF TRUST AND CONFIDENCE, VALID GROUND FOR DISMISSING MANAGERIAL EMPLOYEE. Under Article 282(c) of the Labor Code, loss of trust and confidence is a valid ground for dismissing an employee. Termination of employment on this ground does not require proof beyond reasonable doubt. All that is needed is for the employer to establish sufficient basis for the dismissal of the employee (Cruz vs. Medina, supra). 3. ID.; ID.; ID.; TERMINATION; REQUIREMENTS FOR VALIDITY THEREOF. Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for a just or authorized cause and after due process. The two requirements of this legal provision are: 1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 283 of the New Labor Code; and 2. The legality in the manner of dismissal, that is, with due observance of the procedural requirements of Sections 2, 5, and 6 of Batas Pambansa Blg. 130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]). 4. ID.; ID.; ID.; ID.; ID.; NON-OBSERVANCE OF DUE PROCESS ENTITLES EMPLOYEE TO AWARD OF P1,000.00; CASE AT BAR. In cases where there was a valid ground to dismiss an employee but there was non-observance of due process, this Court held that only a sanction must be imposed upon the employer for failure to give formal notice and to conduct an investigation required by law before dismissing the employee in consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 [1989]; Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo, 199 SCRA 617 [1991]). Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process. The decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED and that private respondents are ORDERED to pay petitioner the amount of One Thousand Pesos (P1,000.00) as indemnity for non-observance of due process. 5. ID.; ID.; ID.; MANAGEMENT, AT LIBERTY TO ABOLISH POSITIONS NO LONGER NECESSARY. The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied (San Miguel Brewery Sales Force Union [PTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot Laboratories vs. NLRC, 154 SCRA 713 [1987]). Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139 [1990]). When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith. DECISION MELO, J p: The appeal before us has reference to the decision of the National Labor Relations Commission (NLRC) dated March 27, 1991 which modified the decision of the Labor Arbiter involving petitioner's charge of illegal dismissal. The reviewing authority merely awarded separation pay equivalent to onehalf month pay for every year of service and denied petitioner's prayer for reinstatement, backwages, moral and exemplary damages, including attorney's fees (p. 89, Rollo). Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in June 1917 with a basic salary of P600.00 a month. In October 1979, petitioner was appointed Dean of the College of Nursing with a starting salary of P3,000.00 a month. In September 1981, petitioner was promoted to College Administrator or Vice-President for Administration, retaining concurrently her position of Dean of the College of Nursing, with an increased salary of P3,500.00 per month. She was later promoted to Executive Vice-President with the corresponding salary of P7,500.00. On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was elected Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management

of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner and her husband, Oscar Aurelio, to wit: (a) On May 30, 1988, petitioner's husband, then in the United States, was removed as Auditor of the college; (b) Without prior notice, petitioner's office was stripped of its facilities. First, the airconditioner, then the refrigerator; (c) Respondents asked petitioner, "to justify," the continued use of the conference room which was used for team teaching; the librarian of the College of Nursing was removed and assigned as secretary of the Chairman of Academic Matters and all the facilities of the College of Nursing were taken over by the individual respondents; (d) Petitioner's salary was reduced from P7,500.00 to P5,000.00 then to P2,500.00 a month; (e) While petitioner was absent because of influenza, respondents assigned her office room to the Chairman on Management and Planning; the Nursing conference room was assigned as the lounge room of the members of the Board of Directors; Because of the indignities and humiliation suffered by the petitioner, she wrote a letter on September 20, 1988 informing the President of Northwestern College that she was going on an indefinite leave, thus: Dear Sir: This is to inform your office that I am taking an indefinite leave of absence effective immediately due to the following reasons: 1. My having been demoted in rank from Executive Vice-President to Vice-President for Administration to Dean of the College of Nursing without prior notice and without any dialogue whatsoever with management. This mote(s) of the administration was coupled with innuendos perpetuated by some people close to management giving rise to speculations that besmirched my reputation and character. 2. Since the new management took over on May 1, 1988, my office has been stripped of its facilities one after the other, again without prior notice. First, the air-conditioner was removed, then the refrigerator. 3. My efforts and that of my staff to complete and improve our physical plant and facilities such as the conference room, library, team teaching requirements and nutrition laboratory did not get any support from management. In fact, our efforts were even seen as mere exercises to satisfy our personal whims. Imagine being asked to "justify" the continued use of our conference room which is a basic requirement for team teaching? To make matters worse, our librarian was assigned as secretary to the Chairman of Academic Matters and our facilities were taken over by same officers of the college. 4. My salary was reduced from P7,500.00 per month to P5,000.00, and then finally to P2,500.00 per month since May 1, 1980. This defies logic because in 1979, I had the starting salary of P3,000.00. Nine years later, I am to be paid P2,500.00 per month. 5. To cap all these, while I was absent because of influenza, management decided to assign my office to the Chairman on Management Planning, and the Nursing conference room to the members of the board to be used as their lounging room. This singular act has caused me extreme anguish and embarrassment which I feel I don't deserve and it has caused much damage to my integrity.

Because of the above-cited development, I feel that I have been inflicted with an injustice that has caused irreparable damage to my reputation, and has rendered me ineffective in discharging my duties as member of administration and as Dean of the College of Nursing. Yours truly, (SGD) Jean C. Aurelio (pp. 6-7, Rollo.) On September 21, 1988, petitioner sent a copy of the above letter to the Secretary of Education, Culture and Sports praying for assistance. On October 26, 1988, the Secretary of Education, Culture and Sports-referred the letter to the DECS Director of Region I. On October 28, 1988, the Director of the Bureau of Higher Education ordered the DECS Regional Director of Region I through telegram "to investigate NWC College of Nursing, Laoag City immediately PRC recommends suspension of the operation of College of Nursing due to lack of Dean and faculty to supervise students." On November 3, 1988, the Regional Director informed respondent Northwestern College of the order of investigation and that pursuant thereto, the Director was sending her representatives "to look into the problem stated thereon which is apparently facing the College of Nursing." On November 7, 1988, the representatives of the Regional Director submitted their official findings and recommendations confirming the truth of the allegations of petitioner in her September 20, 1988 letter. The DECS also confirmed the willingness of petitioner to withdraw her indefinite leave of absence. The matter of petitioner's resumption of her position as Dean of the College of Nursing was addressed by the DECS to the attention of respondents who were given up to November 13, 1988 to make their decision. On November 7, 1988, the Regional Director sent a telegram stating: "Please submit written decision status position dean college of nursing not later than November 14, 1988 pd." Private respondents did not answer. They refused to accept petitioner. On November 16, 1988, petitioner filed her complaint for illegal dismissal against private respondents and prayed for reinstatement plus backwages, moral and exemplary damages, and attorney's fees. At the arbitration level, petitioner and private respondents submitted their respective position papers. On December 29, 1989, the labor arbiter issued a decision dismissing the complaint. It appears that private respondent Northwestern College is managed by its Board of Directors elected annually by the stockholders and who serve as such for the ensuing year until their successors shall have been duly elected and qualified. The individual respondents Ben Nicolas, Ernesto Asuncion, Joffrey Aurelio, Alva B. Caday, Lilia Paz, Wilfredo Santillan, and Glen Aquino, are members of the Board of Directors of Northwestern College of which Jean C. Aurelio is a stockholder. On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the corporation in Laoag City. Elected Directors were the following: Alva Caday, Lucidia Flores, Nicolas Nicolas, Oscar Aurelio, Cherry Caday, Lilia Paz, Ben Nicolas, Joffrey Aurelio, Francisco Santella, Glenn Aquino, and Wilfredo Nicolas. The following members were elected as officers of the Northwestern College: Alva Caday, Chairman of the Board; Ben Nicolas, Vice-Chairman and President; Joffrey Aurelio, Treasurer; Oscar Aurelio, Corporate Auditor and Lucidia Flores, Corporate Secretary. Nicolas Nicolas, Oscar Aurelio, and Cherry Caday later resigned and in their stead, Atty. Ernesto Asuncion, Atty. Jose Castro, and Dr. Juanito Chan were elected by the stockholders. Since their election into office, the Board members have taken effective control of the management of the college and have regularly exercised their corporate powers. The new Board conducted a preliminary audit which revealed that the college was financially distressed, unable to meet its maturing obligations with its creditor bank. The new management headed by its President, Ben Nicolas, embarked on a realignment of positions and functions of the different department in order to minimize expenditures.

As a result of the audit, NWC was compelled to abolish the administrative positions held by petitioner, which she did not contest, because of the following reasons: a) In 1988, NWC realized that it was violating the Administrative Manual for Private Schools. Thus, the position of Administrator/Vice President had to be eliminated; b) At that time, NWC was reeling from the effects of ,j its failure to meet its obligations with its creditors and all efforts to minimize expenditures were being undertaken; c) NWC realized after a study of the realignment of the positions that the functions and duties of Administrator/Vice President for Administration were being performed by the President. Consequently, the former positions had become redundant. During the first semester of the school year 1988-1989, Northwestern College uncovered irregularities allegedly committed by the petitioner, to wit: a) She personally exacted without receipt P25.00 from every student in the College of Nursing for the maintenance of the College Library. b) She did not remit nor liquidate the sum of P600.00 out of the P1,295.91 Related Learning Experience (RLE) fee paid by all students in the College of Nursing. The total sum thereof in the amount of P114,280.00 suspiciously remained unremitted and unliquidated for an unreasonable length of time. c) She drew salaries for teaching in the College of Nursing although she did not have a teaching load. Before the investigation could be concluded, petitioner sent a letter to the President of the college on September 20, 1988 manifesting that she is on an indefinite leave of absence. On December 29, 1989, the labor arbiter dismissed the complaint on the basis of these findings which were adopted by the NLRC: . . . Undoubtedly, complainant had occupied managerial positions, thus the rule of loss of trust and confidence applies. This office is however aware that allegations of loss of trust and confidence must have some basis and such is not lacking on record. Respondent had alleged and submitted evidence of irregularities of complainant during her tenure at the college. The complainant instead of refuting the charges cited alleged irregularities committed by the respondents in their respective offices. Needless to state, the allegation does not detract anything from the charges of irregularities against her by the respondent school. As the records of this case stand, our complainant has not sufficiently explained the substantiated charges of Northwestern College anent exaction of P25.00 from every student of the College of nursing, receipt of salaries for alleged teaching services for which she did not have any teaching load and failure to remit nor liquidate a total amount of P120,000.00. (p. 29 and 94, Rollo.) It must be emphasized that the rules of dismissal for managerial employees are different from those governing ordinary employees for it would be unjust and inequitable to compel an employer to continue with the employment of a person who occupies a managerial and sensitive position despite loss of trust and confidence. At the very least, the relationship must be considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of irregularities were sufficiently substantiated thus justifying petitioner's separation. Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two positions, petitioner violated the Administrative Manual for Private Schools. Thus, the respondent had no other recourse but to take away one of the positions from her or abolish the same. Undoubtedly, the College Board of Directors has the authority to reorganize and streamline the operations of the college with the end in view of minimizing expenditures.

We believe that the instant case was an offshoot of a corporate reorganization, a prerogative reposed on the Board of Directors of the College. The NLRC found that: Admittedly, complainant was a managerial employee who has to have the complete trust and confidence of respondents. While it may be true that complainant was not strictly an accountable employee primarily responsible for disbursement of whatever funds, respondents had some basis in losing its trust and confidence in complainant. Respondents' evidence showed that under the principle of command responsibility, complainant was in a sense responsible in the monitoring of monetary transactions involving funds from library collections and from Related Learning Science collection (pp. 29-32, 136). For it has been held that in case of termination due to loss of trust and confidence proof beyond reasonable doubt of misconduct is not necessary but some basis being sufficient (Villadolid vs. Inciong, 121 SCRA 205). However, we find that complainant was not accorded notice and investigation prior to termination. Indeed, circumstances herein resulted in constructive dismissal. We lend credence to complainant's allegation that investigation was conducted after she tendered her indefinite leave. Law and jurisprudence mandate due process prior to termination (Century Textile vs. NLRC, 161 SCRA 528). Considering the circumstances obtaining and in the spirit of compassionate justice, we find complainant entitled to separation pay, equivalent to one-half month per year of service based on her salary of P7,500.00 or the total amount of P32,750.00. Except for the allegation on constructive dismissal, this petition is a repetition of what petitioner had already alleged below and which the labor arbiter and the NLRC dismissed for lack of merit. Petitioner's claim of constructive dismissal stems from her alleged removal from the positions of Administrator, Vice President for Administration and Executive Vice President. From the time petitioner assumed the position of Executive Vice President, she did not possess any legal right to claim security of tenure concerning this position because she assumed the same without authority from the Board of Directors. Petitioner cannot claim that she was dismissed from the position of Administrator and VicePresident for Administration because her continuous occupation of the positions is at the discretion or pleasure of the Board of Directors. In La Sallete of Santiago, Inc. vs. NLRC (195 SCRA 80 [1991]), this Court explained: The acquisition of security of tenure by the teacher in the manner indicated signifies that he shall thenceforth have the right to remain in employment as such teacher until he reaches the compulsory retirement age in accordance with the rules of the school or the law. That tenure, once acquired, cannot be adversely affected or defeated by requiring the teacher to execute contracts stipulating the termination of his employment upon the expiration of a fixed period or term. Contracts of that sort are anathema and will be struck down as null and void. Now, a teacher may also be appointed as a department head or administrative officer of the school, e.g., as member of the school's governing council, as college dean or assistant dean, as high school principal, as college secretary. Except in the case of a clear and explicit agreement to the contrary, the acceptance by a teacher of an administrative position offered to him or to which he might have aspired, does not operate as a relinquishment or loss by him of his security of tenure as a faculty member; he retains his tenure as a teacher during all the time that he occupies the additional position of department head or administrative officer of the school. Indeed, the agreement between him and the school may very well include a provision for him to continue teaching even on a part-time basis. The teacher designated as administrative officer ordinarily serves for a definite term or at the pleasure of the school head or board of trustees or regents depending on the rules of the school and the agreement he may enter into with the institution. This appears to the Court to be the invariable practice in most private schools, the purpose being, as the Court en banc has also had occasion to point out, to afford to as many of the teaching staff as possible the opportunity to serve as dean or principal or as administrative officer of one type or another. There is, to be sure, nothing whatever amiss in said

practice of having teachers serve as administrative officials for a fixed term or in a non-permanent capacity. xxx xxx xxx A distinction should thus be drawn between the teaching staff of private educational institutions, on one hand teachers, assistant instructors, assistant professors, associate professors, full professors and department or administrative heads or officials on the other college or department secretaries, principals, directors," assistant, deans, deans. The teaching staff, the faculty members, may and should acquire tenure in accordance with the rules and regulations of the Department of Education and Culture and the school's own rules and standards. On the other hand, teachers appointed to serve as administrative officials do not normally and should not expect to, acquire a second or additional tenure. The acquisition of such an additional tenure is not normal, is the exception rather than the rule, and should therefore be clearly and specifically provided by law or contract. (at pp. 82-83, and 85.) The management of NWC rests on its Board of Directors including the selection of members of the faculty who may be allowed to assume other positions in the college aside from that of teacher or instructor. In 1988, when the then new Board of Directors abolished the additional positions held by the petitioner, it was merely exercising its right. The Board abolished the positions not because the petitioner was the occupant thereof but because the positions had become redundant with functions overlapping those of the President of the college. The Board realized that the college was violating the Administrative Manual for Private School which requires that all collegiate departments should have a full-time head. In Philippine School of Business Administration, et al. vs. Labor Arbiter Lacandola S. Leano and Rufino R. Tan (127 SCRA 778 [1984]), this Court held: This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of TAN's not having been elected thereafter, The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or agent or employee, is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist. (At p. 783.). The Board of Directors of NWC merely exercised rights vested in it by the Articles of Incorporation. Petitioner failed to refute the evidence proffered by NWC before the labor arbiter. In her appeal to the NLRC, petitioner also failed to rebut the findings of the labor arbiter. In the instant petition, she has again failed to overturn private respondents' evidence as well as the findings of the labor arbiter which were affirmed by the NLRC. Petitioner's application for an indefinite leave of absence was not approved by the college authorities, but this notwithstanding, she failed to follow-up her application and did not report for work. Believing she was dismissed, petitioner filed the complaint for illegal dismissal, illegal deductions, underpayment, unpaid wages or commissions and for moral damages and attorney's fees on November 16, 1988. As pointed out earlier, the rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not necessarily the same as those applicable to termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer's trust and confidence, than in the case of ordinary rank-and-file employees (Cruz vs. Medina, 177 SCRA S65 [1989]). Article 282(c) of the Labor Code provides that an employer may terminate an employment for "fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative."

Under this provision, loss of trust and confidence is a valid ground for dismissing an employee. Termination of employment on this ground does not require proof beyond reasonable doubt. All that is needed is for the employer to establish sufficient basis for the dismissal of the employee (Cruz vs. Medina, supra) Both the labor arbiter and the public respondent NLRC found that there is some basis for respondent NWC's loss of trust and confidence on petitioner. The dismissal of the petitioner was for a just and valid cause. However, public respondent gave credence to petitioner's allegation that she was not accorded notice and hearing prior to termination. It appears on record that the investigation of petitioner's alleged irregularities was conducted after the filing of the complaint for illegal dismissal. Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for a just or authorized cause and after due process. The two requirements of this legal provision are: 1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 283 of the New Labor Code; and 2. The legality in the manner of dismissal, that is, with due observance of the procedural requirements of Sections 2, 5, and 6 of Batas Pambansa Blg. 130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]). While the Labor Code treats of the nature and the remedies available with regard to the first, such as: (a) reinstatement to his former position without loss of seniority rights, and (b) payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement, said Code does not deal at all with the second, that is, the manner of dismissal, which is therefore, governed exclusively by the Civil Code (Primero vs. IAC, 156 SCRA 436 [1987]; Shoemart vs. NLRC, supra). In cases where there was a valid ground to dismiss an employee but there was non-observance of due process, this Court held that only a sanction must be imposed upon the employer for failure to give formal notice and to conduct an investigation required by law before dismissing the employee in consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 (1989); Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo, 199 SCRA 617 (1991). In Wenphil, we held: However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as discussed above. The dismissal of an employee must be for just or authorized cause and after due process (Emphasis in the original). Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstance of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. (at p. 76, reiterated in Pacific Mills, supra, at p. 261.) Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process. The Board of Directors, composed of the individual private respondents herein, has the power granted by the Corporation Code to implement a reorganization of respondent college's offices, including the abolition of various positions, since it is implied or incidental to its power to conduct the regular business affairs of the corporation.

The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied (San Miguel Brewery Sales Force Union [FTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot Laboratories vs. NLRC, 154 SCRA 713 [1987]). Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139 [1990]). When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith. WHEREFORE, the decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED and that private respondents are ORDERED to pay petitioner the amount of One Thousand Pesos (P1,000.00) as indemnity for non-observance of due process. SO ORDERED. G.R. No. 125303 June 16, 2000 DANILO LEONARDO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and REYNALDO'S MARKETING CORPORATION, ET. AL., respondents. G.R. No. 126937 June 16, 2000 AURELIO FUERTE and DANILO LEONARDO, petitioners, vs. RAUL T. AQUINO, VICTORIANO R. CALAYCAY and ROGELIO I. RALAYA, as Chairman and Members of the NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION and REYNALDO'S MARKETING and/or REYNALDO PADUA, respondents. DE LEON, JR., J Before us is a consolidation of G.R. Nos. 125303 and 126937, both petitions for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, seeking the annulment of a Decision 1 and Resolution 2 dated March 28, 1996 and May 29, 1996, respectively, of the public respondent in NLRC NCR 00-02-0102492. The facts are: Petitioner AURELIO FUERTE was originally employed by private respondent REYNALDO'S MARKETING CORPORATION on August 11, 1981 as a muffler specialist, receiving P45.00 per day. When he was appointed supervisor in 1988, his compensation was increased to P122.00 a day, augmented by a weekly supervisor's allowance of P600.00. On the other hand, DANILO LEONARDO was hired by private respondent on March 4, 1988 as an auto-aircon mechanic at a salary rate of P35.00 per day. His pay was increased to P90.00 a day when he attained regular status six months later. From such time until he was allegedly terminated, he claims to have also received a monthly allowance equal to P2,500.00 as his share in the profits of the auto-aircon division. FUERTE alleges that on January 3, 1992, he was instructed to report at private respondent's main office where he was informed by the company's personnel manager that he would be transferred to its Sucat plant due to his failure to meet his sales quota, and for that reason, his supervisor's allowance would be withdrawn. For a short time, FUERTE reported for work at the Sucat plant; however, he protested his transfer, subsequently filing a complaint for illegal termination.

On his part, LEONARDO alleges that on April 22, 1991, private respondent was approached by the same personnel manager who informed him that his services were no longer needed. He, too, filed a complaint for illegal termination. The case was heard by Labor Arbiter Jesus N. Rodriguez, Jr. On December 15, 1994, Labor Arbiter Emerson C. Tumanon, to whom the case was subsequently assigned, rendered judgment in favor of petitioners. The dispositive portion of the arbiter's decision 3 states: WHEREFORE, premises considered, respondents are hereby ordered: 1. To reinstate complainant Aurelio Fuerte, to the position he was holding before the demotion, and to reinstate likewise complainant Danilo Leogardo to his former position or in lieu thereof, they be reinstated through payroll reinstatement without any of them losing their seniority rights and other privileges, inclusive of allowance and to their other benefits; 2. To pay AURELIO FUERTE, the sum of TWO HUNDRED EIGHTY THOUSAND EIGHT HUNDRED NINETY-SIX PESOS and 72/100 (280,896.72); 3. To pay DANILO LEOGARDO, the sum of TWO HUNDRED FORTY ONE THOUSAND NINE HUNDRED EIGHT PESOS and 67/100 (P241,908.67). SO ORDERED. On appeal, the respondent Commission modified the aforesaid decision as follows: WHEREFORE, premises considered, the Decision of December 15, 1994 is hereby modified as follows: 1. Ordering the reinstatement of complainant Aurelio Fuerte to his former position without loss of his seniority rights but without backwages; 2. Dismissing the complaint of Danilo leonardo [sic] for lack of merit; and 3. Deleting the rests [sic] of the monetary award as well as the award of moral damages and attorney's fees in favor of the complainants also for lack of merit. SO ORDERED. Petitioners filed a motion for reconsideration 4 on April 30, 1996, which the Commission denied in its Resolution dated May 29, 1996. On July 1, 1996, LEONARDO, represented by the Public Attorney's Office, filed G.R. No. 125303, a special civil action for certiorari assailing the Commission's decision and resolution. However, on November 15, 1996, FUERTE, again joined by LEONARDO, filed G.R. No. 126937, a similar action praying for the annulment of the same decision and resolution. On October 7, 1997, private respondent filed its Comment 5 to the petition in G.R. No. 125303. On April 2, 1997, it filed its Comments 6 to the petition in G.R. No. 126937 with a motion to drop petitioner LEONARDO and consolidate G.R. No. 126937 with G.R. No. 125303. We granted private respondent's motion in our Resolution dated June 16, 1997. 7

The petition in G.R. No. 126937 8 raises the following issues: I. RESPONDENT COMMISSIONERS GRAVELY ABUSED THEIR DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN THEY GRANTED RESPONDENTS APPEAL. II. RESPONDENT COMMISSIONERS GRAVELY ABUSED THEIR DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN THEY FOUND FOR RESPONDENT REYNALDO'S MARKETING PRONOUNCING THAT THERE WAS NO ILLEGAL DISMISSAL DESPITE CONTRARY FINDINGS MADE BY THE LABOR ARBITER CONTRARY TO LAW AND EXISTING JURISPRUDENCE. Private respondent contends that it never terminated petitioners' services. In FUERTE's case, private respondent claims that the latter was demoted pursuant to a company policy intended to foster competition among its employees. Under this scheme, private respondent's employees are required to comply with a monthly sales quota. Should a supervisor such as FUERTE fail to meet his quota for a certain number of consecutive months, he will be demoted, whereupon his supervisor's allowance will be withdrawn and be given to the individual who takes his place. When the employee concerned succeeds in meeting the quota again, he is re-appointed supervisor and his allowance is restored. 9 With regard to LEONARDO, private respondent likewise insists that it never severed the former's employment. On the contrary, the company claims that it was LEONARDO who abandoned his post following an investigation wherein he was asked to explain an incident of alleged "sideline" work which occurred on April 22, 1991. It would appear that late in the evening of the day in question, the driver of a red Corolla arrived at the shop looking for LEONARDO. The driver said that, as prearranged, he was to pick up LEONARDO who would perform a private service on the vehicle. When reports of the "sideline" work reached management, it confronted LEONARDO and asked for an explanation. According to private respondent, LEONARDO gave contradictory excuses, eventually claiming that the unauthorized service was for an aunt. When pressed to present his aunt, it was then that LEONARDO stopped reporting for work, filing his complaint for illegal dismissal some ten months after his alleged termination.1wphi1.nt Insofar as the action taken against FUERTE is concerned, private respondent's justification is wellillustrated in the record. He was unable to meet his quota for five months in 1991, from July to November of that year. 10 Yet he insists that it could not possibly be so. He argues that he must have met his quota considering that he received his supervisor's allowance for the period aforesaid. The Commission, however, negated this view, finding the alleged inconsistency to be adequately explained in the record. We quite agree. As found by the Commission, placing special emphasis on the reasoning of the labor arbiter We find otherwise. Complainant Fuerte's failure to meet his sales quota which caused his demotion and the subsequent withdrawal of his allowance is fully supported by Exhibit "4" of respondents' position paper showing that his performance for the months of July 1991 to November 1991 is below par. While it is the policy of the respondent company that an employer who fails to meet his sales quota for three (3) consecutive months, he is stripped of his supervisor's designation and allowance. In the case of Fuerte, the respondents went beyond the three (3) months period before withdrawing his allowance. On this basis, the Labor Arbiter sweepingly concluded that the withdrawal of Fuerte's allowance is illegal since the respondents should have withdrawn the same after Fuerte failed to meet his sales quota for three consecutive months. However, the apparent flaw had been sufficiently reconciled by the respondents when they state that a supervisor like Fuerte, continues to receive his allowance until he is officially stripped of his supervisor's designation and assigned to another job as ordinary employee. This is precisely the reason why complainant Fuerte continued to receive his allowance even beyond the three (3) consecutive months period to meet his sales quota considering that it was only on the fifth consecutive months when the

respondent company decided to strip him of his designation as supervisor. This is corroborated by the "Sinumpaang Salaysay" (Exh. "A" respondents' position paper) of some employees of the respondent company who had been previously demoted for failure to meet their sales quota when they unformably stated: 5. Na alam naming kapagka hindi namin maabot and quotang nabanggit na may ilang buwan, kami'y maaring mademote at kapagka nagkaganoon ang supervisor allowance sampu ng, may mataas na parte sa profit sharing at winnings ay maalis sa amin at maibibigay sa hahalili sa amin. Surprisingly, the Labor Arbiter failed to take into consideration this material allegations of the respondents in his assailed decision except his sweeping statement that the "Sinumpaang Salaysay" was purposely done with malice to justify respondents' withdrawal of Fuerte's supervisor's allowance. [emphasis supplied] FUERTE nonetheless decries his transfer as being violative of his security of tenure, the clear implication being that he was constructively dismissed. We have held that an employer acts well within its rights in transferring an employee as it sees fit provided that there is no demotion in rank or diminution in pay. 11 The two circumstances are deemed badges of bad faith, and thus constitutive of constructive dismissal. In this regard, constructive dismissal is defined in the following manner: an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. 12 Yet here, the transfer was undertaken beyond the parameters as aforesaid. The instinctive conclusion would be that his transfer is actually a constructive dismissal, but oddly, private respondent never denies that it was really demoting FUERTE for cause. It should be borne in mind, however, that the right to demote an employee also falls within the category of management prerogatives. 13 This arrangement appears to us to be an allowable exercise of company rights. An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance may be visited with a penalty even more severe than demotion. Thus, [t]he practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the employer's interest. 14 Neither can we say that FUERTE's actions are indicative of abandonment. To constitute such a ground for dismissal, there must be (1) failure to report for work or absence without valid or justifiable reason; and (2) a clear intention, as manifested by some overt acts, to sever the employer-employee

relationship. 15 We have accordingly held that the filing of a complaint for illegal dismissal, as in this case, is inconsistent with a charge of abandonment. 16 There remains a question regarding the manner of demotion. In Jarcia Machine Shop and Auto Supply, Inc. v. National Labor Relations Commission, 17 we ruled that: Besides, even assuming arguendo that there was some basis for the demotion, as alleged by petitioner, the case records are bereft of any showing that private respondent was notified in advance of his impending transfer and demotion. Nor was he given an opportunity to refute the employer's grounds or reasons for said transfer and demotion. In Gaco v. National Labor Relations Commission, it was noted that: While due process required by law is applied on 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. After reviewing the record, we are sufficiently persuaded that private respondent had offered substantial proof of compliance with this procedural requisite. 18 Accordingly, given that FUERTE may not be deemed to have abandoned his job, and neither was he constructively dismissed by private respondent, the Commission did not err in ordering his reinstatement but without backwages. In a case where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss. 19 Neither do we discern any grave abuse of discretion in the Commission's ruling dismissing LEONARDO's complaint. On this score, the public respondent found that: Coming now to the case of complainant Danilo Leonardo, the evidence on record indubitably shows that he abandoned his work with the respondents. As sufficiently established by respondents, complainant Leonardo, after being pressed by the respondent company to present the customer regarding his unauthorized solicitation of sideline work from the latter and whom he claims to be his aunt, he never reported back to work anymore. This finding is bolstered by the fact that after he left the respondent company, he got employed with Dennis Motors Corporation as Air-Con Mechanic from October 12, 1992 to April 3, 1995 (Certification attached to respondents' Manifestation filed June 5, 1996) It must be stressed that while Leonardo alleges that he was illegally dismissed from his employment by the respondents, surprisingly, he never stated any reason why the respondents would want to ease him out from his job. Moreover, why did it take him ten (10) long months to file his case if indeed he was aggrieved by respondents. All the above facts clearly point that the filing of his case is a mere afterthought on the part of complainant Leonardo. In the case of Flexo Mfg. Corp. vs. NLRC, et. al., 135 SCRA 145, the Supreme Court held, thus: For abandonment to constitute a valid cause for termination of employment, there must be a delibarate [sic] unjustified refusal of the employee to

resume his employment. This refusal must be clearly shown, mere absence is not sufficient, it must be accompanied by overt acts unerringly pointing to the fatcs [sic] that the employee simply does not want to work anymore. LEONARDO protests that he was never accorded due process. This begs the question, for he was never terminated; 20 he only became the subject of an investigation in which he was apparently loath to participate. As testified to by Merlin P. Orallo, the personnel manager, he was given a memorandum 21 asking him to explain the incident in question, but he refused to receive it. 22 In an analogous instance, we held that an employee's refusal to sign the minutes of an investigation cannot negate the fact that he was accorded due process. 23 So should it be here. We find no reason to disturb the Commission's ruling that LEONARDO had abandoned his position, the instant case being a petition for certiorari where questions of fact are not entertained. 24 Whether a worker has abandoned his employment is essentially a question of fact. 25 We reiterate that it is not for us "to re-examine conflicting evidence, reevaluate the credibility of witnesses, nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field." 26 In concluding, we feel that it will not be amiss to point out that a petition for certiorari under Rule 65 is intended to rectify errors of jurisdiction or grave abuse of discretion. As we held in Philippine Advertising Counselors, Inc. v. National Labor Relations Commission, 27 The well-settled rule confines the original and exclusive jurisdiction of the Supreme Court in the review of decisions of the NLRC under Rule 65 of the Revised Rules of Court only to the issue of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction. Grave abuse of discretion is committed when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow just because there is a reversal by the NLRC of the decision of the Labor Arbiter. Neither does the mere variance in the evidentiary assessment of the NLRC and that of the Labor Arbiter would, as a matter of course, so warrant another full review of the facts. The NLRC's decision, so long as it is not bereft of support from the records, deserves respect from the Court. WHEREFORE, the petitions for certiorari in G.R. Nos. 125303 and 126937 are hereby DISMISSED for lack of merit. The Decision dated March 28, 1998 and the Resolution dated May 29, 1996 of public respondents is AFFIRMED in toto. No pronouncement as to costs.1wphi1.nt SO ORDERED. G.R. No. 100641 June 14, 1993 FARLE P. ALMODIEL, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS., INC., respondents. Apolinario Lomabao, Jr. for petitioner. Vicente A. Cruz, Jr., for private respondent. NOCON, J.:

Subject of this petition for certiorari is the decision dated March 21, 1991 of the National Labor Relations Commission in NLRC Case No. 00-00645-89 which reversed and set aside the Labor Arbiter's decision dated September 27, 1989 and ordered instead the payment of separation pay and financial assistance of P100,000.00. Petitioner imputes grave abuse of discretion on the part of the Commission and prays for the reinstatement of the Labor Arbiter's decision which declared his termination on the ground of redundancy illegal. Petitioner Farle P. Almodiel is a certified public accountant who was hired in October, 1987 as Cost Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable placement firm, John Clements Consultants, Inc. with a starting monthly salary of P18,000.00. Before said employment, he was the accounts executive of Integrated Microelectronics, Inc. for several years. He left his lucrative job therein in view of the promising career offered by Raytheon. He started as a probationary or temporary employee. As Cost Accounting Manager, his major duties were: (1) plan, coordinate and carry out year and physical inventory; (2) formulate and issue out hard copies of Standard Product costing and other cost/pricing analysis if needed and required and (3) set up the written Cost Accounting System for the whole company. After a few months, he was given a regularization increase of P1,600.00 a month. Not long thereafter, his salary was increased to P21,600.00 a month. On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization, affecting the whole finance group but the same was disapproved by the Controller. However, he was assured by the Controller that should his position or department which was apparently a one-man department with no staff becomes untenable or unable to deliver the needed service due to manpower constraint, he would be given a three (3) year advance notice. In the meantime, the standard cost accounting system was installed and used at the Raytheon plants and subsidiaries worldwide. It was likewise adopted and installed in the Philippine operations. As a consequence, the services of a Cost Accounting Manager allegedly entailed only the submission of periodic reports that would use computerized forms prescribed and designed by the international head office of the Raytheon Company in California, USA. On January 27, 1989, petitioner was summoned by his immediate boss and in the presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the ground of redundancy. He pleaded with management to defer its action or transfer him to another department, but he was told that the decision of management was final and that the same has been conveyed to the Department of Labor and Employment. Thus, he was constrained to file the complaint for illegal dismissal before the Arbitration Branch of the National Capital Region, NLRC, Department of Labor and Employment. On September 27, 1989, Labor Arbiter Daisy Cauton-Barcelona rendered a decision, the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered declaring that complainant's termination on the ground of redundancy is highly irregular and without legal and factual basis, thus ordering the respondents to reinstate complainant to his former position with full backwages without lost of seniority rights and other benefits. Respondents are further ordered to pay complainant P200,000.00 as moral damages and P20,000.00 as exemplary damages, plus ten percent (10%) of the total award as attorney's fees. 1 Raytheon appealed therefrom on the grounds that the Labor Arbiter committed grave abuse of discretion in denying its rights to dismiss petitioner on the ground of redundancy, in relying on baseless surmises and self-serving assertions of the petitioner that its act was tainted with malice and bad faith and in awarding moral and exemplary damages and attorney's fees. On March 21, 1991, the NLRC reversed the decision and directed Raytheon to pay petitioner the total sum of P100,000.00 as separation pay/financial assistance. The dispositive portion of which is hereby quoted as follows:

WHEREFORE, the appealed decision is hereby set aside. In its stead, Order is hereby issued directing respondent to pay complainant the total separation pay/financial assistance of One Hundred Thousand Pesos (P100,000.00). SO ORDERED. 2 From this decision, petitioner filed the instant petition averring that: The public respondent committed grave abuse of discretion amounting to (lack of) or in excess of jurisdiction in declaring as valid and justified the termination of petitioner on the ground of redundancy in the face of clearly established finding that petitioner's termination was tainted with malice, bad faith and irregularity. 3 Termination of an employee's services because of redundancy is governed by Article 283 of the Labor Code which provides as follows: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. There is no dispute that petitioner was duly advised, one (1) month before, of the termination of his employment on the ground of redundancy in a written notice by his immediate superior, Mrs. Magdalena B.D. Lopez sometime in the afternoon of January 27, 1989. He was issued a check for P54,863.00 representing separation pay but in view of his refusal to acknowledge the notice and the check, they were sent to him thru registered mail on January 30, 1989. The Department of Labor and Employment was served a copy of the notice of termination of petitioner in accordance with the pertinent provisions of the Labor Code and the implementing rules. The crux of the controversy lies on whether bad faith, malice and irregularity crept in the abolition of petitioner's position of Cost Accounting Manager on the ground of redundancy. Petitioner claims that the functions of his position were absorbed by the Payroll/Mis/Finance Department under the management of Danny Ang Tan Chai, a resident alien without any working permit from the Department of Labor and Employment as required by law. Petitioner relies on the testimony of Raytheon's witness to the effect that corollary functions appertaining to cost accounting were dispersed to other units in the Finance Department. And granting that his department has to be declared redundant, he claims that he should have been the Manager of the Payroll/Mis/Finance Department which handled general accounting, payroll and encoding. As a B. S. Accounting graduate, a CPA with M.B.A. units, 21 years of work experience, and a natural born Filipino, he claims that he is better qualified than Ang Tan Chai, a B.S. Industrial Engineer, hired merely as a Systems Analyst Programmer or its equivalent in early 1987, promoted as MIS Manager only during the middle part of 1988 and a resident alien. On the other hand, Raytheon insists that petitioner's functions as Cost Accounting Manager had not been absorbed by Ang Tan Chai, a permanent resident born in this country. It claims to have established below that Ang Tan Chai did not displace petitioner or absorb his functions and duties as they were occupying entirely different and distinct positions requiring different sets of expertise or qualifications and discharging functions altogether different and foreign from that of petitioner's abolished position. Raytheon debunks petitioner's reliance on the testimony of Mr. Estrada saying that

the same witness testified under oath that the functions of the Cost Accounting Manager had been completely dispensed with and the position itself had been totally abolished. Whether petitioner's functions as Cost Accounting Manager have been dispensed with or merely absorbed by another is however immaterial. Thus, notwithstanding the dearth of evidence on the said question, a resolution of this case can be arrived at without delving into this matter. For even conceding that the functions of petitioner's position were merely transferred, no malice or bad faith can be imputed from said act. A survey of existing case law will disclose that in Wiltshire File Co., Inc. v. NLRC, 4 the position of Sales Manager was abolished on the ground of redundancy as the duties previously discharged by the Sales Manager simply added to the duties of the General Manager to whom the Sales Manager used to report. In adjudging said termination as legal, this Court said that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. The characterization of an employee's services as no longer necessary or sustainable, and therefore, properly terminable, was an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. In the case of International Macleod, Inc. v. Intermediate Appellate Court, 5 this Court also considered the position of Government Relations Officer to have become redundant in view of the appointment of the International Heavy Equipment Corporation as the company's dealer with the government. It held therein that the determination of the need for the phasing out of a department as a labor and cost saving device because it was no longer economical to retain said services is a management prerogative and the courts will not interfere with the exercise thereof as long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. In the same vein, this Court ruled in Bondoc v. People's Bank and Trust Co., 6 that the bank's board of directors possessed the power to remove a department manager whose position depended on the retention of the trust and confidence of management and whether there was need for his services. Although some vindictive motivation might have impelled the abolition of his position, this Court expounded that it is undeniable that the bank's board of directors possessed the power to remove him and to determine whether the interest of the bank justified the existence of his department. Indeed, an employer has no legal obligation to keep more employees than are necessary for the operation of its business. Petitioner does not dispute the fact that a cost accounting system was installed and used at Raytheon subsidiaries and plants worldwide; and that the functions of his position involve the submission of periodic reports utilizing computerized forms designed and prescribed by the head office with the installation of said accounting system. Petitioner attempts to controvert these realities by alleging that some of the functions of his position were still indispensable and were actually dispersed to another department. What these indispensable functions that were dispersed, he failed however, to specify and point out. Besides, the fact that the functions of a position were simply added to the duties of another does not affect the legitimacy of the employer's right to abolish a position when done in the normal exercise of its prerogative to adopt sound business practices in the management of its affairs. Considering further that petitioner herein held a position which was definitely managerial in character, Raytheon had a broad latitude of discretion in abolishing his position. An employer has a much wider discretion in terminating employment relationship of managerial personnel compared to rank and file employees. 7 The reason obviously is that officers in such key positions perform not only functions which by nature require the employer's full trust and confidence but also functions that spell the success or failure of an enterprise. Likewise destitute of merit is petitioner's imputation of unlawful discrimination when Raytheon caused corollary functions appertaining to cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien without a working permit. Article 40 of the Labor Code which requires employment permit refers to non-resident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. Since Ang Tan Chai is a resident alien, he does not fall within the ambit of the provision.

Petitioner also assails Raytheon's choice of Ang Tan Chai to head the Payroll/Mis/Finance Department, claiming that he is better qualified for the position. It should be noted, however, that Ang Tan Chai was promoted to the position during the middle part of 1988 or before the abolition of petitioner's position in early 1989. Besides the fact that Ang Tan Chai's promotion thereto is a settled matter, it has been consistently held that an objection founded on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the position. In the case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position, the Court cannot substitute its discretion and judgment for that which is clearly and exclusively management prerogative. To do so would take away from the employer what rightly belongs to him as aptly explained in National Federation of Labor Unions v. NLRC: 8 It is a well-settled rule that labor laws do not authorize interference with the employer's judgment in the conduct of his business. The determination of the qualification and fitness of workers for hiring and firing, promotion or reassignment are exclusive prerogatives of management. The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial authority. The employer is free to determine, using his own discretion and business judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which may be provided by law. There is none in the instant case. Finding no grave abuse of discretion on the part of the National Labor Relations Commission in reversing and annulling the decision of the Labor Arbiter and that on the contrary, the termination of petitioner's employment was anchored on a valid and authorized cause under Article 283 of the Labor Code, the instant petition for certiorari must fail. SO ORDERED. G.R. No. 100701 March 28, 2001

PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK EMPLOYEES ASSOCIATION,1 respondents. GONZAGA-REYES, J.: Before us is a special civil action for certiorari with prayer for preliminary injunction and/or restraining order seeking the nullification of (1) the decision of public respondent in NLRCNCR Case No. 02-00753-88, entitled "Producers Bank Employees Association v. Producers Bank of the Philippines," promulgated on 30 April 1991, reversing the Labor Arbiter's dismissal of private respondent's complaint and (2) public respondent's resolution dated 18 June 1991 denying petitioner's motion for partial reconsideration. 1wphi1.nt The present petition originated from a complaint filed by private respondent on 11 February 1988 with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages.2 On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondent's claims to be unmeritorious and dismissed its complaint.3 In a complete reversal, however, the NLRC4 granted all of private respondent's claims, except for damages.5 The dispositive portion of the NLRC's decision provides WHEREFORE, premises considered, the appealed Decision is, as it is hereby, SET ASIDE and another one issued ordering respondent- appellee to pay complainant-

appellant: 1. The unpaid bonus (mid-year and Christmas bonus) and 13th month pay; 2. Wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof; and 3. Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years. The rest of the claims are dismissed for lack of merit. SO ORDERED. Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC in a Resolution issued on 18 June 1991. Hence, recourse to this Court. Petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons stated in its Petition 1. On the alleged diminution of benefits, the NLRC gravely abused its discretion when (1) it contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the so-called "company practice invoked by it has no legal and moral bases" (p. 2, Motion for Partial Reconsideration, Annex "H"); 2. On the alleged non-compliance with Wage Order No. 6, the NLRC again gravely abused its discretion when it patently and palpably erred in holding that it is "more inclined to adopt the stance of appellant (private respondent UNION) in this issue since it is more in keeping with the law and its implementing provisions and the intendment of the parties as revealed in their CBA" without giving any reason or justification for such conclusions as the stance of appellant (private respondent UNION) does not traverse the clear and correct finding and conclusion of the Labor Arbiter. Furthermore, the petitioner, under conservatorship and distressed, is exempted under Wage Order No. 6. Finally, the "wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof" (par. 2, dispositive portion, NLRC Decision), has prescribed (p. 12, Motion for Partial Reconsideration, Annex "H"). 3. On the alleged non-payment of legal holiday pay, the NLRC again gravely abused its discretion when it patently and palpably erred in approving and adopting "the position of appellant (private respondent UNION)" without giving any reason or justification therefor which position does not squarely traverse or refute the Labor Arbiter's correct finding and ruling (p. 18, Motion for Partial Reconsideration, Annex "H").6 On 29 July 1991, the Court granted petitioner's prayer for a temporary restraining order enjoining respondents from executing the 30 April 1991 Decision and 18 June 1991 Resolution of the NLRC.7 Coming now to the merits of the petition, the Court shall discuss the issues ad seriatim.

Bonuses As to the bonuses, private respondent declared in its position papers filed with the NLRC that 1. Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees since 1971 when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus equivalent to an employee's one-month basic pay and a Christmas bonus equivalent to an employee's one whole month salary (basic pay plus allowance); 2. When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously being given as part of the Christmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus; 3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay as 13th month pay but the Christmas bonus was no longer based on the allowance but on the basic pay of the employees which is higher; 4. In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year bonus; 5. By virtue of an alleged Monetary Board Resolution No. 1566, bank only gave a one-half (1/2) month basic pay as compliance of the 13th month pay and none for the Christmas bonus. In a tabular form, here are the bank's violations: YEAR previous years 1984 1985 1986 1987 MID- YEAR BONUS one mo. basic [one mo. basic] one-half mo. basic one-half mo. basic one-half mo. basic CHRISTMAS BONUS one mo. basic -none-noneone-half mo. basic one-half mo. basic

13TH MO. P

one mo. Ba one-half mo. one-half mo.

one mo. Ba

one mo. ba

Private respondent argues that the mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the employee's regular compensation.10 On the other hand, petitioner asserts that it cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus. On the

contrary, section 4 of the collective bargaining agreement states that Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now accorded or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole judgment and discretion of the BANK to grant, modify or withdraw .11 A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. 12 The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.13 Thus, a bonus is not a demandable and enforceable obligation,14 except when it is made part of the wage, salary or compensation of the employee.15 However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Thus, in Traders Royal Bank v. NLRC,16 we held that It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees. The matter of giving them bonuses over and above their lawful salaries and allowances is entirely dependent on the profits, if any, realized by the Bank from its operations during the past year. From 1979-1985, the bonuses were less because the income of the Bank had decreased. In 1986, the income of the Bank was only 20.2 million pesos, but the Bank still gave out the usual two (2) months basic mid-year and two months gross year-end bonuses. The petitioner pointed out, however, that the Bank weakened considerably after 1986 on account of political developments in the country. Suspected to be a Marcos-owned or controlled bank, it was placed under sequestration by the present administration and is now managed by the Presidential Commission on Good Government (PCGG). In light of these submissions of the petitioner, the contention of the Union that the granting of bonuses to the employees had ripened into a company practice that may not be adjusted to the prevailing financial condition of the Bank has no legal and moral bases. Its fiscal condition having declined, the Bank may not be forced to distribute bonuses which it can no longer afford to pay and, in effect, be penalized for its past generosity to its employees. Private respondent's contention, that the decrease in the mid-year and year-end bonuses constituted a diminution of the employees' salaries, is not correct, for bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code. This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLR17 wherein the Court made the following pronouncements By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. It is something given in addition to what is ordinarily received by or strictly due the recipient. The granting of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages, especially so if it is incapable of doing so.

xxx xxx xxx Clearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature of bonuses to its employees when it has been operating on considerable net losses for a given period of time? Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80's. As early as 1984, the Central Bank found that Manila bank had been suffering financial losses. Presumably, the problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed under receivership and ordered to close operation. In 1988, it was ordered liquidated. It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits to speak of that would warrant the conferment of additional benefits sought by private respondents. No company should be compelled to act liberally and confer upon its employees additional benefits over and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of enlightened generosity and self-interest can be exacted from near empty , if not empty coffers. It was established by the labor arbiter18 and the NLRC19 and admitted by both parties20 that petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265,21 as amended by Presidential Decree No. 72,22 which provides Sec.28-A. Appointment of conservator. - Whenever, on the basis of a report submitted by the appropriate supervising and examining department, the Monetary Board finds that a bank is in a state of continuing inability or unwillingness to maintain a condition of solvency and liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator to take charge of the assets, liabilities, and the management of that banking institution, collect all monies and debts due said bank and exercise all powers necessary to preserve the assets of the bank, reorganize the management thereof and restore its viability .He shall have the power to overrule or revoke "the actions of the previous management and board of directors of the bank, any provision of law to the contrary notwithstanding, and such other powers as the Monetary Board shall deem necessary.1wphi1.nt xxx xxx xxx Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity .In Central Bank of the Philippines v. Court of Appeals,23 the Court declared that the order placing petitioner herein under conservatorship had long become final and its validity could no longer be litigated upon. Also, in the same case, the Court found that sometime in August, 1983, some news items triggered a bank-run in petitioner which resulted in continuous over- drawings on petitioner's demand deposit account with the Central Bank; the over- drawings reached P143.955 million by 17 January 1984; and as of 13 February 1990, petitioner had over-drawings of up to P1.233 billion, which evidences petitioner's continuing inability to maintain a condition of solvency and liquidity, thus justifying the conservatorship. Our findings in the Central Bank case coincide with petitioner's claims that it continuously suffered losses from 1984 to 1988 as follows

YEAR 1984 1985 1986 1987 January-February 1988

NET LOSSES IN MILLIONS OF PESOS P 144.418 P 144.940 P 132.940 P 84.182 P 9.271

1 month basic month basic month basic 1/2 month basic 1/2 month basic

None None 1/2 month basic month basic month basic

month basic month basic 1 month basic 1 month basic 1 month basic

These losses do not include the interest expenses on the overdraft loan of the petitioner to the Central Bank, which interest as of July 31, 1987, amounted to P610.065 Million, and penalties on reserve deficiencies which amounted to P89.029 Million. The principal balance of the overdraft amounted to P971.632 Million as of March 16, 1988.24 Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the conservatorship achieve its purposes for the alternative would be petitioner's closure whereby employees would lose not only their benefits, but their jobs as well. 13th Month Pay With regard to the 13th month pay, the NLRC adopted the position taken by private respondent and held that the conservator was not justified in diminishing or not paying the 13th month pay and that petitioner should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by Presidential Decree No. 1364, but that it did not do so.25 The NLRC held that the actions of the conservator ran counter to the provisions of PD 851. In its position paper,26 private respondent claimed that petitioner made the following payments to its members MID-YEAR BONUS 1 month basic month basic month basic month basic 13th MONTH PAY month basic month basic 1 month basic 1 month basic CHRISTMAS BONUS None None month basic month basic

Petitioner argues that it is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay, pursuant to Section 2 of PD 851.28 PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their employees receiving a basic salary of not more than P 1,000 a month, 29 regardless of the nature of the employment, a 13th month pay, not later than December 24 of every year.30 However, employers already paying their employees a 13th month pay or its equivalent are not covered by the law. Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law,31 the term "equivalent" shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some relief - not to all workers - but only to those not actually paid a 13th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit.32 In the case at bar, even assuming the truth of private respondent's claims as contained in its position paper or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as an "equivalent" of the 13th month pay mandated by PD 851. Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus as part of the 13th month pay. Wage Order No. 6 Wage Order No.6, which came into effect on 1 November 1984, increased the statutory minimum wage of workers, with different increases being specified for agricultural plantation and non-agricultural workers. The bone of contention, however, involves Section 4 thereof which reads All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein, provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay the difference. Such increases shall not include anniversary

However, in its Memorandum27 filed before this Court, private respondent revised its claims as follows MID- YEAR BONUS 13th MONTH PAY CHRISTMAS BONUS

wage increases provided in collective bargaining agreements unless the agreement expressly provide otherwise. On 16 November 1984, the parties entered into a collective bargaining agreement providing for the following salary adjustments Article VIII. Section 1. Salary Adjustments. - Cognizant of the effects of, among others, price increases of oil and other commodities on the employees' wages and earnings, and the certainty of continued governmental or statutory actions adjusting employees' minimum wages, earnings, allowances, bonuses and other fringe benefits, the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement: (i) Effective March 1, 1984 - P225.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1984. (ii) Effective March 1,1985 -P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1,1985. (iii) Effective March 1,1986 -P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1986. In addition, the collective bargaining agreement of the parties also included a provision on the chargeability of such salary or allowance increases against government-ordered or legislated income adjustments Section 2. Pursuant to the MOLE Decision dated October 2, 1984 and Order dated October 24, 1984, the first-year salary and allowance increases shall be chargeable against adjustments under Wage Order No. 5, which took effect on June 16, 1984. The charge ability of the foregoing salary increases against government-ordered or legislated income adjustments subsequent to Wage Order No. 5 shall be determined on the basis of the provisions of such government orders or legislation. Petitioner argues that it complied with Wage Order No. 6 because the first year salary and allowance increase provided for under the collective bargaining agreement can be credited against the wage and allowance increase mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and allowance adjustments prescribed therein. Petitioner asserts that although the collective bargaining agreement was signed by the parties on 16 November. 1984, the first year salary and allowance increase was made to take effect retroactively, beginning from 1 March 1984 until 28 February 1985. Petitioner maintains that this period encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference.33 On the other hand, private respondent contends that the first year salary and allowance increases under the collective bargaining agreement cannot be applied towards the

satisfaction of the increases prescribed by Wage Order No. 6 because the former were not granted within the period of creditability provided for in such wage order. According to private respondent, the significant dates with regard to the granting of the first year increases are 9 November 1984 the date of issuance of the MOLE Resolution, 16 November 1984 - the date when the collective bargaining agreement was signed by the parties and 1 March 1984 the retroactive date of effectivity of the first year increases. Private respondent points out that none of these dates fall within the period of creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage Order No. 6.34 The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation. Thus, we held in Apex Mining Company, Inc. v. NLRC35 that [t]o obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require. Section 1 of Article VIII of the collective bargaining agreement of the parties states that "...the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement..." The unequivocal wording of this provision manifests the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining agreement to any statutory wage and allowance, adjustments issued during the effectivity of such agreement from 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent's contentions, there is nothing in the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6. It would be inconsistent with the above stated rationale underlying the creditability provision of Wage Order No. 6 if, after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for the fact remains that petitioner actually granted wage and allowance increases sufficient to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6. Holiday Pay Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays36 and that the employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. In this case, the Labor Arbiter found that the divisor used by petitioner in arriving at the employees' daily rate for the purpose of computing salary-related benefits is 314.37 This finding was not disputed by the NLRC.38 However, the divisor was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986, to wit To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August 18, 1986, the acting Conservator approved the use of 303 days as divisor in the computation of Overtime pay. The present Policy of 314 days

as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest days. Corollarily, the Acting Conservator also approved the increase of meal allowance from P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays. Proceeding from the unambiguous terms of the above quoted memorandum, the Labor Arbiter observed that the reduction of the divisor to 303 was for the sole purpose of increasing the employees' overtime pay and was not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary-related benefits.39 Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage rate of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for purposes of computing overtime pay only. In its Memorandum, private respondent states that 49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting Conservator is clear. Prior to August 18,1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of the monthlysalaried employees. Effective August 18, 1986, this was changed. It adopted the following formula: Basic salary x 12 months = Daily Wage Rate 303 days 50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not actually paying its employees the regular holiday pay mandated by law. Consequently, it is bound to pay the salary differential of its employees effective November 1, 1974 up to the present. xxx xxx xxx

Sundays and the ten (10) legal holidays form the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251. Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the interoffice memorandum. Thus, the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein. We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing the employees' overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner's employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case and the parties' own admissions, the Court holds that petitioner has complied with the requirements of Article 94 of the Labor Code.1wphi1.nt Damages As to private respondent's claim for damages, the NLRC was correct in ruling that there is no basis to support the same. WHEREFORE, for the reasons above stated, the 30 April 1991 Decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled "Producers Bank Employees Association v. Producers Bank of the Philippines," and its 18 June 1991 - Resolution issued in the same case are hereby SET ASIDE, with the exception of public respondent's ruling on damages. SO ORDERED.

G.R. No. 142824

December 19, 2001

54. Since it is a question of fact, the Inter-office Memorandum dated August 13,1986 (Annex "E") provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay.40 In Union of Filipro Employees v. Vivar, ]r.41 the Court held that "[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate." This was also our ruling in Chartered Bank Employees Association v. Ople,42 as follows It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends otherwise. One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays,

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA MONTEJO, petitioners, vs. INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents. KAPUNAN, J.: Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978. Culled from the questioned decision, the facts of the case are as follows: Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rankand-file employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993. Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar, 1 VicePresident-Human Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union officers inquired about

the stand of the company regarding the duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter could be best discussed during the formal negotiations which would start soon. In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without sealing the containers and securing the raw materials they were working on . When Salazar inquired about the reason for their refusal to follow their normal work schedule, the employees told him to "ask the union officers." To minimize the damage the overtime boycott was causing the company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the union officers that the matter could be better discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company, the overtime boycott continued. In addition, the employees started to engage in a work slowdown campaign during the time they were working, thus substantially delaying the production of the company. 2 On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its counter-proposal. On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday. On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA negotiations. 3 The parties, however, failed to arrive at an agreement and on 15 November 1993, respondent company filed with the Office of the Secretary of Labor and Employment a petition for assumption of jurisdiction. On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly committed by respondent company. On 12 February 1994, the union staged a strike. On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent company to "immediately accept all striking workers, including the fifty-three (53) terminated union officers, shop stewards and union members back to work under the same terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in 1993." 5 On the other hand, petitioner union was directed to "strictly and immediately comply with the return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7 In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings" seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases before them and to thereafter submit their report and recommendation to his office.

On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13 August 1997, hence: WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this case, and judgment is hereby rendered: (1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike; (2) Declaring the respondent union officers namely: Nestor Ocampo Carmelo Santos Marites Montejo Rico Gonzales Rod Abuan Segundino Flores Hernando Clemente President Vice-President Treasurer/Board Member Auditor Director Director Director

who spearheaded and led the overtime boycott and work slowdown, to have lost their employment status; and (3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which prohibits the union or any employee during the existence of the CBA from staging a strike or engaging in slowdown or interruption of work and ordering them to cease and desist from further committing the aforesaid illegal acts. Petitioner union moved for the reconsideration of the order but its motion was denied. The union went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated on 29 December 1999, the appellate court dismissed the petition. The union's motion for reconsideration was likewise denied. Hence, the present recourse where petitioner alleged: THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES. THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED. THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER. 9

We sustain the questioned decision. On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the assumption order on 14 February 1994. However, it cannot be denied that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the parties acceded and participated in the proceedings, knowing fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of Labor. The appellate court also correctly held that the question of the Secretary of Labor and Employment's jurisdiction over labor and labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)10 where the Court declared: In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the labor arbiter has exclusive jurisdiction. Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening proviso therein reading '(e)xcept as otherwise provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or the various regional directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings. As we have said, '(i)t is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it. In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally construed to subserve the objective of the jurisdiction vested in the Secretary.11 Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be accorded due respect by the Supreme Court.12 Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart from their findings. Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol evidence rule"13 when they upheld the allegation of respondent company that the work schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner union, the provisions of their CBA on working hours clearly stated that the normal working hours were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union underscored that the regular work hours for the company was only eight (8) hours. It further contended that the Labor Arbiter as well as the Court of Appeals should not have admitted any other evidence contrary to what was stated in the CBA. The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. 15 Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases.16 Hence,

the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA. In any event, the parties stipulated: Section 1. Regular Working Hours A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.17 It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they followed, without any question or complaint, the two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours. As Labor Arbiter Caday elucidated in his report: Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union Vice-President Carmelo C. Santos, demanded that the company make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the employees to sign, his name appeared but without his signatures, he however had rendered overtime during those dates and was paid because unlike in other departments, it has become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union, its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the discussion of the second issue.18 As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and "work slowdown" committed by the respondents amounted to illegal strike. As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-PresidentHuman Resources Department, sometime in February, 1993, he was approached by the union President Nestor Ocampo and Union Director Hernando Clemente who asked him as to what was the stand of the company regarding the duration of the CBA between the company and which was set to expire on July 31, 1993. He answered that the matter could be best discussed during the formal renegotiations which anyway was to start soon. This query was followed up sometime in March, 1993, and his answer was the same. In early

April, 1993, the union president requested for a meeting to discuss the duration and effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the union officers asked him if he would agree to make the new CBA effective on August 1, 1993 and the term thereof to be valid for only two (2) years. When he answered that it was still premature to discuss the matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without sealing the containers and securing the raw materials they were working on. When he saw the workers leaving before the end of their shift, he asked them why and their reply was "asked (sic) the union officers." Alarmed by the overtime boycott and the damage it was causing the company, he requested for a meeting with the union officers. In the meeting, he asked them why the regular work schedule was not being followed by the employees, and union Director Enrico Gonzales, with the support of the other union officers, told him that if management would agree to a two-year duration for the new CBA and an effectivity date of August 1, 1993, all employees will return to the normal work schedule of two 12-hour shifts. When answered that the management could not decide on the matter at the moment and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott continued and the employees at the same time employed a work slowdown campaign during working hours, causing considerable delay in the production and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which formed part of his direct testimony). This testimonial narrations of Salazar was, as earlier said, undisputed because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on August 9, 1994). Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department Managers pointing to the union officers as the instigators of the overtime boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union member at the time the concerted activities of the respondents took place, is quoted hereunder: "2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko x x x "3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag nagbigay ng senyas ang Unyon ng "showtime." "4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at Linggo. "5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina: Nestor Ocampo Carmelo Santos Nanding Clemente TessMontejo Presidente Bise-Presidente Director Chief Steward

Segundo Flores Enrico Gonzales Boy Alcantara Rod Abuan

Director Auditor Shop Steward Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nagovertime" gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis. xxx xxx xxx

Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in the performance and work efficiency for the year 1993 as compared to the previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she could not answer how she was able to prepare the productivity reports from May 1993 to February 1994 because from April 1993 up to April 1994, she was on union leave. As such, the productivity reports she had earlier shown was not prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the comparison made by the respondents was of no moment, because the higher production for the years previous to 1993 was reached when the employees regularly rendered overtime work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in financial losses to the company but also damaged its business reputation. Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work schedule thru their concerted activities of "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company to accede to their unreasonable demands, can be classified as a strike on an installment basis, as correctly called by petitioner company x x x19 It is thus undisputed that members of the union by their own volition decided not to render overtime services in April 1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their own volition and in keeping with the regular working hours in the Company x x x decided not to render overtime".21 Such admission confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to its unreasonable demands. More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a violation of their CBA, which prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs. NLRC ,23 this Court ruled: x x x (T)he concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of x x x (their collective bargaining) agreement."

What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. The Court also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their own terms." x x x24 Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation package to some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts they committed. Respondent company correctly postured that at the time these union officers obtained their separation benefits, they were still considered employees of the company. Hence, the company was merely complying with its legal obligations.25 Respondent company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by its employees and the economic situation prevailing, respondent company chose to let its employees avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it should not be punished. WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the Court of Appeals is AFFIRMED. SO ORDERED. PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (4th Division), and RAUL G. DIAMANTE, respondents.

"IRENEA E. CENIZA "Commissioner"[2] and the resolution of May 31, 1994 which provides: "WHEREFORE, premises considered, the decision in question is hereby SET ASIDE as regards complainant Alfonso Araneta only, whose appeal is hereby reopened to give the respondent-appellee the opportunity to answer the same in accordance with our above discussion. Except for this modification, the rest of the decision stays. "SO ORDERED. "Cebu City, Philippines. "IRENEA E. CENIZA "Presiding Commissioner"[3] The facts are as follows: On June 30, 1975, Philippine Airlines hired respondent Raul Diamante as Integrated Ticket Representative for Bacolod City station. On April 8, 1988, Edgardo Pineda, Rizalino Cabarloc, Ernesto Subia and Rolando Velasco went to Bacolod Airport to have their tickets booked for their flight to Manila on April 9 and 10, 1988. Romeo Vista, a former officemate of Edgardo Pineda, was their contact person. At the airport, Leticia Vista, wife of Romeo Vista, introduced Raul Diamante to Edgardo Pineda as the person who could help in the booking of his ticket. Pineda requested Diamante if he could book their tickets for the April 8, 1988 flight, particularly Subia, who had to attend an important meeting in Manila. Diamante answered that all flights for the week were fully booked. He suggested that he leave with him their tickets. Pineda gave four (4) tickets to Diamante together with the amount of One Thousand Pesos (P1,000.00) then Diamante assured them that they will be accommodated. Subia was booked for the April 8, 1988 flight to Manila while Pineda, Velasco and Cabarloc were booked for the April 10, 1988 flight. When Subia failed to take the flight due to illness, Diamante returned Subia's ticket to Vista the following day since it was Diamante's day off. In order to facilitate Subia's re-booking, Vista asked for the help of her friend Nelia Cawaling, a neighbor of PAL Station Agent Rodolfo Puentebella. With the help of Cawaling and Puentebella, Subia was able to take the April 9, 1988 flight to Manila. Upon their arrival in Manila, on June 20, 1988, Pineda executed an affidavit charging Diamante with bribery/corruption. On July 08, 1988, petitioner's Bacolod Branch Manager required Diamante to comment on the affidavit. On July 13, 1988, Diamante submitted his sworn statement denying the allegations against him. On July 27, 1988, after evaluation of the complaint and finding the explanation of Diamante insufficient, petitioner's manager charged Diamante administratively with bribery/extortion and violation of PAL's Code of Discipline, particularly Article VIII, Section 1, paragraph 2 thereof, which provides: "Any employee who directly or indirectly requests or receives any consideration, share, percentage or commission for himself or for another person in connection with the performance of his duties."

DECISION

PARDO, J.: The case is a petition for certiorari with prayer for preliminary injunction and temporary restraining order, to nullify the decision of the National Labor Relations Commission[1] dated March 18, 1994, which states: "WHEREFORE, the instant appeals are hereby granted. The decision under appeal is hereby set aside and a new one entered declaring illegal the dismissal of the complainant appellants Alfonso P. Araneta and Raul G. Diamante and ordering respondent Philippine Airlines to reinstate them to their former or equivalent positions without loss of seniority rights, with three (3) years backwages inclusive of allowances and other benefits. "All other claims are hereby dismissed for lack of sufficient basis. "SO ORDERED. "Cebu City, Philippines.

Thereafter, petitioner convened an ad-hoc Committee on Administrative Investigation and conducted an investigation. On October 3, 1988, at a clarificatory hearing of the committee Diamante appeared and was investigated with the assistance of his counsel, Atty. Allan Zamora, and PALEA representative Mario Cornelio. During the hearing, it was agreed to reset the hearing on October 24, 1988, to give Diamante a chance to confront Pineda. After several postponements, there was never a confrontation. No confrontation occurred due to the fact that the committee unilaterally set the confrontation on November 11, 1988, at Tuguegarao Airport, Cagayan, despite the previous agreement of the parties and respondent counsel's request to reset it on November 22, 1988, in Manila. The Committee, after deliberation, resolved the case on the basis of the evidence on record. On December 14, 1988, Diamante received a notice of his dismissal from the service by an office memorandum, dated November 29, 1988. On January 17, 1989, Diamante filed with the National Labor Relations Commission, Regional Arbitration Branch No. VI, Bacolod City, a complaint[4] against Philippine Airlines, Inc. for illegal dismissal, reinstatement with backwages and damages. On October 28, 1992, Labor Arbiter Merlin Deloria rendered a decision[5] declaring the dismissal legal and valid. On November 26, 1992, Diamante appealed the decision to the National Labor Relations Commission (NLRC). On March 18, 1994, the NLRC rendered a decision granting Diamante's appeal and setting aside the Labor Arbiter's decision and ordering the reinstatement of Diamante with three years back-wages. On April 8, 1994, petitioner filed a motion for reconsideration which the NLRC denied in a resolution dated May 31, 1994. Hence, this petition.[6] The principal issue before us is whether respondent was illegally dismissed which would entitle him to reinstatement with backwages. Petitioner alleges that the National Labor Relations Commission committed a grave error in ruling that private respondent was not accorded his full constitutional right to due process of law. We reiterate the rule that in certiorari proceedings under Rule 65 of the Revised Rules of Court, this Court does not assess and weigh the sufficiency of evidence upon which the labor arbiter and the NLRC based their decisions. Our query is limited to the determination of whether or not public respondent acted without or in excess of jurisdiction or with grave abuse of discretion in rendering the assailed decisions.[7] When the findings of fact of the NLRC contradict those of the labor arbiter, this Court must of necessity review the records to determine which findings should be preferred as more conformable to the evidentiary facts.[8]

and the discipline, dismissal and recall of workers.[9] In general, management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. With respect to the procedural aspect of private respondent's dismissal, he was given ample opportunity to present his side and to defend himself against the charges against him. He had every opportunity to be heard. Petitioner sent a letter dated July 8, 1988, to respondent, requiring him to answer the charges against him. He participated in the investigation conducted by the company and he appeared with his counsel on October 3, 1988. After investigation, he was notified of his dismissal. The fact that respondent Diamante was not able to confront Pineda did not mean that he was deprived of his right to due process. The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy.[10] Since private respondent's dismissal was for just and valid cause, the order of public respondent for the reinstatement of private respondent with award of backwages has no factual and legal basis. WHEREFORE, the petition is hereby GRANTED. The challenged decision and resolution of the National Labor Relations Commission are SET ASIDE. In lieu thereof, the decision of the Labor Arbiter dated October 28, 1992, is AFFIRMED. No costs. G.R. No. 164774 April 12, 2006

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners, vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents. DECISION PUNO, J.: We are called to decide an issue of first impression: whether the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative. At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the decision of the National Labor Relations Commission (NLRC) which affirmed the ruling of the Labor Arbiter. Petitioner Star Paper Corporation (the company) is a corporation engaged in trading principally of paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department while Sebastian Chua is its Managing Director. The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. 1

Regarding the legality of respondent's dismissal, we note that respondent was found to have violated the Company Code of Discipline. We recognize the right of an employer to regulate all aspects of employment. This right, aptly called management prerogative, gives employers the freedom to regulate, according to their discretion and best judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy promulgated in 1995,2 viz.: 1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company. 2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to 3 get married, one of them should resign to preserve the policy stated above. Simbol resigned on June 20, 1998 pursuant to the company policy.4 Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy, one 5 must resign should they decide to get married. Comia resigned on June 30, 2000. Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated that Zuiga, a married man, got Estrella pregnant. The company allegedly could have terminated her services due to immorality but she opted to resign on December 21, 1999.6 The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no money and property accountabilities in the company and that they release the latter of any claim or demand of whatever nature.7 Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign voluntarily; they were compelled to resign in view of an illegal company policy. As to respondent Estrella, she alleges that she had a relationship with co-worker Zuiga who misrepresented himself as a married but separated man. After he got her pregnant, she discovered that he was not separated. Thus, she severed her relationship with him to avoid dismissal due to the company policy. On November 30, 1999, she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work on December 21, 1999 but she found out that her name was on-hold at the gate. She was denied entry. She was directed to proceed to the personnel office where one of the staff handed her a memorandum. The memorandum stated that she was being dismissed for immoral conduct. She refused to sign the memorandum because she was on leave for twenty-one (21) days and has not been given a chance to explain. The management asked her to write an explanation. However, after submission of the explanation, she was nonetheless dismissed by the company. Due to her urgent need for money, she later submitted a letter of 8 resignation in exchange for her thirteenth month pay. Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorneys fees. They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. They also contended that they were dismissed due to their union membership. On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit, viz.: [T]his company policy was decreed pursuant to what the respondent corporation perceived as management prerogative. This management prerogative is quite broad and encompassing for it covers hiring, work assignment, working method, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. Except as provided for or limited by special law, an employer is free to regulate, according to his own discretion and judgment all the aspects of employment.9 (Citations omitted.)

On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11, 2002. 10 Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution 11 dated August 8, 2002. They appealed to respondent court via Petition for Certiorari. In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC decision, viz.: WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows: (1) Declaring illegal, the petitioners dismissal from employment and ordering private respondents to reinstate petitioners to their former positions without loss of seniority rights with full backwages from the time of their dismissal until actual reinstatement; and (2) Ordering private respondents to pay petitioners attorneys fees amounting to 10% of the award and the cost of this suit.13 On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that: 1. x x x the subject 1995 policy/regulation is violative of the constitutional rights towards marriage and the family of employees and of Article 136 of the Labor Code; and 2. x x x respondents resignations were far from voluntary.14 We affirm. The 1987 Constitution15 states our policy towards the protection of labor under the following provisions, viz.: Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. xxx Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. The Civil Code likewise protects labor with the following provisions: Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves Article 136 of the Labor Code which provides: Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read together with the first paragraph of the rule. The rule does not require the woman employee to resign. The employee spouses have the right to choose who between them should resign. Further, they are free to marry persons other than co-employees. Hence, it is not the marital status of the employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-relatives-within-thethird-degree-policy which is within the ambit of the prerogatives of management. 16 It is true that the policy of petitioners prohibiting close relatives from working in the same company takes the nature of an anti-nepotism employment policy. Companies adopt these policies to prevent the hiring of unqualified persons based on their status as a relative, rather than upon their ability. 17 These policies focus upon the potential employment problems arising from the perception of favoritism exhibited towards relatives. With more women entering the workforce, employers are also enacting employment policies specifically prohibiting spouses from working for the same company. We note that two types of employment policies involve spouses: policies banning only spouses from working in the same company (nospouse employment policies), and those banning all immediate family members, including spouses, from working in the same company (anti-nepotism employment policies).18 Unlike in our jurisdiction where there is no express prohibition on marital discrimination, 19 there are twenty state statutes20 in the United States prohibiting marital discrimination. Some state courts21 have been confronted with the issue of whether no-spouse policies violate their laws prohibiting both marital status and sex discrimination. In challenging the anti-nepotism employment policies in the United States, complainants utilize two theories of employment discrimination: the disparate treatment and the disparate impact. Under the disparate treatment analysis, the plaintiff must prove that an employment policy is discriminatory on its face. No-spouse employment policies requiring an employee of a particular sex to either quit, transfer, or be fired are facially discriminatory. For example, an employment policy prohibiting the employer from hiring wives of male employees, but not husbands of female employees, is discriminatory on its face.22 On the other hand, to establish disparate impact, the complainants must prove that a facially neutral policy has a disproportionate effect on a particular class. For example, although most employment policies do not expressly indicate which spouse will be required to transfer or leave the company, the policy often disproportionately affects one sex.23 The state courts rulings on the issue depend on their interpretation of the scope of marital status discrimination within the meaning of their respective civil rights acts. Though they agree that the term "marital status" encompasses discrimination based on a person's status as either married, single, divorced, or widowed, they are divided on whether the term has a broader meaning. Thus, their decisions vary.24 The courts narrowly25 interpreting marital status to refer only to a person's status as married, single, divorced, or widowed reason that if the legislature intended a broader definition it would have either chosen different language or specified its intent. They hold that the relevant inquiry is if one is married

rather than to whom one is married. They construe marital status discrimination to include only whether a person is single, married, divorced, or widowed and not the "identity, occupation, and place of employment of one's spouse." These courts have upheld the questioned policies and ruled that they did not violate the marital status discrimination provision of their respective state statutes. The courts that have broadly26 construed the term "marital status" rule that it encompassed the identity, occupation and employment of one's spouse. They strike down the no-spouse employment policies based on the broad legislative intent of the state statute. They reason that the no-spouse employment policy violate the marital status provision because it arbitrarily discriminates against all spouses of present employees without regard to the actual effect on the individual's qualifications or work performance.27 These courts also find the no-spouse employment policy invalid for failure of the employer to present any evidence of business necessity other than the general perception that spouses in the same workplace might adversely affect the business.28 They hold that the absence of such a bona fide occupational qualification29 invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office.30 Thus, they rule that unless the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an employer may not discriminate against an employee based on the identity of the employees spouse.31 This is known as the bona fide occupational qualification exception. We note that since the finding of a bona fide occupational qualification justifies an employers nospouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice.32 To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.33 The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the standard of reasonableness of the company policy which is parallel to the bona fide occupational qualification requirement. In the recent case of Duncan Association of Detailman-PTGWO and 34 Pedro Tecson v. Glaxo Wellcome Philippines, Inc., we passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. We held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. We considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility that a 35 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.36 In said case, the employee was dismissed in violation of petitioners 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.37 (Emphases supplied.) 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 burden was successfully discharged in Duncan but not in PT&T. We do not find a reasonable business necessity in the case at bar.

Petitioners sole contention that "the company did not just want to have two (2) or more of its employees related between the third degree by affinity and/or consanguinity"38 is lame. That the second paragraph was meant to give teeth to the first paragraph of the questioned rule39 is evidently not the valid reasonable business necessity required by the law. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employees right to security of tenure. Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry persons other than co-employees. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.40 Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the legislatures silence41 that married persons are not protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of management prerogative. Corollarily, the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic. As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that her resignation letter was written in her own handwriting. Both ruled that her resignation was voluntary and thus valid. The respondent court failed to categorically rule whether Estrella voluntarily resigned but ordered that she be reinstated along with Simbol and Comia. Estrella claims that she was pressured to submit a resignation letter because she was in dire need of money. We examined the records of the case and find Estrellas contention to be more in accord with the evidence. While findings of fact by administrative tribunals like the NLRC are generally given not only respect but, at times, finality, this rule admits of exceptions,42 as in the case at bar. Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her alleged immoral conduct. At first, she did not want to sign the termination papers but she was forced to tender her resignation letter in exchange for her thirteenth month pay. The contention of petitioners that Estrella was pressured to resign because she got impregnated by a 43 married man and she could not stand being looked upon or talked about as immoral is incredulous. If she really wanted to avoid embarrassment and humiliation, she would not have gone back to work at all. Nor would she have filed a suit for illegal dismissal and pleaded for reinstatement. We have held that in voluntary resignation, the employee is compelled by personal reason(s) to dissociate himself from employment. It is done with the intention of relinquishing an office, accompanied by the act of 44 abandonment. Thus, it is illogical for Estrella to resign and then file a complaint for illegal dismissal. Given the lack of sufficient evidence on the part of petitioners that the resignation was voluntary, Estrellas dismissal is declared illegal. IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August 3, 2004 is AFFIRMED.1avvphil.net

SO ORDERED. G.R. No. 151309 October 15, 2008

BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, and/or WILFREDO C. RIVERA, respondents. DECISION NACHURA, J.: This petition seeks a review of the Decision1 of the Court of Appeals (CA) dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the petitioners' transfer to another workplace did not amount to a constructive dismissal and an unfair labor practice. The pertinent factual antecedents are as follows: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement2 (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a compressed workweek in the company.3 In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City: MR. WILFREDO C. RIVERA President, Tryco Pharma Corporation San Rafael, Bulacan Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan Dear Mr. Rivera:

This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is addressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned address only. Further, production of a drug includes propagation, processing, compounding, finishing, filling, repacking, labeling, advertising, storage, distribution or sale of the veterinary drug product. In no instance, therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan City. Please be guided accordingly. Thank you. Very truly yours, (sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M. Chief, Animal Feeds Standard Division4 Accordingly, Tryco issued a Memorandum5 dated April 7, 1997 which directed petitioner Aya-ay to report to the company's plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.6 Subsequently, through a Memorandum7 dated May 9, 1997, Tryco also directed petitioners Egera, Lario and Barte to report to the company's plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997. In August 1997, petitioners filed their separate complaints8 for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position Paper,9 petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority to bind the company, and this was the reason why the negotiations failed. They added that the management transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4. In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with the management's directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the company's representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due to the stubbornness of the union panel. Respondents further averred that, long before the start of the negotiations, the company had already been planning to decongest the Caloocan office to comply with the government policy to shift the concentration of manufacturing activities from the metropolis to the countryside. The decision to transfer the company's production activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry. On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. 10 The Labor Arbiter held that the transfer of the petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants are not members of the negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of Agriculture. The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners did not render work from May 26 to 31, 1997; overtime pay is not due because of the compressed workweek agreement between the union and management; and service incentive leave pay cannot be claimed by the complainants because they are already enjoying vacation

leave with pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be left to the grievance machinery or voluntary arbitrator. On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case, thus: PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants' appeal therefrom DISMISSED for lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to report to work at respondents' San Rafael Plant, Bulacan but without backwages. Respondents are directed to accept the complainants back to work. SO ORDERED.11 On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack of merit.12 Left with no recourse, petitioners filed a petition for certiorari with the CA. On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order was a management prerogative not amounting to a constructive dismissal or an unfair labor practice. The CA further sustained the enforceability of the MOA, particularly the waiver of overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other valuable privileges. The dispositive portion of the said CA decision reads: WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27, 1998 and the Decision and Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 0806115-97 and 08-05920-97, are AFFIRMED. SO ORDERED.13 The CA denied the petitioners' motion for reconsideration on December 20, 2001.14 Dissatisfied, petitioners filed this petition for review raising the following issues: -ATHE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS. -BTHE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR PRACTICE. -CTHE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEY'S FEES.15 The petition has no merit.

We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence.16 This is particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement.17 In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners were not constructively dismissed and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse the minds of the petitioners who have persistently pursued this case on the mistaken belief that the labor tribunals and the appellate court committed grievous errors, this Court will go over the issues raised in this petition. Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of employees. They point out that the Caloocan City office is still engaged in production activities until now and respondents even hired new employees to replace them. We do not agree. We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present arguments in support of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be fair warning to counsel for the petitioners. Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.18 This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business.19 Management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. 20 Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.21 However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. 22 Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.23 Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.24 Incidentally, petitioners cite Escobin v. NLRC25 where the Court held that the transfer of the employees therein was unreasonable. However, the distance of the workplace to which the employees were being

transferred can hardly compare to that of the present case. In that case, the employees were being transferred from Basilan to Manila; hence, the Court noted that the transfer would have entailed the separation of the employees from their families who were residing in Basilan and accrual of additional expenses for living accommodations in Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families. Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because it would paralyze and render the union ineffective. To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not deprived of the membership of the petitioners whose work assignments were only transferred to another location. More importantly, there was no showing or any indication that the transfer orders were motivated by an intention to interfere with the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers' right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices.26 Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.27 D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees. Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall

be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement. 5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties. PESALA v. NLRC,28 cited by the petitioners, is not applicable to the present case. In that case, an employment contract provided that the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that was above the legal minimum wage. However, unlike the present MOA which specifically states that the employee waives his right to claim overtime pay for work rendered beyond eight hours, the employment contract in that case was silent on whether overtime pay was included in the payment of the fixed monthly salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate provided under the employment contract included overtime pay. The Court noted that if the employee is paid only the minimum wage but with overtime pay, the amount is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime pay was not included in the agreed fixed monthly rate. Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.