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Labor Law 1 A2010 -1- Disini

OTHER CAUSES, BUSINESS RELATED Retrenchment, or "lay-off" in layman's parlance, is the


termination of employment initiated by the employer
CAUSES through no fault of the employee's and without prejudice to
the latter, resorted to by the management during periods of
RECOGNITION OF RIGHT – BUSINESS- business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders,
RELATED CAUSES/[PROTECTION shortage of materials, conversion of a plant for a new
production program or the introduction of new methods or
more efficient machinery, or of automation.
AGABON V NLRC
Simply put, it is an act of employer of dismissing employees
[PAGE 35] because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business, a
UICHICO V NLRC right consistently recognized and affirmed by this court.
273 SCRA 35 - Any claim of actual or potential business losses must satisfy
certain established standards before any reduction of personnel
HERMOSISIMA JR; June 2, 1997 becomes legal, viz:
1. The losses expected and sought to be avoided must
NATURE be substantial and not merely de minimis in extent;
Special civil action for certiorari 2. The substantial losses apprehended must be
reasonably imminent, as such imminence can be
FACTS perceived objectively and in good faith by the employer;
- Private respondents were employed by Crispa, Inc. for many 3. The retrenchment must be reasonably necessary and
years in the latter's garments factory. Their services were likely to effectively prevent the expected losses.
terminated on the ground of retrenchment due to alleged 4. The alleged losses. If already realized, and the
serious business losses suffered by Crispa, Inc. in the years expected imminent losses sought to be forestalled, must
immediately preceding 1990. be proved by sufficient and convincing evidence
- Three (3) separate complaints for illegal dismissal and - The Statement of Profit and Losses submitted by Crispa, Inc. to
diminution of compensation against Crispa, Inc., Valeriano Floro prove its alleged losses, without the accompanying signature of
(a major stockholder and director), and the petitioners (high- a certified public accountant or audited by an independent
ranking officers and directors). auditor, are nothing but self-serving documents which ought to
- Labor Arbiter rendered a decision dismissing the complaints be treated as a mere scrap of paper devoid of any probative
for illegal dismissal but at the same time ordering Crispa, Inc., value.
Floro and the petitioners to pay respondent employees 2. YES
separation pays equivalent to seventeen (17) days for every Reasoning
year of service - The general rule is that obligations incurred by the
- The NLRC found Crispa, Inc., Valeriano Floro, together with the corporation, acting through its directors, officers and
petitioners liable for illegal dismissal and modified the award of employees, are its sole liabilities. There are times, however,
separation pay in the amount of one (1) month for every year of when solidary liabilities may be incurred but only when
service instead of seventeen (17) days. exceptional circumstances warrant such as in the following
- Private respondents sought a clarification of public respondent cases:
NLRC's Resolution dated September 30, 1993 insofar as the 1. When directors and trustees or, in appropriate cases, the
computation of separation pay by the Examination and officers of a corporation: (a) vote for or assent to patently
computation division was concerned as well as the failure of the unlawful acts of the corporation; (b) act in bad faith or with
Resolution to award them full backwages despite the finding of gross negligence in directing the corporate affairs; (c) are
illegal dismissal. guilty of conflict of interest to the prejudice of the
- On April 21, 1995, the NLRC, treating the Motion to Clarity corporation, its stockholders or members, and other persons
Judgment as an Appeal, granted the same in this wise: …hereby - In labor cases, particularly, corporate directors and officers are
directed to include in the computation, six months backwages. solidarily liable with the corporation for the termination of
- Petitioners filed a Motion for Reconsideration of the April 21, employment of corporate employees done with malice or in bad
1995 Resolution, which was denied. Hence, this petition faith. In this case, it is undisputed that petitioners have a direct
hand in the illegal dismissal of respondent employees.
ISSUES Disposition Petition is DISMISSED.
1. WON Respondents were illegally dismissed (i.e. there was no
valid retrenchment) FILIPINAS V GATLABAYAN
2. WON petitioners may be held solidarily liable with the 487 SCRA 673
company
CALLEJO; April 19, 2006
HELD
1. YES NATURE
Reasoning Petition for Review on Certiorari of the decision of the CA
- Article 2831 of the Labor Code covers retrenchment.
FACTS
- Filipinas Systems “FILSYSTEMS,” Inc. (Filsystems) is a
1 domestic corporation engaged in the construction business.
Art. 283. Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of labor Filsystems employed complainants as grillers, carpenters and
saving devices, redundancy, retrenchment to prevent losses or the closing or laborers on various dates from 1992 to July 24, 1999. Their
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 average length of service with Filsystems ranged from two to
on the worker and the Ministry of Labor and Employment at least one (1) month nine years. Their latest and last assignment was in Meralco, in
before the intended date thereof. In case of termination due to the installation of Antipolo, after which they reported back to the main plant.
labor saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1) Complainants narrated that they were verbally informed that
month pay for every year of service, whichever is higher. In case of retrenchment to their services were no longer needed on July 24, 1999
prevent losses and in cases of closures or cessation of operations of establishment or (considering that they were only project employees and the
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for project to which they were last assigned had already been
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year."
Labor Law 1 A2010 -2- Disini
completed). The said employees filed their respective a certain degree of urgency for the retrenchment, which is after
complaints for illegal dismissal against Filsystems. all a drastic recourse with serious consequences for the
- Filsystems, on the other hand, averred that the complainants livelihood of the employees retired or otherwise laid-off.
were employed merely as project employees. Because of the consequential nature of retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively
ISSUE prevent the expected losses. The employer should have taken
WON the employees were legally dismissed by reason of other measures prior or parallel to retrenchment to forestall
retrenchment losses, i.e., cut other costs than labor costs. An employer who,
for instance, lays off substantial numbers of workers while
HELD continuing to dispense fat executive bonuses and perquisites or
NO so-called “golden parachutes,” can scarcely claim to be
- Petitioners’ claim that respondents were retrenched must be retrenching in good faith to avoid losses. The employer’s
rejected. Indeed, petitioners even failed to adduce in evidence prerogative to bring down labor costs by retrenching after less
any notes addressed to respondents notifying them that their drastic means – e.g., reduction of both management and rank-
employment was terminated on the ground of retrenchment. In and-file bonuses and salaries, going on reduced time, improving
Sebuguero v. National Labor Relations Commission, this Court manufacturing efficiencies, trimming of marketing and
said: advertising costs, etc. – have been tried and found wanting.
The requirement of notice to both the employees concerned - Alleged losses if already realized, and the expected imminent
and the Department of Labor and Employment (DOLE) is losses sought to be forestalled, must be proved by sufficient
mandatory and must be written and given at least one month and convincing evidence. The reason for requiring this quantum
before the intended date of retrenchment. In this case, it is of proof is readily apparent: any less exacting standard of proof
undisputed that the petitioners were given notice of the would render too easy the abuse of this ground for termination
temporary lay-off. There is, however, no evidence that any of services of employees. Thus, petitioner failed to adduce a
written notice to permanently retrench them was given at morsel of evidence to prove the factual basis for a valid
least one month prior to the date of the intended retrenchment.
retrenchment. ..But what the law requires is a written notice Disposition Petition denied
to the employees concerned and that requirement is
mandatory. The notice must also be given at least one BUSINESS SERVICES OF THE FUTURE TODAY INC V
month in advance of the intended date of retrenchment to
CA
enable the employees to look for other means of employment
and therefore to ease the impact of the loss of their jobs and 480 SCRA 571
the corresponding income. That they were already on QUISUMBING; January 30, 2006
temporary lay-off at the time notice should have been given
to them is not an excuse to forego the one-month written NATURE
notice because by this time, their lay-off is to become Petition for review on certiorari the decision of the Court of
permanent and they were definitely losing their employment. Appeals declaring the dismissal of the private respondents
- Moreover, the minutes of the meeting on August 22, 2000 illegal and awarding to them separation pay, backwages, and
(supposedly between the management of petitioner 13th month pay, and attorney’s fees.
corporation, and rank and file and supervisory employees),
show that only 13 rank and file employees attended. There is no FACTS
evidence on record that respondents attended the meeting. - Mailboxes, Etc. (Davao) is the local franchisee of Mailboxes,
There is likewise no evidence on record that petitioners Etc. (MBE), a US-based corporation operating business support
complied with the requirements of Article 283 of the Labor Code and communication service centers worldwide. It is operated
of the Philippines, which reads: locally by petitioner Business Services of the Future Today, Inc.
Article 283. Closure of establishment and reduction of (BSFTI), whose stockholders are petitioner Ramon Allado and
personnel – The employer may also terminate the his nominees.
employment of any employee due to the installment of labor - On January 8, 1996, Allado hired private respondents, spouses
saving devices, redundancy, retrenchment to prevent losses Gilbert and Ma. Celestina Veruasa, as manager and assistant
or the closing or cessation of operation of the establishment manager, respectively, of Mailboxes, Etc. (Davao). During the
or undertaking unless the closing is for the purpose of course of their employment the spouses’ advances exceeded
circumventing the provisions of this Title, by serving a written their unpaid salaries by P43,402.54.
notice on the workers and the Ministry of Labor and - On January 8, 1998, Allado personally gave notices of
Employment at least one (1) month before the intended date termination effective immediately to the spouses. They gave as
thereof. In case of termination due to the installation of labor reason, the negative cashflow and BSFTI’s failure to infuse
saving devices or redundancy, the worker affected thereby additional capital to the business. No written notice of closure of
shall be entitled to a separation pay equivalent to at least one business was given to the Department of Labor and
(1) month pay or to at least one (1) month pay for every year Employment (DOLE). Allado then padlocked the offices of
of service, whichever is higher. In case of retrenchment to Mailboxes, Etc. (Davao), confiscated all its business records,
prevent losses and in cases of closures or cessation of and appropriated for himself all the transferable rights and
operations of establishment or undertaking not due to serious equipment of the office.
business losses or reverses, the separation pay shall be - Despite repeated demands, the petitioners did not pay the
equivalent to one (1) month pay or at least one half (1/2) alleged balance of P129,488.93 due to the spouses. Thereafter,
month pay for every year of service, whichever is higher. A the Veruasa spouses instituted a complaint for illegal dismissal.
fraction of at least six (6) months shall be considered one (1)
whole year. ISSUE
- The general standards in retrenchment are: firstly, the losses WON the dismissal was illegal
expected should be substantial and not merely de minimis in HELD
extent. If the loss purportedly sought to be forestalled by NO
retrenchment is clearly shown to be insubstantial and - The BSFTI’s closure was bona fide and under ART. 283. of the
inconsequential in character, the bona fide nature of the Labor Code closure of establishment is a valid ground for
retrenchment would appear to be seriously in question. termination of employment. The records before us revealed that
Secondly, the substantial loss apprehended must be reasonably it suffered losses from 1996 to 1998. The failure of the
imminent, as such imminence can be perceived objectively and petitioners to notify the DOLE through a written notice of the
in good faith by the employer. There should, in other words, be termination of its corporate life should not nullify the dismissal,
Labor Law 1 A2010 -3- Disini
or render it illegal, or ineffectual. However, the employer should could not prevent further losses because it was in fact through
indemnify the employee, in the form of nominal damages, for his remarkable performance as Sales Manager that the
the violation of his right to statutory due process. Company had an unprecedented increase in domestic market
Ratio Article 283 of the Labor Code is the applicable law. It share the preceding year. For that accomplishment, he
states, continued, he was promoted to Marketing Manager and was
ART. 283. Closure of establishment and reduction of authorized by the President to hire four (4) Sales Executives five
personnel. – The employer may also terminate the (5) months prior to his termination.
employment of any employee due to the installation of labor - In its answer, petitioner company alleged that the termination
saving devices, redundancy, retrenchment to prevent losses of respondent's services was a cost-cutting measure: that in
or the closing or cessation of operation of the establishment December 1984, the company had experienced an unusually
or undertaking unless the closing is for the purpose of low volume of orders: and that it was in fact forced to rotate its
circumventing the provisions of this Title, by serving a written employees in order to save the company. Despite the rotation
notice on the worker and the Ministry of Labor and of employees, petitioner alleged; it continued to experience
Employment at least one (1) month before the intended date financial losses and private respondent's position, Sales
thereof. In case of termination due to the installation of labor Manager of the company, became redundant.
saving devices or redundancy, the worker affected thereby - On 2 December 1986, during the proceedings before the Labor
shall be entitled to a separation pay equivalent to at least his Arbiter, petitioner, in a letter 1 addressed to the Regional
one (1) month pay or to at least one (1) month pay for every Director of the then Ministry of Labor and Employment, notified
year of service, whichever is higher. In case of retrenchment that official that effective 2 January 1987, petitioner would close
to prevent losses and in cases of closures or cessation of its doors permanently due to substantial business losses.
operations of establishment or undertaking not due to serious - In a decision dated 11 March 1987, the Labor Arbiter declared
business losses or financial reverses, the separation pay shall the termination of private respondent's services illegal and
be equivalent to one (1) month pay or at least one-half (1/2) ordered petitioner to pay private respondent backwages,
month pay for every year of service, whichever is higher. A unpaid salaries in the amount of, accumulated sick and
fraction of at least six (6) months shall be considered as one vacation leaves in the amount of, hospitalization benefit
(1) whole year. package in the amount, unpaid commission in the amount of,
- For the cessation of business operations due to serious moral damages in the amount of and attorney's fees in the
business losses or financial reverses to be valid, the employer amount of. On appeal by petitioner Wiltshire, the National Labor
must give the employee and the DOLE written notices 30 days Relations Commission ("NLRC") affirmed in toto on 9 February
prior to the effectivity of his separation. 1988 the decision of the Labor Arbiter.
- However. in Agabon v. National Labor Relations Commission, - In this Petition for Certiorari, it is submitted that private
[15] we ruled that where the dismissal is for an authorized respondent's dismissal was justified and not illegal. Petitioner
cause, the lack of statutory due process should not nullify the maintains that it had been incurring business losses beginning
dismissal, or render it illegal, or ineffectual. However, the 1984 and that it was compelled to reduce the size of its
employer should indemnify the employee, in the form of personnel force. Petitioner also contends that redundancy as a
nominal damages, for the violation of his right to statutory due cause for termination does not necessarily mean duplication of
process. The amount of such damages is addressed to the work but a "situation where the services of an employee are in
sound discretion of the Court, taking into account the relevant excess of what is demanded by the needs of an undertaking
circumstances.
Disposition Petition partially granted. ISSUE
WON private respondent’s dismissal was justified on the ground
A. INSTALLATION OF LABOR SAVING DEVICES of retrenchment

HELD
B. REDUNDANCY YES
- The Court resolved to grant due course to the Petition for
BUSINESS JUDGMENT Certiorari. The Resolutions of the National Labor Relations
Commission dated 9 February 1988 and 7 March 1988 are
hereby SET ASIDE and NULLIFIED. The Temporary Restraining
WILTSHIRE FILE CO INC V NLRC Order issued by this Court on 21 March 1988 is hereby made
193 SCRA 665 PERMANENT.
FELICIANO; February 7, 1991 Ratio. Having reviewed the record of this case, the Court has
satisfied itself that indeed petitioner had serious financial
NATURE difficulties before, during and after the termination of the
Petition for review on certiorari services of private respondent. For one thing, the audited
financial statements of the petitioner for its fiscal year ending
FACTS on 31 July 1985 prepared by a firm of independent auditors,
- Private respondent Vicente T. Ong was the Sales Manager of showed a net loss in the amount of P4,431,321.00 and a total
petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March deficit or capital impairment at the end of year of
1981 up to 18 June 1985. On 13 June 1985, upon private P6,776,493.00. 2 In the preceding fiscal year (1983-1984), while
respondent's return from a business and pleasure trip abroad, the company showed a net after tax income of P843,506.00, it
he was informed by the President of petitioner Wiltshire that his actually suffered a deficit or capital impairment of
services were being terminated. Private respondent maintains P2,345,172.00. Most importantly, petitioner Wiltshire finally
that he tried to get an explanation from management of his closed its doors and terminated all operations in the Philippines
dismissal but to no avail. On 18 June 1985, when private on January 1987, barely two (2) years after the termination of
respondent again tried to speak with the President of Wiltshire, private respondent's employment. We consider that finally
the company's security guard handed him a letter which shutting down business operations constitutes strong
formally informed him that his services were being terminated confirmatory evidence of petitioner's previous financial distress.
upon the ground of redundancy. The Court finds it very difficult to suppose that petitioner
- Private respondent filed, on 21 October 1985, a complaint Wiltshire would take the final and irrevocable step of closing
before the Labor Arbiter for illegal dismissal alleging that his down its operations in the Philippines simply for the sole
position could not possibly be redundant because nobody (save purpose of easing out a particular officer or employee, such as
himself) in the company was then performing the same duties. the private respondent.
Private respondent further contended that retrenching him
Labor Law 1 A2010 -4- Disini
- Turning to the legality of the termination of private total workforce and the number of positions in the company’s
respondent's employment, we find merit in petitioner's basic table of organization.
argument. The Court was unable to sustain public respondent - Dole intimates that the 1990-1991 reduction was a
NLRC's holding that private respondent's dismissal was not continuation of previous efforts to restructure its organization.
justified by redundancy and hence illegal. In the first place, - Previously, in 1982, Dole reduced its manpower by 509
while the letter informing private respondent of the termination workers but prolonged collective bargaining negotiations, which
of his services used the word "redundant", that letter also ended in 1990, prevented the company from proceeding with
referred to the company having "incur[red] financial losses its restructuring
which [in] fact has compelled [it] to resort to retrenchment to - Among the factors considered by the company in undertaking
prevent further losses". 3 Thus, what the letter was in effect the reduction program was the high absenteeism rate, which in
saying was that because of financial losses, retrenchment was 1989 accounted for 16% of total man hours. The high
necessary, which retrenchment in turn resulted in the absenteeism rate translated to higher paid sick leaves, higher
redundancy of private respondent's position. operating costs for medical facilities, and higher transportation
- In the second place, the Court does not believe that costs due to under-filled and late hauls.
redundancy in an employer's personnel force necessarily or - Dole also cites “the exacerbation of operating cost problems
even ordinarily refers to duplication of work. That no other due to factors beyond [its] control, i.e., the Gulf War, oil price
person was holding the same position that private respondent increases, mandated wage increases, the 9% import levy,
held prior to the termination of his services, does not show that power rate hikes, [and] increased land rentals,” existing at that
his position had not become redundant. Indeed, in any well- time.
organized business enterprise, it would be surprising to find - Furthermore, the “bloody December 1989 coup d’etat shook
duplication of work and two (2) or more people doing the work investor confidence and put in doubt the continued economic
of one person. Redundancy, for purposes of our Labor Code, progress of the country.”
exists where the services of an employee are in excess of what - Pursuant to its restructuring efforts, Dole abolished the
is reasonably demanded by the actual requirements of the positions of foremen, bargaining capataces and foreladies.
enterprise. Succinctly put, a position is redundant where it is Employees occupying these positions were either promoted or
superfluous, and superfluity of a position or positions may be were dismissed on grounds of redundancy.
the outcome of a number of factors, such as overhiring of - To address the surplus of manpower relative to its operations,
workers, decreased volume of business, or dropping of a Dole also decided to reduce the number of employees
particular product line or service activity previously company-wide. In 1990, the company offered a Special
manufactured or undertaken by the enterprise. 4 The employer Voluntary Resignation (SVR) program of which many
has no legal obligation to keep in its payroll more employees employees, including a number of private respondents, availed.
than are necessarily for the operation of its business. - Upon approval of the applications, notices of termination were
- In the third place, in the case at bar, petitioner Wiltshire, in sent to the employees who availed of the SVR.
view of the contraction of its volume of sales and in order to cut - After receiving the benefits, said employee-applicants
down its operating expenses, effected some changes in its executed a “Release” stating that the employee had no claims
organization by abolishing some positions and thereby effecting against Dole in connection with his or her employment.
a reduction of its personnel. Thus, the position of Sales Manager Subsequently, the dismissed employees executed another
was abolished and the duties previously discharged by the “Release of Claim” in favor of Dole.
Sales Manager simply added to the duties of the General - A total of 2,357 hourly and monthly salaried employees were
Manager, to whom the Sales Manager used to report. separated from Dole during this period.
- It is of no legal moment that the financial troubles of the - After assessing the outcome of the SVR, Dole found that it
company were not of private respondent's making. Private could still do with lesser employees, and proceeded to dismiss
respondent cannot insist on the retention of his position upon more of them in March 1991.
the ground that he had not contributed to the financial - Overall, 2,792 employees were separated under the SVR
problems of Wiltshire. The characterization of private Program.
respondent's services as no longer necessary or sustainable, - In Oct. 1991, complaints for illegal dismissal were filed against
and therefore properly terminable, was an exercise of business Dole by De Lara et al.
judgment on the part of petitioner company. The wisdom or - LA Solano dismissed the complaints for lack of merit; their
soundness of such characterization or decision was not subject dismissal was valid.
to discretionary review on the part of the Labor Arbiter nor of - NLRC reversed the LA and ordered reinstatement. Denied
the NLRC so long, of course, as violation of law or merely DOLE’s MR.
arbitrary and malicious action is not shown. It should also be
noted that the position held by private respondent, Sales ISSUE
Manager, was clearly managerial in character. WON DOLE’S redundancy program is valid and if so, won the
dismissal of the respondent employees are valid as well
DOLE PHILIPPINES INC V NLRC (BARRANCO)
HELD
365 SCRA 124
YES
KAPUNAN; September 13, 2001 - Redundancy is one of the authorized causes for the dismissal
of an employee.
NATURE - The lack of notice to the DOLE does not render the
Certiorari redundancy program void.
Reasoning
FACTS - Wiltshire File Co. Inc., vs. NLRC: “x x x redundancy in an
- Dole Philippines, Inc., is a corporation organized and existing employer’s personnel force necessarily or even ordinarily refers
under Philippine laws. It is engaged in the business of growing, to duplication of work. That no other person was holding the
canning, processing and manufacturing pineapples and other same position that private respondent held prior to the
allied products. The other petitioners were Dole corporate termination of his services, does not show that his position had
officers at the time the cases were instituted not become redundant. Indeed, in any well-organized business
- Private respondents were Dole’s employees of different ranks enterprise, it would be surprising to find duplication of work and
and positions. two (2) or more people doing the work of one person. We
- In 1990 and 1991, DOLE carried out a massive manpower believe that redundancy, for purposes of the Labor Code, exists
reduction and restructuring program aimed at reducing the where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the
Labor Law 1 A2010 -5- Disini
enterprise. Succinctly put, a position is redundant where it is Indeed, private respondents received a generous separation
superfluous, and superfluity of a position or positions may be package, as set out in the narration of facts above.
the outcome of a number of factors, such as overhiring of Disposition Petition is GRANTED and the decision of the NLRC
workers, decreased volume of business, or dropping of a ANNULLED and SET ASIDE. TRO –LIFTED
particular product line or service activity previously
manufactured or undertaken by the enterprise.”
ASUFRIN JR V SAN MIGUEL CORP
- The characterization of an employee’s services as no longer
necessary or sustainable, and, therefore, properly terminable, is 425 SCRA 270
an exercise of business judgment on the part of the employer. YNARES-SANTIAGO; March 10, 2004
The wisdom or soundness of such characterization or decision is
not subject to discretionary review provided, that violation of FACTS
law or arbitrary or malicious action is not shown. - Coca Cola Plant, then a department of respondent San Miguel
- Dole’s redundancy program does not appear to be tainted by Beer Corporation (SMC), hired petitioner as a
bad faith even if it hired casual employees to replace those utility/miscellaneous worker.
dismissed (as it has always hired casual employees to augment - He became a regular employee paid on daily basis as a Forklift
its manpower in accordance with the demands of the industry.) Operator. Then became a monthly paid employee promoted as
- The petition alleges that the redundancy program is part of a Stock Clerk.
wide-scale restructuring of the company. - The sales office and operations at the Sum-ag, Bacolod City
- This purported restructuring is supported by the company’s Sales Office were reorganized. Several positions were
undisputed history towards these ends, which culminated in the abolished including petitioner’s position as Stock Clerk. After
abolition of certain positions and the Special Voluntary reviewing petitioner’s qualifications, he was designated
Resignation program in 1990-1991. warehouse checker at the Sum-ag Sales Office.
- Among the avowed goals of such restructuring is the reduction - SMC implemented a new marketing system known as the “pre-
of absenteeism in the company. The harsh economic and selling scheme” at the Sum-ag Beer Sales Office. As a
political climate then prevailing in the country also emphasized consequence, all positions of route sales and warehouse
the need for cost-saving measures. personnel were declared redundant. Respondent notified the
- Reorganization as a cost-saving device is acknowledged by DOLE Director of Region VI that 22 personnel of the Sales
jurisprudence. An employer is not precluded from adopting a Department of the Negros Operations Center would be retired.
new policy conducive to a more economical and effective - SMC thereafter wrote a letter to petitioner informing him that,
management, and the law does not require that the employer owing to the implementation of the “pre-selling operations”
should be suffering financial losses before he can terminate the scheme, all positions of route and warehouse personnel will be
services of the employee on the ground of redundancy. declared redundant and the Sum-ag Sales Office will be closed
- The law, however, does not prevent employers from saving on effective April 30, 1996. Thus, from April 1, 1996 to May 15,
labor costs. 1996, petitioner reported to respondent’s Personnel
- International Macleod, Inc. vs. Intermediate Appellate Court: Department at the Sta. Fe Brewery, pursuant to a previous
held that the determination of the need for the phasing out of a directive.
department as a labor and cost saving device because it was no - Thereafter, the employees of Sum-ag sales force were
longer economical to retain said department is a management informed that they can avail of respondent’s early retirement
prerogative, with which the courts will not interfere. package pursuant to the retrenchment program, while those
- De Ocampo vs. NLRC: “[t]he reduction of the number of who will not avail of early retirement would be redeployed or
workers in a company made necessary by the introduction of absorbed at the Brewery or other sales offices.
the services of Gemac Machineries in the maintenance and - Petitioner opted to remain and manifested to Acting Personnel
repair of its industrial machinery is justified. There can be no Manager Salvador Abadesco his willingness to be assigned to
question as to the right of the company to contract the services any job, considering that he had three children in college.
of Gemac Machineries to replace the services rendered by the - Petitioner was surprised when he was informed by the Acting
terminated mechanics with a view to effecting more economic Personnel Manager that his name was included in the list of
and efficient methods of production.” So long as the employees who availed of the early retirement package.
undertaking to save on labor costs is not attended by malice, Petitioner’s request that he be given an assignment in the
arbitrariness, or intent on the part of the employer to company was ignored by the Acting Personnel Manager.
circumvent the law, as in this case, the Court will not interfere - Petitioner thus filed a complaint for illegal dismissal with the
with such endeavor. NLRC.
Ratio If an employee consented to his retrenchment or - The Labor Arbiter dismissed the complaint for lack of merit.
voluntarily applied for retrenchment with the employer due to - Petitioner appealed to the NLRC which set aside the Labor
the installation of labor-saving devices, redundancy, closure or Arbiter’s decision and ordered respondent SMC to reinstate
cessation of operation or to prevent financial losses to the petitioner to his former or equivalent position with full
business of the employer, the required previous notice to the backwages.
DOLE is not necessary as the employee thereby acknowledged - Respondent filed a petition with the Court of Appeals which
the existence of a valid cause for termination of his reversed the decision of the NLRC and reinstated the judgment
employment (International Harvester, Inc. vs. NLRC). of the Labor Arbiter dismissing the complaint for illegal
- Here, most of the private respondents even filled up dismissal.
application forms to be considered for the redundancy program - Petitioner’s motion for reconsideration] was denied.
and thus acknowledged the existence that their services were
redundant. ISSUE
- Private respondents executed two releases in favor of WON the dismissal of petitioner is based on a just and
petitioner company. authorized cause
- Not all quitclaims are per se invalid or against public policy.
But those HELD
(1) where there is clear proof that the waiver was wangled NO
from an unsuspecting or gullible person or - Dole Philippines, Inc. v. NLRC, citing the leading case of
(2) where the terms of settlement are unconscionable on Wiltshire File Co., Inc. v. NLRC:
their face are invalid. In these cases, the law will step in to … redundancy in an employer’s personnel force necessarily
annul the questionable transaction. There is no showing here or even ordinarily refers to duplication of work. That no
that private respondents are unsuspecting or gullible persons. other person was holding the same position that private
Neither are the terms of the settlement unconscionable. respondent held prior to the termination of his services,
Labor Law 1 A2010 -6- Disini
does not show that his position had not become redundant. by such schemes which all too often reduce to near nothing
Indeed, in any well-organized business enterprise, it would what is left of the rubble of rights of our exploited workers.
be surprising to find duplication of work and two (2) or - Given the nature of petitioner’s job as a Warehouse Checker, it
more people doing the work of one person. We believe that is inconceivable that respondent could not accommodate his
redundancy, for purposes of the Labor Code, exists where services considering that the warehousing operations at Sum-ag
the services of an employee are in excess of what is Sales Office has not shut down.
reasonably demanded by the actual requirements of the - To sustain the position taken by the appellate court would be
enterprise. Succinctly put, a position is redundant where it to dilute the workingman’s most important right: his
is superfluous, and superfluity of a position or positions constitutional right to security of tenure.
may be the outcome of a number of factors, such as - While respondent may have offered a generous compensation
overhiring of workers, decreased volume of business, or package to those whose services were terminated upon the
dropping of a particular product line or service activity implementation of the “pre-selling scheme,” we find such an
previously manufactured or undertaken by the enterprise. offer, in the face of the prevailing facts, anathema to the
- The determination that employee’s services are no longer underlying principles which give life to our labor statutes
necessary or sustainable and, therefore, properly terminable is because it would be tantamount to likening an employer-
an exercise of business judgment of the employer. employee relationship to a salesman and a purchaser of a
- The wisdom or soundness of this judgment is not subject to commodity.
discretionary review of the Labor Arbiter and the NLRC, - To quote what has been aptly stated by former Governor
provided there is no violation of law and no showing that it was General Leonard Wood in his inaugural message before the 6th
prompted by an arbitrary or malicious act. Philippine Legislature on October 27, 1922 “labor is neither a
- It is not enough for a company to merely declare that it has chattel nor a commodity, but human and must be dealt with
become overmanned. It must produce adequate proof that such from the standpoint of human interest.”
is the actual situation to justify the dismissal of the affected - As has been said: “We do not treat our workers as
employees for redundancy. merchandise and their right to security of tenure cannot be
- Persuasive as the explanation proffered by respondent may be valued in precise peso-and-centavo terms. It is a right which
to justify the dismissal of petitioner, a number of disturbing cannot be allowed to be devalued by the purchasing power of
circumstances, however, leave the Court unconvinced. employers who are only too willing to bankroll the separation
1. Of the 23 SMC employees assigned at the Sum-ag Sales pay of their illegally dismissed employees to get rid of them.”
Office/Warehouse, 9 accepted the offer of SMC to avail of the - This right will never be respected by the employer if we
early retirement whose separation benefits was computed at merely honor it with a price tag. The policy of “dismiss now and
250% of their regular pay. The rest, including petitioner, did pay later” favors moneyed employers and is a mockery of the
not accept the offer. Out of the remaining fourteen 14, only right of employees to social justice.
petitioner clearly manifested, through several letters, his Disposition. The petition was granted.
desire to be redeployed to the Sta. Fe Brewery or any sales
office – and for any position not necessarily limited to that of
a warehouse checker. In short, he was even willing to accept
FINANCIAL LOSS
a demotion just to continue his employment. Meanwhile,
other employees who did not even write a letter to SMC were ESCAREAL V NLRC (PHILIPPINE REFINING CO INC)
redeployed to the Sta. Fe Brewery or absorbed by other 213 SCRA 472
offices/outlets outside Bacolod City. DAVIDE JR; September 2, 1992
2. Petitioner was in the payroll of the Sta. Fe Brewery and
assigned to the Materials Section, Logistics Department,
NATURE
although he was actually posted at the Sum-ag Warehouse.
Petition for certiorari
Thus, even assuming that his position in the Sum-ag
Warehouse became redundant, he should have been returned
FACTS
to the Sta. Fe Brewery where he was actually assigned and
- Escareal was hired by the PRC for the position of Pollution
where there were vacant positions to accommodate him.
Control Manager effective on 16 September 1977 with a
3. It appears that despite respondent’s allegation that it
starting monthly pay of P4,230 00; the employment was made
ceased and closed down its warehousing operations at the
permanent effective on 16 March 1978. The contract of
Sum-ag Sales Office, actually it is still used for warehousing
employment provides, inter alia, that his "retirement date will
activities and as a transit point where buyers and dealers get
be the day you reach your 60th birthday, but there is provision
their stocks.
(sic) for voluntary retirement when you reach your 50th
4. In selecting employees to be dismissed, a fair and
birthday. Bases for the hiring of Escareal are LOI No. 588
reasonable criteria must be used, such as but not limited to
implementing the National Pollution Control Decree, P.D No.
(a) less preferred status, e.g. temporary employee; (b)
984, and Memorandum Circular No. 02, implementing LOI No.
efficiency; and (c) seniority. In the case at bar, no criterion
588, which amended Memorandum Circular No. 007, Series of
whatsoever was adopted by respondent in dismissing
1977, issued by the National Pollution Control Commission
petitioner. - Furthermore, as correctly observed by the NLRC,
(NPCC).
respondent “has not shown how the cessation of operations
- 1 April 1979: Escareal was also designated as Safety Manager
of the Sum-ag Sales Office contributed to the ways and
pursuant to Article 162 of the Labor Code (P.D. 442, as
means of improving effectiveness of the organization with the
amended) and the pertinent implementing rule thereon. At the
end in view of efficiency and cutting distribution overhead
time of such designation, Escareal was duly accredited as a
and other related costs.
Safety Practitioner by the Bureau of Labor Standards,
- Respondent, thus, clearly resorted to sweeping
Department of Labor and Employment (DOLE) and the Safety
generalization[s] in dismissing complainant.” Indeed,
Organization of the Philippines.
petitioner’s predicament may have something to do with an
- In addition, the pertinent rules on Occupational Health and
incident where he incurred the ire of an immediate superior in
Safety implementing the Labor Code provide for the designation
the Sales Logistics Unit for exposing certain irregularities
of full-time safety men to ensure compliance with the safety
committed by the latter.
requirements prescribed by the Bureau of Labor Standards.
- Whether it be by redundancy or retrenchment or any of the
Consequently, Escareal's designation was changed to Pollution
other authorized causes, no employee may be dismissed
Control and Safety Manager.
without observance of the fundamentals of good faith.
- In the course of his employment, Escareal's salary was
- It is not difficult for employers to abolish positions in the guise
regularly upgraded; the last pay hike was granted on 28 March
of a cost-cutting measure and we should not be easily swayed
Labor Law 1 A2010 -7- Disini
1988 when he was officially informed that his salary was being 2. WON Escareal's right to security of tenure was violated by
increased to P23,100.00 per month effective 1 April 1988. This PRC
last increase is indisputably a far cry from his starting monthly 3. WON Escareal's employment was for a fixed definite period
salary of P4,230.00. to end at his 60th birthday because of the stipulation as to the
- Sometime in the first week of November 1987, PRC's retirement age of sixty (60) years
Personnel Administration Manager George B. Ditching informed 4. WON Escareal is entitled to backwages and retirement
Escareal about the company's plan to declare the position of benefits
Pollution Control and Safety Manager redundant. Ditching 5. WON Escareal is entitled to damages and attorney's fees
attempted to convince Escareal to accept the redundancy offer
or avail of the company's early retirement plan. Escareal HELD
refused and instead insisted on completing his contract as he 1. NO
still had about three and a half (3 1/2) years left before reaching - Wiltshire File Co., Inc. vs. NLRC: Redundancy, for purposes
the mandatory retirement age of sixty (60). of the Labor Code, exists where the services of an employee are
- 15 June 1988: Escareal's immediate superior, PRC's Engg Dept in excess of what is reasonably demanded by the actual
Manager Jesus P. Javelona, formally informed Escareal that the requirements of the enterprise; a position is redundant when it
position of "Safety and Pollution Control Manager will be is superfluous, and superfluity of a position or positions may be
declared redundant effective at the close of work hours on 15th the outcome of a number of factors, such as 257the overhiring
July 1988." Escareal was also notified that the functions and of workers, a decreased volume of business or the dropping of a
duties of the position to be declared redundant will be absorbed particular product line or service activity previously
and integrated with the duties of the Industrial Engineering manufactured or undertaken by the enterprise.
Manager; as a result thereof, Escareal "will receive full - Redundancy in an employer's personnel force, however, does
separation benefits provided under the PRC Retirement Plan not necessarily or even ordinarily refer to duplication of work.
and additional redundancy payment under the scheme applying That no other person was holding the same position which the
to employees who are 50 years old and above and whose jobs dismissed employee held prior to the termination of his services
have been declared redundant by Management." does not show that his position had not become redundant.
- Escareal protested his dismissal via his 22 June 1988 letter to - PRC had no valid and acceptable basis to declare the position
Javelona. This notwithstanding, the PRC unilaterally circulated a of Pollution Control and Safety Manager redundant as the same
clearance dated 12 July 1988, to take effect on 15 July 1988, may not be considered as superfluous; said positions are
indicating therein that its purpose is for Escareal's "early required by law. Thus, it cannot be gainsaid that the services of
retirement" and not redundancy. Escareal confronted Javelona; Escareal are in excess of what is reasonably required by the
the latter, in his letter dated 13 July 1988, advised the former enterprise. Otherwise, PRC would not have allowed ten (10)
that the employment would be extended for another month, or long years to pass before opening its eyes to that fact; neither
up to 15 August 1988. Escareal responded with a letter dated would it have increased the Escareal's salary to P23,100.00 a
25 July 1988 threatening legal action. month effective 1 April 1988. That Escareal's positions were not
- 14 July 1988: PRC's Industrial Relations Manager Bernardo N. duplicitous is best evidenced by PRC's recognition of their
Jambalos III sent a Notice of Termination to the DOLE informing imperative need thereof, this is underscored by the fact that
the latter that Escareal was being terminated on the ground of Miguelito S. Navarro, the company's Industrial Engineering
redundancy effective 16 August 1988. Manager, was designated as Pollution Control and Safety
- 5 August 1988:Escareal had a meeting with Cesar Bautista Manager on the very same day of Escareal's termination.
and Dr. Reynaldo Alejandro, PRC's President and Corporate - Indeed, the proposition that a department manned by a
Affairs Director, respectively. To his plea that he be allowed to number of engineers presumably because of the heavy
finish his contract of employment as he only had three (3) years workload, could still take on the additional responsibilities which
left before reaching the mandatory retirement age, Bautista were originally reposed in an altogether separate section
retorted that the termination was final. headed by Escareal, is difficult to accept.
- 8 August 1988: Escareal presented to Javelona a computation - If PRC felt that either Escareal was incompetent or that the
showing the amount of P2,436,534.50 due him (Escareal) by task could be performed by someone more qualified, then why
way of employee compensation and benefits. is it that the person designated to the position hardly had any
- On the date of the effectivity of his termination, Escareal was experience in the field concerned? And why reward Escareal,
only fifty-seven (57) years of age. He had until 21 July 1991, his barely five (5) months before the dismissal, with an increase in
sixtieth (60th) birth anniversary, before he would have been salary?
compulsorily retired. Also, on the date of effectivity of - If based on the ground of redundancy, such a move would be
Escareal's termination, 16 August 1988, (UP Chemical Engg invalid as the creation of said position is mandated by the law;
graduate) Miguelito S. Navarro, PRC's Industrial Engineering the same cannot therefore be declared redundant.
Manager, was designated as the Pollution Control and Safety - If the aim was to generate savings in terms of the salaries that
Officer. PRC would not be paying Escareal any more as a result of the
- In view of all this, Escareal filed a complaint for illegal streamlining of operations for improved efficiency, such a move
dismissal with damages against the private respondent PRC could hardly be justified in the face of PRC's hiring of ten (10)
before the NLRC. Labor Arbiter Manuel P. Asuncion rendered a fresh graduates for the position of Management Trainee and
decision ordering PRC to pay Escareal his redundancy pay in advertising for vacant positions in the Engineering/Technical
accordance with existing company policy on the matter, without Division at around the time of the termination.
prejudice to the grant of additional benefits offered by PRC - There would seem to be no compelling reason to save money
during the negotiation stage of the case, though it never by removing such an important position. As shown by their
materialized for failure of the parties to reach an agreement. recent financial statements, PRC's year-end net profits had
- On appeal, NLRC affirmed the Labor Arbiter's decision, with steadily increased from 1987 to 1990.
modification ordering PRC to pay Escareal his retirement pay in - While concededly, Article 283 of the Labor Code does not
accordance with the company policy and other benefits granted require that the employer should be suffering financial losses
to him thereunder, less outstanding obligations of the before he can terminate the services of the employee on the
complainant with the company at the time of his dismissal. ground of redundancy, it does not mean either that a company
Separate MFRs of PRC and Escareal were both dismissed. which is doing well can effect such a dismissal whimsically or
Hence, this petition. capriciously. The fact that a company is suffering from business
losses merely provides stronger justification for the termination.
ISSUES 2. YES
1. WON PRC had valid and acceptable basis to declare the - It is evident that Escareal's right to security of tenure was
position of Pollution Control and Safety Manager redundant violated by the private respondent PRC. Both the Constitution
Labor Law 1 A2010 -8- Disini
(Section 3, Article XIII) and the Labor Code (Article 279, P.D.
442, as amended) enunciate this right as available to an
TIERRA INTERNATIONAL CONSTRUCTION CORP V
employee.
- Security of tenure is a right which may not be denied on mere NLRC (OLIVAR)
speculation of any unclear and nebulous basis. 211 SCRA 73
- In this regard, it could be concluded that the respondent PRC PADILLA; July 3, 1992
was merely in a hurry to terminate the services of Escareal as
soon as possible in view of the latter's impending retirement; it NATURE
appears that said company was merely trying to avoid paying Petition for the annulment of the decision of NLRC.
the retirement benefits Escareal stood to receive upon reaching
the age of sixty (60). PRC acted in bad faith. FACTS
3. NO - March 7 1984: private respondent Isidro P. Olivar was hired by
- There is no indication that PRC intended to offer uninterrupted FEBROE, a foreign shipping company, through its local agent
employment until Escareal reached the mandatory retirement Tierra International Construction Corporation, to work as shift
age, the contract of employement merely informs Escareal of supervisor in its Base Operating Support (BOS) project for the
the compulsory retirement age and the terms pertaining to the U.S. Navy in the British Indian Ocean Territory of Diego Garcia,
retirement. for a period of one (1) year with a basic monthly salary of US
- The letter to Escareal confirming his appointment does not $680.00.
categorically state when the period of employment would end. - Olivar’s employment contract was renewed in 1985; the last
It stands to reason then that Escareal's employment was not renewal was on 8 May 1986. But on 1 October 1986, he was
one with a specific period. dismissed from employment, and subsequently repatriated to
4. YES the Philippines.
- Article 279, LC: an "employee who is unjustly dismissed from - Olivar alleged that he was a victim of improper termination of
work shall be entitled to reinstatement without loss of seniority employment thru gradual and systematic removal of high
rights and other privileges and to his full backwages, inclusive salaried employees.
of allowances, and to his other benefits or their monetary - FEBROE averred that in July and August 1986, its management
equivalent computed from the time his compensation was undertook a comprehensive audit and evaluation of its entire
withheld from him up to the time of his actual reinstatement." work force to promote economy, efficiency and profitability in
- Torillo vs. Leagardo, Jr. / Santos vs. NLRC: "The normal its operations, and to reduce personnel whose positions were
consequences of a finding that an employee has been illegally considered redundant or surplusage and/or to re-assign
dismissed are, firstly, that the employee becomes entitled to personnel to other available useful positions. One of the
reinstatement to his former position without loss of seniority positions listed for abolition was the position of the olivar as
rights and, secondly, the payment of backwages corresponding "13401 — Supervisor, Technical."
to the period from his illegal dismissal up to actual - POEA held that the termination was for authorized cause.
reinstatement. xxx Though the grant of reinstatement POEA then ordered Tierra and FEBROE to pay Olivar his
commonly carries with it an award of backwages, the separation pay.
inappropriateness or non-availability of one does not carry with - Tierra contended that the employment contract does not
it the inappropriateness or non-availability of the other. xxx Put provide for separation pay in case of termination based on
a little differently, payment of backwages is a form of relief that redundancy or reduction of force due to a decrease in volume
restores the income that was lost by reason of unlawful or scope of work.
dismissal, separation pay, in contrast, is oriented towards the - NLRC reversed the decision of POEA and ordered the company
immediate future, the transitional period the dismissed to pay Olivar corresponding to the unexpired portion of his
employee must undergo before locating a replacement job." contract.
- Reinstatement of Escareal would have been proper. However,
since he reached the mandatory retirement age on 21 July ISSUES
1991, reinstatement is no longer feasible. He should thus be 1. WON termination of Olivar is illegal
awarded his backwages from 16 August 1988 to 21 July 1991, 2. WON Olivar is entitled to separation pay
inclusive of allowances and the monetary equivalent of the
other benefits due him for that period, plus retirement benefits HELD
under the PRC's compulsory retirement scheme which he would 1. YES, the termination was for a valid cause.
have been entitled to had he not been illegally dismissed. Ratio In redundancy, what is looked into is the position itself,
5. NO the nature of the services performed by the employee and the
- In his complaint and the attached Affidavit-Complaint, Escareal necessity of such position.
does not mention any claim for damages and attorney s fees;
furthermore, no evidence was offered to prove them. An award
therefor would not be justified. Reasoning
Disposition Petition granted. - Termination of an employee's services because of a reduction
of work force due to a decrease in the scope or volume of work
LAW REQUIRED POSITION of the employer is synonymous to, or a shade of termination
because of redundancy under Article 283 of the Labor Code.
- Redundancy exists where the services of an employee are in
ESCAREAL V NLRC excess of what is reasonably demanded by the actual
[PAGE 260] requirements of the enterprise. A position is redundant where it
is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as over-hiring of
WHEN REDUNDANCY workers, decreased volume of business, or dropping of a
particular product line or service activity previously
LOPEZ SUGAR CORP V FRANCO manufactured or undertaken by the enterprise.
- Olivar received his notice of termination advising him that his
[PAGE 150] position will be deleted because of a reduction of force due to a
decrease in scope of work assigned. 28 other positions were
WILTSHIRE FILE CO INC V NLRC also abolished. Olivar was not singled out and that his
[PAGE 257] termination was not arbitrary or malicious on the part of the
employer.
Labor Law 1 A2010 -9- Disini
- The law does not make any distinction between a technical measure from the ambit of the term "retrenchment" within the
and a non-technical position for purposes of determining the meaning of Art. 283.
validity of termination due to redundancy. Neither does the law Reasoning
nor the stipulations of the employment contract here involved - The Labor Arbiter, affirmed by the NLRC, found petitioner to
require that junior employees should first be terminated (in have complied with the requirements of the law in effecting a
answer to NLRC’s reasoning that junior employees should be valid retrenchment. The law acknowledges the right of every
terminated first before the technical and senior positions). business entity to reduce its work force if it is compelled by
2. YES, Olivar is entitled to separation pay. economic factors that would otherwise endanger its stability or
Ratio Not only are existing laws read into contracts in order to existence. In exercising its right to retrench employees, the firm
fix the obligations as between the parties, but the reservation of may choose to close all, or a part of, its business to avoid
essential attributes of sovereign power is also read into further losses or mitigate expenses.
contracts as a postulate of the legal order. Obiter
Reasoning - Redundancy exists where the services of an employee are in
- There is no mention of an award of separation pay in the excess of what would reasonably be demanded by the actual
contract between the parties. HOWEVER, Tierra admits that requirements of the enterprise. A position is redundant when it
Article 283 of the Labor Code governs its employer-employee is superfluous, and superfluity of a position or positions could be
relationship with the private respondent as the same is deemed the result of a number of factors, such as the overhiring of
written in the employment contract signed by the parties. Thus, workers, a decrease in the volume of business or the dropping
although a contract is the law between the parties, thereto, this of a particular line or service previously manufactured or
provisions of law which regulate such contracts are deemed undertaken by the enterprise. An employer has no legal
included and shall limit and govern the relations between the obligation to keep on the payroll employees more than the
parties. number needed for the operation of the business.
Disposition. Decision of the NLRC is reversed and set aside, Retrenchment, in contrast to redundancy, is an economic
and the decision of the POEA is revived. No pronouncements as ground to reduce the number of employees. A dismissal due to
to costs. redundancy entitles the worker to separation pay equivalent to
1 month pay for every year of service. When the termination of
ESCAREAL V NLRC employment is due to retrenchment to prevent losses, the
separation pay is only an equivalent of 1/2 month pay for every
[PAGE 260]
year of service. In the above instances, a fraction of at least 6
months is considered as 1 whole year.
EDGE APPAREL INC V NLRC Disposition The appealed decision is MODIFIED by deleting
349 PHIL 972 the additional award of separation pay to private respondents.
VITUG; February 12, 1998
CRITERIA-SELECTION OF EMPLOYEE
NATURE
Petition for certiorari and prohibition assailing the decision of
the NLRC PANLILIO V NLRC (FINDSTAFF PLACEMENT
SERVICES INC, OMAN SHERATON HOTEL INC)
FACTS 281 SCRA 53
- Pursuing its retrenchment program, petitioner Edge Apparel,
Inc., dismissed private respondents from employment. The
ROMERO; October 17, 1997
subsequent receipt of their separation pay benefits did not
NATURE
deter them from going through with their complaint for illegal
Review of the decision of the NLRC
dismissal against petitioner. The charge averred that the
retrenchment program was a mere subterfuge used by Edge
FACTS
Apparel to give a semblance of regularity and validity to the
- Petitioner Moises B. Panlilio was recruited by private
dismissal.
respondent Findstaff Placement Services (FPS) for employment
- Satisfied with the legality of the retrenchment program, the
in the Sheraton Hotel in Oman as Recreational Manager in
Labor Arbiter dismissed the complaint of private respondents
October 1991. The contract was for a period of two years.
against petitioner. The decision was appealed to the NLRC. In
However, in March 1992, his services were terminated.
their appeal, private respondents claimed that the documents
- He filed a complaint for illegal dismissal before the POEA.
submitted to demonstrate the alleged losses had been
POEA rendered a decision in favor of the petitioner on the
"bloated" so as to reflect financial losses. The NLRC held that
ground that the alleged redundancy of his position was not
there was no basis for the retrenchment of the workers .
adequately proven.
- The NLRC found, however, that the workers were terminated
- FPS filed an appeal before the NLRC, submitting affidavits from
due to redundancy and ordered petitioner to pay private
the officers of the Director of Personnel and Training Division of
respondents additional separation pay in accordance with Art.
Sheraton Hotel by FPS substantiating the redundancy of
283. The NLRC noted that the workers were assigned to the
petitioner’s position. However, NLRC affirmed the decision of
sewing line for simple garments which was phased out due in
the POEA. On MFR, NLRC reversed its decision.
fact to the dropping of this particular line of business. It was
held that the dismissal of private respondents could be
ISSUE
considered to have been due to redundancy since it was only
WON Panlilio was illegally dismissed
private respondents' line of work which was phased out by
petitioner. Edge Apparel’s MFR was denied, hence this petition.
HELD
YES
ISSUE
- The redundancy of his position wasn’t fully substantiated. The
WON private respondents were dismissed due to redundancy
affidavits and documents it submitted are entitled to little
weight, for it does not prove the superfluity of petitioner’s
HELD
position. In fact, these documents do not even present the
NO
necessary factors which would confirm that a position is indeed
Ratio The fact that a mere portion of the business of an
redundant, such as overhiring of workers, decreased volume of
employer is shut down does not necessarily remove that
business or dropping of a product line or service activity.
Labor Law 1 A2010 - 10 - Disini
- Undoubtedly, said documents still do not sufficiently explain view of the pendency of a criminal case against him with the
the reason why petitioner’s position had become redundant, but Office of the Ombudsman for alleged irregularities in the
only elucidated the fact that he was not a victim of any granting of loans for which he could likewise be held pecuniarily
discrimination in effecting the termination. liable.
- We have held that it is important for a company to have fair - Petitioner filed a complaint for illegal dismissal with money
and reasonable criteria in implementing its redundancy claims.
program, such as but not limited to, (a) preferred status, (b) - Labor Arbiter declared Philippine Postal Savings Bank, Inc.
efficiency and (c) seniority. Unfortunately for FPS, such guilty of illegal dismissal.
appraisal was not done in the instant case. Respondents appealed to the NLRC asseverating that they were
Disposition Decision reversed denied due process of law when Labor Arbiter allegedly hastily
decided that they did not adduce evidence to support their
GOLDEN THREAD KNITTING INDUSTRIES INC V claim of business losses to justify retrenchment. In support of
their appeal, respondents submitted in evidence different
NLRC
documents.
[PAGE 194] - Petitioner duly opposed the presentation of the aforesaid
documents contending that [these] cannot be presented for the
first time on appeal. Moreover, even if the same can be
admitted on appeal, the aforesaid documents are insufficient to
prove the existence of business losses. Finally, petitioner posits
that if serious losses were in fact incurred by respondent PPSBI,
the same was due to the mismanagement of its officers which
TANJUAN V PHIL POSTAL SAVINGS BANK should not be borne by its rank and file employees.
411 SCRA 168 - NLRC issued a Resolution admitting the evidence presented by
PANGANIBAN; September 16, 2003 respondents on appeal and finding the same adequate to prove
the existence of business losses on the part of respondent
NATURE PPSBI. Petitioner elevated the case to the CA which affirmed the
Petition for Review of a CA ruling NLRC.

FACTS ISSUES
- Tanjuan (petitioner) was employed by Philippine Postal 1. WON proof of business losses maybe admitted on appeal
Savings Bank, Inc. (respondent), a government financing 2. WON the CA has a Power to review findings of fact
institution and a subsidiary of the Philippine Postal Corporation 3. WON the Retrenchment was valid
(Philpost), as Property Appraisal Specialist and Officer-in-Charge
of its Credit Supervision and Control Department. At the time HELD
material to this case, he was on his fourth year of service. 1. YES
Torres (respondent Torres), PPSBI’s President and Chief - It is well-settled that the NLRC is not precluded from receiving
Executive Officer, issued Memorandum 145-98 addressed to evidence, even for the first time on appeal, because technical
petitioner and five (5) other employees belonging to its rules of procedure are not binding in labor cases. This rule
Accounts Management Department and Credit Supervision and applies equally to both the employee and the employer. In the
Control Department charging them with negligence in the interest of due process, the Labor Code directs labor officials to
performance of duties and misrepresentation. Petitioner use all reasonable means to ascertain the facts speedily and
submitted his written explanation alleging that he merely objectively, with little regard to technicalities or formalities.
reviewed and validated the findings of the Property Appraiser. However, delay in the submission of evidence should be clearly
- OP Order No. 003-99 was issued by respondent Torres to explained and should adequately prove the employer’s
petitioner informing him of his preventive suspension for a allegation of the cause for termination.
period of ninety (90) days in view of the pending administrative - In the instant case, it is undisputed that the evidence of
investigation against him, later reduced to 30 days. Petitioner’s business losses for the years 1996 up to 1999 was introduced
suspension would only be up to February 11, 1999, after which before the NLRC only. The CA correctly noted, however, that
he could already report back to work. respondents reserved the right to introduce the evidence to the
- Board of Directors of respondent PPSBI issued Board labor arbiter, if and when required to do so. Reasons of
Resolution No. 99-14 approving the bank’s reorganization via confidentiality and the volatile nature of PPSBI’s business as a
retrenchment of employees and re-alignment of functions and banking institution prompted respondents to limit the
positions for the purpose of preventing further serious losses. In presentation of this evidence at the outset. Indeed, it would
furtherance of the Board’s decision, a letter was released by have been foolhardy for the NLRC and the CA to reject the
respondent Torres addressed to all employees of respondent evidence, just because it had not been presented before the
PPSBI, informing them of the impending reorganization and labor arbiter. Such evidence was absolutely necessary to
enjoining them to apply for their desired plantilla positions resolve the issue of whether petitioner’s employment was
under the new organizational set-up not later than July 20, validly terminated. For strictly adhering to technical rules of
1999, otherwise they shall not be included in the selection procedure at the expense of equity, the Commission has in fact
process and shall be deemed to have opted to be separated been chided by the Court in Philippine Telegraph and Telephone
instead. Petitioner did not apply for any position in the new Corporation v. NLRC, from which we quote:
organizational set-up. “Thus, even if the evidence was not submitted to the labor
- Petitioner received a Notice of Termination dated October 4, arbiter, the fact that it was duly introduced on appeal to
1999 informing him that pursuant to respondent PPSBI’s respondent commission is enough basis for the latter to have
adoption of a new organizational structure under Board been more judicious in admitting the same, instead of falling
Resolution No. 99-14, his employment therewith shall cease [at] back on the mere technicality that said evidence can no
the close of office hours on November 4, 1999 or thirty (30) longer be considered on appeal. Certainly, the first course of
calendar days from date of receipt of the notice on the ground action would be more consistent with equity and the basic
of abolition of position. The Department of Labor and notions of fairness.”
Employment was likewise seasonably notified prior to the - As to petitioner’s claim that he was denied due process
effectivity date of petitioner’s termination as required by law. because of the belated admission of the evidence, suffice it to
However, the release of his separation pay of one and a half (1 say that he was given every opportunity to refute it and to
1/2) months salary for every year of service was withheld in submit counter-evidence. The essence of due process consists
simply in according parties reasonable opportunity to be heard
Labor Law 1 A2010 - 11 - Disini
and to submit any evidence they may have in support of their withholding of separation pay, which has not been raised as an
defense. issue in this Petition, was satisfactorily resolved by the CA.
2. YES - The only remaining question is whether respondents have
- Section 9 of Batas Pambansa Blg. 129, as amended by sufficiently and convincingly established business reverses of
Republic Act No. 7902, expanded the jurisdiction of the CA as the kind or the amount that would justify the retrenchment. As
follows: this Court has held, before any reduction of personnel becomes
“SEC. 9. Jurisdiction. - The Court of Appeals shall exercise: legal, any claim of actual or potential business losses must
“(1) Original jurisdiction to issue writs of mandamus, satisfy established standards as follows: (1) the losses incurred
prohibition, certiorari, habeas corpus, and quo warranto, and are substantial and not de minimis; (2) the losses are actual or
auxiliary writs or processes, whether or not in aid of its reasonably imminent; (3) the retrenchment is reasonably
appellate jurisdiction; necessary and is likely to be effective in preventing the
- The Court of Appeals shall have the power to try cases and expected losses; and (4) the alleged losses, if already incurred,
conduct hearings, receive evidence and perform any and all or the expected imminent losses sought to be forestalled are
acts necessary to resolve factual issues raised in cases falling proven by sufficient and convincing evidence. The employer has
within its original and appellate jurisdiction, including the power the burden of proving that the losses are serious, actual and
to grant and conduct new trials or further proceedings. Verily, real.
the appellate court, pursuant to the exercise of its original - The Court had previously ruled that financial statements
jurisdiction over petitions for certiorari, has the power to review audited by independent external auditors constituted the
NLRC cases. Such review extends to the factual findings of the normal method of proof of the profit-and-loss performance of a
labor arbiter when, as in this case, these are at variance with company. Audit reports conducted by no less than the
those of the NLRC. Commission on Audit (COA) showec the losses alleged by
- The CA acted within its power when it disregarded the labor respondents to have been the primary reason for the Board of
arbiter’s findings and upheld the contrary ruling of the NLRC. In Directors’ decision to effect retrenchment and reorganization
turn, the factual findings of the former affirming those of the were clearly not at all fictitious, imaginary or mere conjectures
latter are generally binding on this Court and will not as a rule as claimed by petitioner. Furthermore, the fact that respondent
be reviewed on appeal. Petitioner has not shown any reason for PPSBI was being regularly monitored by the Bangko Sentral ng
us to depart from this rule. Pilipinas (BSP) and the Philippine Deposit Insurance Corporation
3. YES (PDIC) due to its precarious financial position for several years
- The Court has consistently recognized and affirmed the positively affirms respondents’ asseveration of continuous
employer’s management right and prerogative to terminate the serious business losses. The findings of the CA affirming those
services of its employees in order to obviate or minimize of the NLRC showed real and grave financial reverses, which
business losses. Retrenchment, one of the authorized causes made downsizing the only recourse for the bank to follow.
for termination under the Labor Code, has been defined as “the Indeed, the retrenchment of petitioner was the consequence of
termination of employment initiated by the employer through the bank’s reorganization and a cost-saving device recognized
no fault of the employees and without prejudice to the latter, by jurisprudence.
resorted by management during periods of business recession, Disposition Petition is DENIED, and the assailed Decision and
industrial depression, or seasonal fluctuations[;] or during lulls Resolution AFFIRMED.
occasioned by lack of orders, shortage of materials, conversion
of the plant for a new production program or the introduction of LOPEZ SUGAR CORP V FRANCO
new methods or more efficient machinery, or of automation.
[PAGE 150]
- For the exercise of such prerogative, Article 283 of the Labor
Code provides these conditions:
“Art. 283. Closure of establishment and reduction of
personnel. -- The employer may also terminate the
EMPLOYMENT OF INDEPENDENT
employment of any employee due to the installation of labor CONTRACTOR – EFFECT
saving 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 ASIAN ALCOHOL CORPORATION V NLRC
circumventing the provisions of this Title, by serving a written 305 SCRA 416
notice on the worker and the Ministry of Labor and PUNO; March 25, 1999
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor NATURE
saving devices or redundancy, the worker affected thereby Petition for Review on certiorari of NLRC decision
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every FACTS
year of service, whichever is higher. In case of retrenchment - In Sept ‘91, the Parsons family, who originally owned the
to prevent losses and in cases of closures or cessation of controlling stocks in Asian Alcohol Corp (AAC), were driven by
operations of establishment or undertaking not due to serious mounting business losses to sell their majority rights to Prior
business losses or financial reverses, the separation pay shall Holdings, Inc. which took over AAC’s management and
be equivalent to one (1) month pay or at least one-half (½) operation.
month pay for every year of service, whichever is higher. A - To prevent further losses, Prior Holding implemented an
fraction of at least six (6) months shall be considered as one organizational plan and other cost-saving measures. Some 117
(1) whole year. employees out of a total workforce of 360 were separated. 72 of
-Thus, the requisites for valid retrenchment are the following: them occupied redundant positions that were abolished. Of
(1) necessity of the retrenchment to prevent losses, and proof these positions, 21 held by union members and 51 by non-union
of such losses; (2) written notice to the employees and to the members.
Department of Labor and Employment (DOLE) at least one - The 6 private respondent workers are among those union
month prior to the intended date of retrenchment; and (3) members whose positions were abolished due to redundancy. In
payment of separation pay equivalent to one-month pay or at Oct, ‘92, they received individual notices of termination
least one-half month pay for every year of service, whichever is effective Nov 30, ‘92. They were paid the equivalent of 1 month
higher. There is no dispute that respondents have seasonably salary for every year of service as separation pay, the money
complied with the procedural requirement of serving written value of their unused sick, vacation, emergency and seniority
notice to petitioner and the DOLE. On the other hand, the leave credits, 13th month pay for the year 1992, medicine
allowance, tax refunds, and goodwill cash bonuses for those
Labor Law 1 A2010 - 12 - Disini
with at least 10 years of service. All of them executed sworn by the business. Under these conditions, ER has no legal
releases, waivers and quitclaims. Except for 2, they all signed obligation to keep in its payroll more EEs than are necessary for
sworn statements of conformity to the company retrenchment the operation of its business.
program. And except for one, they all tendered letters of - Procedure – Requisites for valid implementation of valid
resignation. redundancy program: (1) written notice served on both the
- The 6 private respondents filed with the NLRC complaints for employees and the Department of Labor and Employment at
illegal dismissal with a prayer for reinstatement with least one month prior to the intended date of retrenchment; (2)
backwages, moral damages and atty's fees. They alleged that payment of separation pay equivalent to at least one month
AAC used the retrenchment program as a subterfuge for union pay or at least one month pay for every year of service,
busting. They claimed that they were singled out for separation whichever is higher; (3) good faith in abolishing the redundant
by reason of their active participation in the union. They also positions; and (4) fair and reasonable criteria in ascertaining
asseverated that Asian Alcohol was not bankrupt as it has what positions are to be declared redundant and accordingly
engaged in an aggressive scheme of contractual hiring. abolished.
- LA ruled in favor of AAC saying that retrenchment was valid. - On Effect of Employment of Independent Contractor: An
NLRC reversed LA ruling that there was illegal dismissal. It employer's good faith in implementing a redundancy program is
rejected the evidence by AAC to prove its business reversals. It not necessarily destroyed by availment of the services of an
ruled that the positions of private respondents were not independent contractor to replace the services of the
redundant for the simple reason that they were replaced by terminated employees. We have previously ruled that the
casuals. Hence, this petition. reduction of the number of workers in a company made
necessary by the introduction of an independent contractor is
ISSUE justified when the latter is undertaken in order to effectuate
WON the positions of the herein private respondent workers are more economic and efficient methods of production. In the case
unnecessary redundant and superfluous, thereby justifying the at bar, private respondents failed to proffer any proof that the
termination of their employment management acted in a malicious or arbitrary manner in
engaging the services of an independent contractor to operate
the Laura wells. Absent such proof, the Court has no basis to
HELD interfere with the bona fide decision of management to effect
YES more economic and efficient methods of production.
Ratio Retrenchment and redundancy under A283 of Labor Disposition Petition GRANTED. NLRC decision set aside. LA
Code2 are just causes for the employer to terminate the ruling reinstated.
services of workers to preserve the viability of the business. In
exercising its right, however, management must faithfully
comply with the substantive and procedural requirements laid PROCEDURE – REQUIREMENT
down by law and jurisprudence
Reasoning
- On Retrenchment: AAC was able to prove the ff. requirements
ASIAN ALCOHOL CORP V NLRC
for retrenchment to be valid: (1) the retrenchment was [PAGE 264]
reasonably necessary and likely to prevent business losses,
which, if already incurred, are not merely de minimis, but HEARING
substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith
by the employer; (2) ER served written notice both to the EEs WILTSHIRE FILE CO INC V NLRC
and to DOLE at least 1 mo. prior to the intend date of [PAGE 257]
retrenchment;(3) ER paid the retrenched employees separation
pay equivalent to 1 mo. pay or at least 1/2 month pay for every
year of service, whichever is higher; (4) ER exercised its
prerogative to retrench employees in good faith for the
advancement of its interest of its interest and not to defeat or
circumvent the employees' right to security of tenure; and (5) VENUE OF COMPLAINT
ER used fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the EEs, such
as status (i.e., whether they are temporary, casual, regular or WILTSHIRE FILE CO INC V NLRC
managerial employees), efficiency, seniority, physical fitness, [PAGE 257]
age, and financial hardship for certain workers.
- On Redundancy: Redundancy exists when the service
capability of the work force is in excess of what is reasonably C. RETRENCHMENT TO PREVENT LOSSES
needed to meet the demands on the enterprise. A redundant
position is one rendered superfluous by any of these factors:
overhiring of workers, decreased volume of business, dropping
of a particular product line previously manufactured by the
DEFINED
company or phasing out of a service activity priorly undertaken
FF MARINE CORP V NLRC
2
Art. 283. Closure of establishment and reduction of personnel. — The employer may
455 SCRA 154
also terminate the employment of any employee due to the installation of labor TINGA; April 8, 2005
saving 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
FACTS
on the workers and the Ministry of Labor and Employment at least one (1) month - On 26 October 1998, petitioners filed with the Department of
before the intended date thereof. In case of termination due to the installation of Labor and Employment (DOLE) a notice that petitioner
labor saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least one (1) month pay or to at least one (1) month
corporation was undertaking a retrenchment program to curb
pay for every year of service, whichever is higher. In case of retrenchment to prevent the serious business reverses brought about by the Asian
losses and in case of closures or cessation of operations of establishment or economic crisis. Notices and separation were given to the
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay at least one-half (1/2), month pay for
affected employees.
every year of service, whichever is higher. A fraction of at least six (6) month shall be
considered one (1) whole year.
Labor Law 1 A2010 - 13 - Disini
- 21 employees were retrenched including petitioner Magno adduce the 1996 and 1997 Financial Statements audited by an
who despite receiving separation pay, filed a case for illegal independent external auditor before the Labor Arbiter and the
dismissal. Magno claimed that he was beguiled into accepting NLRC. By merely upholding the evidentiary weight accorded to
the separation pay since petitioners terminated his services on financial statements duly audited by independent external
the pretext that the dredging machine where he was assigned auditors, grave abuse of discretion on the part of the NLRC is
was temporarily stalled in Zambales. Magno eventually learned hardly imaginable as it is unfounded
that the company had been adducing to others a different - It is essentially required that the alleged losses in business
reason for retrenchment, primarily the Asian financial crisis operations must be proven. The employer bears the burden of
- Labor Arbiter Salimathar V. Nambi promulgated a Decision proving the existence or the imminence of substantial losses
upholding the validity of retrenchment. NLRC reversed decision. with clear and satisfactory evidence that there are legitimate
CA affirmed NLRC decision. business reasons justifying a retrenchment. Should the
- Material to the resolution of the case was the issue of employer fail to do so, the dismissal shall be deemed unjustified
admissibility and competency as evidence of the 31 December - Moreover, petitioners failed to act in consonance with the rule
1997 and 1996 Financial Statements of petitioners. However, that retrenchment shall be a remedy of last resort.
the appellate court ruled that a perusal of the certification retrenchment is not perfectly justified as there was no showing
issued by Banaria, Banaria and Company (independent auditor) that the retrenchment was the last recourse resorted to by
regarding the Financial Statements reveals that the same were petitioners. Although petitioners allege in their petition before
executed on 30 March 1998 or nine (9) months prior to the this Court that they had undertaken cost-cutting measures
filing of the complaint for illegal dismissal on 12 January 1999. before they resorted to retrenchment, their contention does not
Thus, the financial statements could have been offered as inspire belief for the evidence shows that the petition for
evidence before the Labor Arbiter and the NLRC. Thus, the certiorari filed by petitioners with the Court of Appeals is bereft
Court of Appeals reproached petitioners for having suppressed of any allegation of prior resort to cost-cutting measures other
material evidence than retrenchment
- Accordingly, the appellate court found that petitioners failed to
substantiate the substantive requirements of a valid
retrenchment DISTINCTION REDUNDANCY AND
RETRENCHMENT
ISSUE
WON retrenchment was valid
AG&P UNITED RANK AND FILE ASSN V NLRC
HELD (ATLANTIC GULF AND PACIFIC COMPANY OF
NO MANILA INC)
- Retrenchment is the termination of employment initiated by
265 SCRA 159
the employer through no fault of the employees and without
prejudice to the latter, resorted to by management during MENDOZA; November 29, 1996
periods of business recession, industrial depression, or seasonal
fluctuations or during lulls occasioned by lack of orders, NATURE
shortage of materials, conversion of the plant for a new Special Civil Action for Certiorari
production program or the introduction of new methods or more
efficient machinery, or of automation FACTS
- There are three (3) basic requisites for a valid retrenchment to - Petitioner union is the duly certified bargaining agent of the
exist, to wit: (a) the retrenchment is necessary to prevent rank and file employees of the respondent corporation.
losses and such losses are proven; (b) written notice to the - As a result of a deadlock in the negotiations for a collective
employees and to the DOLE at least one (1) month prior to the bargaining agreement, the union declared a strike on
intended date of retrenchment; and (c) payment of separation September 22, 1987.
pay equivalent to one (1) month pay or at least one-half (1/2) - Less than a month later, the Department of Labor and
month pay for every year of service, whichever is higher Employment assumed jurisdiction over the dispute. Then
- Also according to jurisprudence: “the employer’s prerogative Secretary Franklin Drilon rendered a decision on February 10,
to bring down labor costs by retrenching must be exercised 1988 from which both parties appealed.
essentially as a measure of last resort, after less drastic - On January 11, 1988, prior to the rendition of the decision of
means… alleged losses if already realized, and the expected the Secretary of Labor and Employment, the president of
imminent losses sought to be forestalled, must be proved by respondent company announced the adoption by the company
sufficient and convincing evidence” of several cost-cutting measures to forestall impending financial
- The law recognizes this under Article 283 of the Labor Code. losses. Among these was a so-called "redundancy program,"
However, the employer bears the burden to prove his allegation which, as implemented on March 1, 1988, resulted in the layoff
of economic or business reverses. of around 177 employees, some of whom were officers and
- petitioners adduced before the Labor Arbiter the 1994 and members of the petitioner union. The affected employees were
1995 Financial Statements. Said Financial Statements, however, given separation pay equivalent to one month pay for every
were prepared only by petitioners’ accountant, Rosalie year of service, for which they signed documents of waiver.
Bengzon, and approved by the manager Bernadette Rosales. - On March 14, 1988, however, petitioners filed a complaint for
They were not audited by an independent external auditor. The unfair labor practice and illegal dismissal.
financial statements show that in 1994 and 1995, petitioner - After trial, Labor Arbiter Mendoza found the complaint to be
corporation earned an income of only P77,609.79 and without merit and accordingly dismissed it. He found the
P155,339.96, respectively. In contrast, the 1996 and 1997 "redundancy program" necessary for the company's existence
Financial Statements, however, showed losses of and considered private respondent's practice of rehiring or
P18,005,918.08, and P21,316,072.89, respectively. It was only reemploying dismissed employees under the said program as a
before the Court of Appeals that the financial statements for the managerial prerogative, made not only in pursuance of the
years 1996 and 1997 as audited by an independent external company's policy of giving preference to its dismissed workers,
auditor were introduced. They were not presented before the but actually beneficial to the workers as well. Moreover, he held
Labor Arbiter and the NLRC although they were executed on 30 that petitioners' acceptance of termination pay and other
March 1998, several months prior to the filing of the complaint benefits constituted a waiver of their right to question their
for illegal dismissal by Magno on 12 January 1999 dismissal.
- The appellate court’s affirmance of the decision of the NLRC is - On appeal, the NLRC reversed the labor arbiter's ruling.
principally anchored on the ground that petitioners failed to
Labor Law 1 A2010 - 14 - Disini
- The company moved for a reconsideration. On May 29, 1992,
the NLRC under R.A. No. 6715, reconsidered the decision and
DISTINCTION CLOSURE AND
reinstated the decision of the labor arbiter. RETRENCHMENT
- Petitioners filed a motion for reconsideration but their motion
was denied
JAT GEN SERVICES V NLRC (MASCARINAS)
ISSUE 421 SCRA 78
WON the NLRC gravely abused its discretion by declaring the QUISUMBING; January 26, 2004
legality of the redundancy program of the company
NATURE
HELD Certiorari on decision of CA affirming NLRC affirming LA finding
NO petitioner liable for illegal dismissal and ordering petitioners to
- It is now settled that the NLRC has the power to admit on pay private respondent Mascarinas separation pay, backwages,
appeal additional evidence to show lawful cause for dismissal, legal holiday pay, service incentive leave pay and 13th month
provided that the delay in the submission of said evidence is pay in the aggregate sum of P85,871.00.
explained and the same clearly proves the employer's
allegation of a valid cause for dismissing his employees. FACTS
- In the case at bar, evidence of losses for the years 1987 up to - JAT is engaged in the business of selling second-hand heavy
1990 was, belatedly introduced in the NLRC. But the delay was equipment. It hired private respondent as helper tasked to
satisfactorily explained by respondent company, as the audit coordinate with the cleaning and delivery of the heavy
conducted on its financial report by Sycip Gorres Velayo and Co. equipment sold to customers. Initially, private respondent was
was completed only in 1991. The additional evidence presented hired as a probationary employee and was paid P165 per day
confirmed private respondent's allegation that the losses that was increased to P180 in July 1997 and P185 in January
expected by the company were substantial and reasonably 1998.
imminent to justify the layoff of the individual petitioners. - In October 1997, the sales of heavy equipment declined
- It is necessary to distinguish "redundancy" from because of the Asian currency crisis. Consequently, JAT
"retrenchment." Both are mentioned in Art. 283 of the Labor temporarily suspended operations. It advised its employees,
Code as just causes for the closing of establishments or including private respondent, not to report for work starting on
reduction of personnel. "Redundancy" exists when the services the first week of March 1998. JAT indefinitely closed shop
of an employee are in excess of what is required by an effective May 1998.
enterprise. "Retrenchment," on the other hand, is one of the - A few days after, Mascarinas filed a case for illegal dismissal
economic grounds for dismissing employees and is resorted to and underpayment of wages.
primarily to avoid or minimize business losses. Private - On December 14, 1998, JAT filed an Establishment
respondent's "redundancy program, " while denominated as Termination Report with the DOLE, notifying its decision to
such, is more precisely termed "retrenchment" because it is close its business operations due to business losses and
primarily intended to prevent serious business losses. financial reverses.
- The Labor Code recognizes retrenchment as one of the
authorized causes for terminating the employer-employee ISSUE
relationship and the decision to retrench or not to retrench is a WON private respondent was illegally dismissed
management prerogative. In the case at bar, the company HELD
losses were duly established by the financial statements NO
presented by both parties. Ratio Article 283 of the Labor Code is clear that an employer
- Petitioners contend that the "redundancy program" was may close or cease his business operations or undertaking even
actually a union-busting scheme of management, aimed at if he is not suffering from serious business losses or financial
removing union officers who had declared a strike. This reverses, as long as he pays his employees their termination
contention cannot stand in the face of evidence of substantial pay in the amount corresponding to their length of service, It
losses suffered by the company. Moreover, while it is true that would, indeed, be stretching the intent and spirit of the law if
the company rehired or reemployed some of the dismissed we were to unjustly interfere in management’s prerogative to
workers, it has been shown that such action was made only as close or cease it s business operations just because said
company projects became available and that this was done in undertaking is not suffering from any loss. (Industrial Timber
pursuance of the company's policy of giving preference to its Corp. v NLRC)
former workers in the hiring of project employees. The rehiring Reasoning
or reemployment does not negate the imminence of losses, - While the CA defined the issue to be the validity of dismissal
which prompted private respondent to retrench. due to alleged closure of business, it cited jurisprudence
- Lastly, it is not disputed that petitioners signed documents of relating to retrenchment to support its resolution and
waiver. Petitioners insist that the documents are without any conclusion. While they are often used interchangeably and are
effect because quitclaims and releases are contrary to public interrelated, they are actually two separate and
policy and therefore, null and void. Not all quitclaims and independent causes for termination of employment.
releases are, however, contrary to public policy. If the Termination of an employment may be predicated on one
agreement was voluntarily entered into and represents a without the need of resorting to the other.
reasonable settlement, it is binding on the parties and may not - Closure of business, on one hand, is the reversal of fortune of
later be disowned simply because of a change of mind. It is only the employer whereby there is a complete cessation of business
where there is clear proof that the waiver was wangled from an operations and/or an actual locking-up of the doors of
unsuspecting or gullible person, or the terms of settlement are establishment, usually due to financial losses. Closure of
unconscionable on its face, that the law will step in to annul the business as an authorized cause for termination of employment
questionable transaction. But where it is shown that the person aims to prevent further financial drain upon an employer who
making the waiver did so voluntarily, with full understanding of cannot pay anymore his employees since business has already
what he was doing, and the consideration for the quitclaim is stopped.
credible and reasonable, the transaction must be recognized as - On the other hand, retrenchment is reduction of personnel
a valid and binding undertaking. usually due to poor financial returns so as to cut down on costs
Disposition Dismissed. of operations in terms of salaries and wages to prevent
bankruptcy of the company. It issometimes also referred to as
downsizing. Retrenchment is an authorized cause for
termination of employment which the law accords an employer
Labor Law 1 A2010 - 15 - Disini
who is not making good in its operations in order to cut back on - By decision of April 30, 1999, the Labor Arbiter dismissed the
expenses for salaries and wages by laying off some employees. complaint for illegal dismissal on the ground that a business
The purpose of retrenchment is to save a financially ailing entity has the right to reduce its work force if necessitated by
business establishment from eventually collapsing. compelling economic factors which endanger its existence or
- However, the burden of proving that such closure is bona fide stability.
falls upon the employer. JAT’s submitted financial statements - On appeal, the NLRC acknowledged the right of ACCI to
were bereft of details on the extent of alleged losses incurred. regulate, according to its own discretion and judgment, all
- So we proceed to determining if there was valid dismissal on aspects of employment including the lay-off of workers because
the ground of closure or cessation of operations for reasons of losses in the operation of its business, lack of work and
other than substantial business losses. JAT’s income statement considerable reduction in the volume of business. It thus
showed declining sales –enough to justify the closure of dismissed the appeal.
business. - Private respondents thereupon brought their case, via petition
The dismissal being valid, backwages need not be awarded. for certiorari before the Court of Appeals, alleging that the
Dispositive petition is given due course. The assailed Labor Arbiter and the NLRC committed grave abuse of
Resolutions of the Court of Appeals in CA-G.R. SP No. 60337 are discretion and utter ignorance of the law in completely
AFFIRMED with the MODIFICATION that the award of P66,924.00 disregarding the audited financial statements prepared by
as backwages is deleted. The award of separation pay SGV&Co. showing that ACCI’s F & B Department had been
amounting to P10,296.00 and the other monetary awards, consistently earning profits.
namely salary differentials in the amount of P1,066.00, legal - By decision of August 14, 2002, the Court of Appeals reversed
holiday pay in the amount of P1,850.00, service incentive leave those of the NLRC and the Labor Arbiter. It held that due to
pay in the amount of P925.00 and the 13th month pay in the ACCI’s failure to prove by sufficient and competent evidence
amount of P4,910, or a total of P29,047.00 are maintained. No that its alleged losses were substantial, continuing and without
pronouncements as to costs. any immediate prospect of abating them, the bona fide nature
of the retrenchment appeared doubtful
ALABANG COUNTRY CLUB V NLRC (ALABANG - ACCI’s motion for reconsideration was denied by the appellate
court by Resolution of March 6, 2003
COUNTRY CLUB INDEPENDENT EMPLOYEES UNION)
- During the pendency of the whole case, petitioner the
466 SCRA 329 separation package of sixty-two (62) of the sixty-three (63)
CARPIO-MORALES; August 9, 2005 individual respondents on account of which they executed
Releases, Waivers and Quitclaims in its favor.
NATURE
Petition for review on certiorari. Alabang Country Club Inc. ISSUE
(ACCI) seeks to set aside the appellate court’s decision which WON respondents were terminated for an authorized cause
denied its motion for reconsideration, and ordered the
reinstatement of herein 63 respondents-members of the labor HELD
organization Alabang Country Club Independent Employees YES
Union, without loss of seniority rights and other privileges, and Reasoning
payment of full backwages. - The court first distinguished between retrenchment and
closure of a business undertaking, because the respondents
FACTS were relying on a case (Lopez Sugar Corp. v Federation of Free
- ACCI’s internal auditor conducted a study on the profitability Workers) involving retrenchment on the ground of serious
of ACCI’s Food and Beverage Department business losses being allowed subject to certain conditions.
- Her report showed that from 1989-1993, the F&B Dept had - The court, however, viewed this case as one involving closure
been incurring substantial losses of around P8,727,135 of business undertaking.
- Realizing that it was no longer profitable for ACCI to maintain - **Retrenchment is the reduction of personnel for the
its own F&B Dept, the management decided to cease from purpose of cutting down on costs of operations in terms of
operating it, and to open it to a contractor, which would be salaries and wages resorted to by an employer because of
willing to operate its own food and beverage business within the losses in operation of a business occasioned by lack of work and
club. considerable reduction in the volume of business.
- ACCI entered into an agreement with La Tasca Restaurant for - **Closure of a business or undertaking due to business
it to operate the F&B Dept. losses is the reversal of fortune of the employer whereby there
- ACCI sent its F&B Dept employees letters informing them their is a complete cessation of business operations to prevent
services would be terminated effective 1 month later, that they further financial drain upon an employer who cannot pay
would get separation pay of 125% of their monthly salary for anymore his employees since business has already stopped.
every year of service, that La Tasca agreed to absorb all - While the Labor Code provides for the payment of separation
affected employees immediately with the status of regular package in case of retrenchment to prevent losses, it does not
employees without need of undergoing probationary period, obligate the employer for the payment thereof if there is
and that they would receive the same salary they were closure of business due to serious losses.
receiving at the time of their termination - In the present case, when petitioner decided to cease
- The Union filed a complaint for illegal dismissal, unfair labor operating its F & B Department and open the same to a
practice, regularization and damages with prayer for the concessionaire, it did not reduce the number of personnel
issuance of a writ of preliminary injunction against ACCI assigned thereat. It terminated the employment of all
- The ACCI ceased operating its F&B Dept as scheduled, and La personnel assigned at the department.
Tasca began operating its own F&B business - As in the case of retrenchment, however, for the closure of a
- Meanwhile, in the proceedings before the Labor Arbiter, business or a department due to serious business losses to be
respondent union informed that the F&B division had been regarded as an authorized cause for terminating employees, it
reporting gaining profits as shown by the Statement of Income must be proven that the losses incurred are substantial and
and Deficit prepared by SGV. They thus argued that compliance actual or reasonably imminent; that the same increased
with standards for losses to justify their retrenchment were not through a period of time; and that the condition of the company
met by ACCI. is not likely to improve in the near future.
- ACCI averred that it may exercise management prerogatives - As did the appellate court, this Court finds that the study
to adopt a cost-saving and cost-consciousness program t report submitted by the internal auditor of petitioner, the only
improve efficiency in its operations, etc. evidence submitted to prove its alleged losses, is self-serving
and falls short of the stringent requirement of the law that the
Labor Law 1 A2010 - 16 - Disini
employer prove sufficiently and convincingly its allegation of FACTS
substantial losses. - The Philippine Tuberculosis Society, Inc. is a non-stock and
- Petitioner’s failure to prove that the closure of its F & B non-profit domestic corporation with the primary objective of
Department was due to substantial losses notwithstanding, this fighting tuberculosis in the Philippines. It has employees who
Court finds that individual respondents were dismissed on the are represented by private respondent National Labor Union.
ground of closure or cessation of an undertaking not due - In the proceedings before the NLRC, it was shown that, in
to serious business losses or financial reverses, which is allowed 1989, the Society began to experience serious financial
under Article 283 of the Labor Code: difficulties when it incurred a deficit of P2 million. The shortfall
Art. 283. Closure of establishment and reduction of increased to P9,100,000.00 in 1990 and was certain to become
personnel. – The employer may also terminate the worse were it not for quick measures taken by petitioner.
employment of any employee due to the installation of labor- - First, the Society leased a property in Tayuman to a fastfood
saving devices, redundancy, retrenchment to prevent losses outlet, cancelled its service agreement with a janitorial
or the closing or cessation of the establishment or company, and sold its equity in the Philippine Long Distance
undertaking unless the closing is for the purpose of Telephone Company (PLDT). Second, it withdrew from the Pag-
circumventing the provisions of this Title, by serving a written Ibig Fund Program, negotiated with the Government Service
notice on the worker and the Ministry of Labor and Insurance System for the restructuring of its obligations, and
Employment at least one (1) month before its intended date applied for exemption from minimum wage increases. Finally, it
thereof. In case of termination due to the installation of disapproved the overtime pay of supervisory and managerial
labor-saving devices or redundancy, the worker affected employees, obtained the waiver of personnel of their
thereby shall be entitled to a separation pay equivalent to at entitlement to wage differentials, and implemented the
least one (1) month pay for every year of service, whichever retrenchment of one hundred sixteen (116) employees.The
is higher. In case of retrenchment to prevent losses and in retrenchment is the subject of the present suit.
cases of closures or cessation of operations of the - On September 27, 1991, respondent NLU filed a notice of
establishment or undertaking not due to serious business strike against the Society with the National Conciliation and
losses or financial reverses, the separation pay shall be Mediation Board (NCMB), charging the Society with unfair labor
equivalent to one (1) month pay or at least one-half (½) practice in terminating the services of the aforementioned
month pay for every year of service, whichever is higher. A employees.
fraction of at least six (6) months shall be considered as one - Conferences were scheduled by the NCMB, which however
(1) whole year. failed to resolve the case. On November 6, 1991, then
- While petitioner did not sufficiently establish substantial losses Secretary of Labor and Employment Ruben Torres certified the
to justify closure of its F & B Department on this ground, there case to the NLRC on the ground that the labor dispute seriously
is basis for its claim that the continued maintenance of said affected the national interest.
department had become more expensive through the years. An - On August 31, 1993, the NLRC rendered a decision declaring
evaluation of the financial figures appearing in the audited as invalid the retrenchment of the employees concerned on the
financial statements prepared by the SGV&Co. shows that ground that the Society did not take seniority into account in
ninety one to ninety six (91% - 96%) percent of the actual their selection.
revenues earned by the F & B Department comprised the costs
and expenses in maintaining the department. Petitioner’s ISSUE
decision to place its F & B operations under a concessionaire WON NLRC committed grave abuse of discretion in rendering its
must then be respected, absent a showing of bad faith on its decision
part.
- While the closure of F & B Department is found to be justified, HELD
petitioner is, under the above-quoted provision of Art. 283 of NO
the Labor Code, mandated to pay separation pay computed - Clearly (under the Labor Code), retrenchment or reduction of
from the time individual respondents commenced their the workforce in cases of financial difficulties is recognized as a
employment until the time the department ceased operations, ground for the termination of employment.
in an amount equivalent to one (1) month pay or at least one- - Although petitioner is a non-stock and non-profit
half (½) month pay for every year of service, whichever is organization, retrenchment as a measure adopted to
higher. In petitioner’s case, it in fact voluntarily doled out to stave off threats to its existence is available to it.
some of individual respondents separation pay equivalent to - However, the employer’s prerogative to layoff employees is
one month and a quarter (1¼) for every year of service, a subject to certain limitations set forth in Lopez Sugar
fraction of a year being considered as one year. Corporation v. Federation of Free Workers as follows:
- Respondents not having been illegally dismissed, they are not - Firstly, the losses expected should be substantial and not
entitled to backwages. merely de minimis in extent. If the loss purportedly sought to
By petitioner’s information, it had paid, during the pendency of be forestalled by retrenchment is clearly shown to be
the case, the separation package of sixty-two (62) of the sixty- insubstantial and inconsequential in character, the bonafide
three (63) individual respondents on account of which they nature of the retrenchment would appear to be seriously in
executed Releases, Waivers and Quitclaims in its favor. question. Secondly, the substantial loss apprehended must be
Disposition Petition GRANTED reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in
other words, be a certain degree of urgency for the
COVERAGE retrenchment, which is after all a drastic recourse with serious
consequences for the livelihood of the employees retired or
otherwise laid-off. Because of the consequential nature of
PHILIPPINE TUBERCULOSIS SOCIETY INC V NLRC retrenchment, it must, thirdly, be reasonably necessary and
294 SCRA 567 likely to effectively prevent the expected losses. The employer
MENDOZA; August 25, 1998 should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor
NATURE costs. An employer who, for instance, lays off substantial
This is a petition for certiorari to set aside the decision of the numbers of workers while continuing to dispense fat executive
NLRC declaring the retrenchment of 116 employees of bonuses and perquisites or so-called “golden parachutes,” can
petitioner invalid and ordering the reinstatement and scarcely claim to be retrenching in good faith to avoid losses. To
backwages to them. impart operational meaning to the constitutional policy of
providing “full protection” to labor, the employer’s prerogative
Labor Law 1 A2010 - 17 - Disini
to bring down labor costs by retrenching must be exercised FACTS
essentially as a measure of last resort, after less drastic means - The Rural Bank of Bangued dismissed Paulino Balbalec, Juan
- e.g., reduction of both management and rank-and-file bonuses Bolante and Rolando Beleno, petitioners, alleging that its
and salaries, going on reduced time, improving manufacturing workforce was being retrenched for losses suffered by the bank
efficiencies, trimming of marketing and advertising costs, etc. - during the years 1984-1988. It stressed that management's
have been tried and found wanting. decision to dismiss them was made to "protect the bank's
- Lastly, but certainly not the least important, alleged losses if stability and profitability" and to "enable the bank to comply
already realized, and the expected imminent losses with provisions of the new minimum wage law."
sought to be forestalled, must be proved by sufficient - Petitioners alleged that they were singled out for dismissal
and convincing evidence. The reason for requiring this after they refused to sign an agreement for deferment of wage
quantum of proof is readily apparent: any less exacting increases under RA 6727, an agreement which all other
standard of proof would render too easy the abuse of this employees signed. The bank, on the other hand, averred that
ground for termination of services of employees. retrenchment of its workforce was necessary to prevent
- In addition to the above, the retrenchment must be business losses. It further alleged that said termination would
implemented in a just and proper manner. As held in not hamper its operations and denied that petitioners were
Asiaworld Publishing House, Inc. v. Ople: singled out, claiming that the latter ranked last in seniority
… there must be fair and reasonable criteria to be used in among its employees.
selecting employees to be dismissed, such as: (a) less - The Labor Arbiter decided that there was no valid
preferred status (e.g. temporary employee); (b) efficiency retrenchment, hence complainants were illegally dismissed. The
rating; and (c) seniority. NLRC sustained the Labor Arbiter's findings. On motion for
- There is substantial evidence in the record to support the reconsideration, however, the NLRC partially reversed itself with
NLRC’s finding that the Society suffered financial distress as a respect to the issue of retrenchment, upholding the bank's
result of growing deficits which were not likely to abate. dismissal of petitioners on the basis of a valid retrenchment.
Petitioner presented to the NLRC the balance sheets, financial
statements, and the reports of its external auditors for the ISSUE
years 1989 and 1990. We cannot, therefore, say that the WON the bank's dismissal of petitioners was justified by a valid
finding of the NLRC is unsupported by substantial evidence. retrenchment
Accordingly, the NLRC could rightly conclude:
Given the claim of the Society that its present financial HELD
troubles were occasioned by a dearth of funding from its YES
traditional sources of revenue, . . . it is Our considered view Ratio The law recognizes the right of every business entity to
that the Society’s claim to retrench employees . . . is valid. reduce its workforce if the same is made necessary by
- Nor do we think the NLRC erred in holding that though the compelling economic factors which would endanger its
Society was justified in ordering a retrenchment, its existence or stability. In spite of overwhelming support granted
implementation of the scheme rendered the retrenchment by the social justice provisions of our Constitution in favor of
invalid. That is because in selecting the employees, the Society labor, the fundamental law itself guarantees, even during the
disregarded altogether the factor of seniority. As the NLRC process of tilting the scales of social justice towards workers
noted: and employees, "the right of enterprises to reasonable returns
- We noted with concern that the criteria used by the Society of investment and to expansion and growth." [quoting Art XIII,
failed to consider the seniority factor in choosing those to be Sec 3, last paragraph of the Consti]
retrenched, a failure which, to our mind, should invalidate the Reasoning To hold otherwise would not only be oppressive and
retrenchment, as the omission immediately makes the selection inhuman, but also counterproductive and ultimately subversive
process unfair and unreasonable. Things being equal, retaining of the nation's thrust towards a resurgence in our economy
a newly hired employee and dismissing one who had occupied which would ultimately benefit the majority of our people.
the position for years, even if the scheme should result in Where appropriate and where conditions are in accord with law
savings for the employer, since he would be paying the and jurisprudence, the Court has authorized valid reductions in
newcomer a relatively smaller wage, is simply unconscionable the workforce to forestall business losses, the hemorrhaging of
and violative of the senior employee’s tenurial rights. In Villena capital, or even to recognize an obvious reduction in the volume
vs. NLRC, 193 SCRA 686, February 7, 1991, the Supreme Court of business which has rendered certain employees redundant.
considered the seniority factor an important ingredient for the - Article 283 of the Labor Code provides:
validity of a retrenchment program. According to the Court, Art. 283. Closure of establishment and reduction of personnel
the following legal procedure should be observed for a - The employer may also terminate the employment of any
retrenchment to be valid; (a) one-month prior notice to employee due to the installation of labor saving devices,
the employee as prescribed by Article 282 of the Labor redundancy, retrenchment to prevent losses or the closing or
Code; and b) use of a fair and reasonable criteria in cessation of operation of the establishment or undertaking
carrying out the retrenchment program, such as 1) less unless the closing is for the purpose of circumventing the
preferred status (as in the case of temporary provisions of this Title, by serving a written notice on the
employees) 2) efficiency rating, 3) seniority, and 4) worker and the Ministry of Labor and Employment at least
proof of claimed financial losses. one (1) month before the intended date thereof. In case of
- Petitioner has not explained why the said employees had to be termination due to the installation of labor saving devices or
laid off without considering their many years of service to the redundancy, the worker affected thereby shall be entitled to a
Society. The fact that these employees had accumulated separation pay equivalent to at least his one (1) month pay or
seniority credits indicates that they had been retained in the to at least one (1) month pay for every year of service,
employ of the Society because of loyal and efficient service. The whichever is higher. In case of retrenchment to prevent
burden of proving the contrary is on petitioner. losses and in cases of closures or cessation of operations of
Disposition Petition DISMISSED for lack of showing that in establishment or undertaking not due to serious business
rendering its decision, NLRC committed grave abuse of losses or financial reverses, the separation pay shall be
discretion. equivalent to one (1) month pay or at least onehalf (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
BALBALEC V NLRC (RURAL BANK OF BANGUED)
(1) whole year.
251 SCRA 399 - The article not only contemplates the termination of
KAPUNAN; December 19, 1995 employment of workers or employees to minimize established
business losses but also to prevent impending losses, for the
Labor Law 1 A2010 - 18 - Disini
law's phraseology explicitly uses the phrase "retrenchment to the restaurant was continued in its new location, while waiting
prevent losses." However, retrenchment strikes at the very core for the construction of a new Mayon Hotel & Restaurant. Only
of an individual's employment and the burden clearly falls upon nine of the sixteen employees continued working in the Mayon
the employer to prove economic or business losses with Restaurant at its new site.
appropriate supporting evidence. After all, not every asserted - On various dates, the 16 employees filed complaints for
potential loss is sufficient legal warrant for a reduction of underpayment of wages and other money claims against
personnel and the evidence adduced in support of a claim of petitioners
actual or potential business losses should satisfy certain - The Labor Arbiter awarded substantially all of respondents’
established standards, to wit: money claims and held that based on the evidence presented,
1. The losses expected and sought to be avoided must be Josefa Po Lam is the owner/proprietor of Mayon Hotel &
substantial and not merely de minimis; Restaurant, and is the proper respondent in these cases.
2. The apprehended substantial losses must be reasonably - NLRC reversed labor arbiter’s decision and dismissed all
imminent, as such imminence can be perceived objectively complaints.
and in good faith by the employer; - CA reinstated labor arbiter’s decision
3. The retrenchment should reasonably be necessary and
likely to prevent effectively the expected losses; ISSUES
4. The losses, both the past and forthcoming, must be proven 1. WON Josefa Po Lam should to be held liable as the owner of
by sufficient and convincing evidence. petitioner Mayon Hotel & Restaurant, and the proper
- The bank posted losses in the amount of P12,920.22, respondent in this case
P3,888.34 and P17,865.12 for the years 1984, 1985 and 1986, 2. WON respondents Loveres, Guades, Macandog, Atractivo,
respectively. Against these losses, the bank registered a net Llarena and Nicerio were illegally dismissed
income of P12,702.59 and P68,085.56 in 1988 and 1989, 3. WON respondents are entitled to their money claims
respectively. Its net profit of P60,085.56 would instead have
been a net loss had not the bank deferred the implementation HELD
of the wage increase under RA 6640. In addition, the bank was 1. YES
faced with a serious financial problem resulting from a - The records of the case belie petitioner Josefa Po Lam’s claim
considerable reduction of its total resources by 27.23% and that she is merely an overseer. While Josefa Po Lam claims that
total loan investments by 35.79% from 1984 to 1988. Past due it is her daughter, Pacita Po, who owns the hotel and restaurant
loan ratio ranged from 29.13% to 32.13% in 1986 to 1988 such when the latter purchased the same, Josefa failed to submit the
that it was required by the Central Bank to set aside a reserve document of sale as allegedly the sale was only verbal although
for bad debts in the amount of P359,464.50 as of December 31, the license to operate said hotel and restaurant is in the name
1988. It should be noted that unlike huge commercial banks of Pacita which, despite our Order to Josefa to present the same,
with large capitalization, the bank involved is a small rural bank she failed to comply. While several documentary evidences
barely afloat and surviving on a measly capitalization of were submitted by Josefa wherein Pacita was named therein as
P500,000. Were we to deny its urgent request to streamline its owner of the hotel and restaurant, there were documentary
work force to enable it to maintain stability and modest evidences also that were submitted by Josefa showing her
profitability, we would be sending a small financial institution ownership of said enterprise Respondents testified that it was
teetering on the verge of financial ruin tumbling down on the Josefa who exercises all the acts and manifestation of ownership
road to bankruptcy. of the hotel and restaurant like transferring employees from the
- The State recognizes the pivotal role of small rural banks in Greatwall Palace Restaurant which she and her husband Roy Po
the development of the countryside through its loan portfolios Lam previously owned; it is Josefa to whom the employees
and other services to the rural folk. While courts must be submit reports, draws money for payment of payables and for
constantly vigilant in validating claims of business losses to marketing, and attends to Labor Inspectors during ocular
prevent unscrupulous employers from feigning such losses in inspections.
order to dismiss their personnel, we are satisfied that the Rural 2. YES
Bank of Bangued undertook the drastic act of cutting down its - The records are unequivocal that since petitioner Mayon Hotel
workforce in order to prevent imminent substantial loss to its & Restaurant suspended its hotel operations and transferred its
business. As to petitioners' claim that they were singled out in restaurant operations in Elizondo Street, respondents Loveres,
the process because they happened to be the only employees Macandog, Llarena, Guades and Nicerio have not been
who did not sign an agreement for deferment of wages under permitted to work for petitioners. Respondent Alamares, on the
RA 6727, suffice it to say that such assertion is merely other hand, was also laid-off when the Elizondo Street
speculative because the bank clearly followed the standard for operations closed, as were all the other respondents. Since
dismissing its personnel by selecting the last in seniority among then, respondents have not been permitted to work nor
its 10 employees. recalled, even after the construction of the new premises at
Dispositive Decision of the NLRC AFFIRMED with Peñaranda Street and the reopening of the hotel operations
MODIFICATION. with the restaurant in this new site.
- Article 286 of the Labor Code is clear — there is termination of
PROCEDURE employment when an otherwise bona fide suspension of work
exceeds six months. The cessation of employment for more
than six months was patent and the employer has the burden of
MAYON HOTEL & RESTAURANT V ADANA proving that the termination was for a just or authorized cause.
458 SCRA 609 - Even after six months of what should have been just a
temporary lay-off, the same respondents were still not recalled
PUNO; May 16, 2005
to work. More than three years after the supposed “temporary
lay-off,” the employment of all of the respondents with
NATURE
petitioners had ceased, notwithstanding that the new premises
Petition for certiorari to annul CA decision
had been completed and the same operated as a hotel with bar
and restaurant. This is clearly dismissal — or the permanent
FACTS
severance or complete separation of the worker from the
- On various dates starting in 1981, petitioner hotel and
service on the initiative of the employer regardless of the
restaurant hired the 16 respondents.
reasons therefor.
- Due to the expiration and non-renewal of the lease contract
- We find substantial evidence that petitioners intended the
for the rented space occupied by the said hotel and restaurant,
termination to be permanent. First, respondents filed the
operations of the business were suspended. The operation of
complaint for illegal dismissal immediately after the closure of
Labor Law 1 A2010 - 19 - Disini
the hotel operations in Rizal Street, notwithstanding the alleged applications of petitioners for facility evaluation prior to its
temporary nature of the closure of the hotel operations, and approval to determine whether or not respondents were indeed
petitioners’ allegations that the employees assigned to the given such kind and quantity of food. Also, there was no
hotel operations knew about this beforehand. Second, in their evidence that the quality and quantity of food in the Orders
position paper submitted to the Labor Arbiter, petitioners made were voluntarily accepted by respondents.
no mention of any intent to recall these respondents to work - Even granting that meals and snacks were provided and
upon completion of the new premises. Third, the various indeed constituted facilities, such facilities could not be
pleadings on record show that petitioners held respondents, deducted without compliance with certain legal requirements.
particularly Loveres, as responsible for mismanagement of the The employer simply cannot deduct the value from the
establishment and for abuse of trust and confidence. The employee's wages without satisfying the following: (a) proof
vehemence of petitioners’ accusation of mismanagement that such facilities are customarily furnished by the trade; (b)
against respondents, especially against Loveres, is inconsistent the provision of deductible facilities is voluntarily accepted in
with the desire to recall them to work. Fourth, petitioners’ writing by the employee; and (c) the facilities are charged at
memorandum on appeal also averred that the case was filed fair and reasonable value.
“not because of the business being operated by them or that - More important, food or snacks or other convenience provided
they were supposedly not receiving benefits from the Labor by the employers are deemed as supplements if they are
Code which is true, but because of the fact that the source of granted for the convenience of the employer. The criterion in
their livelihood, whether legal or immoral, was stopped on making a distinction between a supplement and a facility does
March 31, 1997, when the owner of the building terminated the not so much lie in the kind (food, lodging) but the purpose.
Lease Contract.” Fifth, petitioners had inconsistencies in their Considering, therefore, that hotel workers are required to work
pleadings in referring to the closure. Sixth, that petitioners different shifts and are expected to be available at various odd
terminated all the other respondents, by not employing them hours, their ready availability is a necessary matter in the
when the Hotel and Restaurant transferred to its new site on operations of a small hotel, such as petitioners’ business. The
Peñaranda Street. Indeed, in this same memorandum, deduction of the cost of meals from respondents’ wages,
petitioners referred to all respondents as “former employees of therefore, should be removed.
Mayon Hotel & Restaurant.” - The 5% of the gross income of the establishment cannot be
- Even assuming that the cessation of employment was merely considered as part of the respondents’ wages. Although called
temporary, it became dismissal by operation of law when profit share, such is in the nature of share from service charges
petitioners failed to reinstate respondents after the lapse of six charged by the hotel.
months, pursuant to Article 286 - Petitioners themselves have admitted that the establishment
- Serious business losses do not excuse the employer from employs “more or less sixteen employees,” therefore they are
complying with the clearance or report required under Article estopped from claiming that the applicable minimum wage
283 of the Labor Code and its implementing rules before should be for service establishments employing 15 employees
terminating the employment of its workers. In the absence of or less.
justifying circumstances, the failure of petitioners to observe - The employer cannot exempt himself from liability to pay
the procedural requirements set out under Article 284, taints minimum wages because of poor financial condition of the
their actuations with bad faith, especially since they claimed company. The payment of minimum wages is not dependent
that they have been experiencing losses in the three years on the employer’s ability to pay.
before 1997. Disposition Petition is denied. The case is REMANDED to the
-Even assuming that the closure was due to a reason beyond Labor Arbiter for the RECOMPUTATION of the total monetary
the control of the employer, it still has to accord its employees benefits awarded and due to the employees concerned in
some relief in the form of severance pay. accordance with the decision.
- While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, the
dismissal of employees must be made within the parameters of TEMPORARY RETRENCHMENT
law and pursuant to the tenets of fair play. And in termination
disputes, the burden of proof is always on the employer to SEBUGERO V NLRC (GTI SPORTSWEAR)
prove that the dismissal was for a just or authorized cause.
248 SCRA 532
Where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter DAVIDE JR; September 27, 1995
of illegal dismissal.
- Under these circumstances, the award of damages was NATURE
proper. As a rule, moral damages are recoverable where the Special civil action for certiorari
dismissal of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in a manner FACTS
contrary to morals, good customs or public policy. - Petitioners were among the thirty-eight (38) regular
3. YES employees of private respondent GTI Sportswear who were
- Petitioners failed to submit the pertinent employee files, given "temporary lay-off"notices due to alleged lack of work and
payrolls, records, remittances and other similar heavy losses caused by the cancellation of orders from abroad
documents which would show that respondents rendered work and by the garments embargo. Believing that their "temporary
entitling them to payment for overtime work, night shift lay-off" was a ploy to dismiss them, resorted to because of their
differential, premium pay for work on holidays and rest day, and union activities and was in violation of their right to security of
payment of these as well as the COLA and the SILP. By choosing tenure, laid-off employees filed complaint with Labor Arbiter.
not to fully and completely disclose information and present the - GTI denied the claim of illegal dismissal and asserted that it
necessary documents to prove payment of labor standard was its prerogative to lay-off its employees temporarily for a
benefits due to respondents, petitioners failed to discharge the period not exceeding six months to prevent losses, and that the
burden of proof. Indeed, petitioners’ failure to submit the lay-off affected both union and non-union members. It justified
necessary documents which as employers are in their its failure to recall the 38 laid-off employees after the lapse of
possession, inspite of orders to do so, gives rise to the six months because of the subsequent cancellations of job
presumption that their presentation is prejudicial to its cause. orders made by its foreign principals.
- The cost of meals and snacks purportedly provided to - 22 of the 38 complainants accepted the separation pay. The
respondents cannot be deducted as part of respondents’ petitioners herein did not.
minimum wage. Respondents were not interviewed by the - LA said there was justification to lay-off temporarily some
DOLE as to the quality and quantity of food appearing in the employees. That their principals transferred their orders were
Labor Law 1 A2010 - 20 - Disini
proven by correspondence. Although, as a general rule,
Respondent company has the prerogative and right to resort to
temporary lay-off, such right is likewise limited to a period of six
REQUIREMENTS – STANDARDS
(6) months applying Art. 286. However, Respondent company
should have recalled them after the end of the six month period LOPEZ SUGAR CORP V FED OF FREE WORKERS
or at the least reasonably informed them (complainants) that PHILIPPINE LABOR UNION ASSOCIATION (PLUA-
the Respondent company is still not 'in a position to recall them, NACUSIP)
and if the same cannot be met, then the company should
implement retrenchment and pay its employees separation pay. 189 SCRA 179
Hence, there is in this complaint a clear case of constructive FELICIANO; August 30, 1990
dismissal. Reinstatement is not prudent, separation pay is in
order. NATURE
- GTI appealed to NLRC. NLRC concurred with the findings of Certiorari
the Labor Arbiter that there was a valid lay-off of the petitioners
due to lack of work, but disagreed with the latter's ruling FACTS
granting back wages. NLRC said that having established lack of - Lopez Sugar Corporation (LPC), allegedly, to prevent losses
work, it follows that retrenchment took place and not due to major economic problems, and exercising its privilege
constructive dismissal. under the 1975-1977 CBA entered into with PLUA-NACUSIP,
- Petitioners filed this action. caused the retrenchment and retirement of a number of its
ISSUES employees.
1. WON the ground for termination of employment was - LPC filed with the MOLE a combined report on retirement and
redundancy application for clearance to retrench affecting eighty six (86) of
2. WON termination was legal its employees. Of these 86 employees, 59 were retired and 27
were to be retrenched in order to prevent losses.
HELD - Federation of Free Workers (FFW), as the certified bargaining
1. NO, the ground in this case is retrenchment. agent of the rank-and-file employees of LPC, also filed with the
- Redundancy exists where the services of an employee are in MOLE a complaint for unfair labor practices and recovery of
excess of what is reasonably demanded by the actual union dues.
requirements of the enterprise. - In said complainant, FFW claimed that the terminations
- Retrenchment on the other hand, is used interchangeably with undertaken by LPC were violative of the security of tenure of its
the term "lay-off." It is the termination of employment initiated members and were intended to "bust" the union and hence
by the employer through no fault of the employee's and without constituted an unfair labor practice.
prejudice to the latter, resorted to by management during - FFW claimed that after the termination of the services of its
periods of business recession, industrial depression, or seasonal members, LPC advised 110 casuals to report to its personnel
fluctuations, or during lulls office.
2. YES, it is legal, but it is defective. - FFW further argued that to justify retrenchment, serious
- Six months is the period set by law that the operation of a business reverses must be "actual, real and amply supported by
business or undertaking may be suspended thereby suspending sufficient and convincing evidence." FFW prayed for
the employment of the employees concerned. The temporary reinstatement of its members who had been retired or
lay-off wherein the employees likewise cease to work should retrenched.
also not last longer than six months. After six months, the - LPC denied having hired casuals to replace those it had retired
employees should either be recalled to work or permanently or retrenched. It explained that the announcement calling for
retrenched. 110 workers to report to its personnel office was only for the
- Failing to comply with this would be tantamount to dismissing purpose of organizing a pool of extra workers which could be
the employees and the employer would thus be liable for such tapped whenever there were temporary vacancies by reason of
dismissal. leaves of absence of regular workers.
- We must determine whether there was compliance with the - LA: denied LPC’ s application for clearance to retrench its
law regarding a valid retrenchment at anytime within the six employees on the ground that for retrenchment to be valid, the
month-period that they were temporarily laid-off. Three basic employer's losses must be serious, actual and real and must be
requisites for valid retrenchment: amply supported by sufficient and convincing evidence. The
- it is necessary to prevent losses and losses are proven application to retire was also denied on the ground that LPC's
- written notice to employees and DOLE at least 1 mo prior to prerogative to so retire its employees was granted by the 1975-
intended date of retrenchment 77 CBA had long ago expired. LPC was, therefore, ordered to
- separation pay reinstate 27 retired or retrenched employees represented by
- Here, both the Labor Arbiter and the NLRC found that the PLUAand FFW and to pay them full backwages from the time of
private respondent was suffering and would continue to suffer termination until actual reinstatement.
serious losses. - On appeal, the NLRC, finding no justifiable reason for
- In this case, it is undisputed that the petitioners were given disturbing the decision of the Labor Arbiter, affirmed that
notice of the temporary lay-off. There is, however, no evidence decision
that any written notice to permanently retrench them was given
at least one month prior. There is also nothing in the records to ISSUE
prove that a written notice was ever given to the DOLE. WON NLRC acted with GAD in denying LPC’ s combined report
- With respect to the payment of separation pay, the NLRC on retirement and application for clearance to retrench
found that GTI offered to give the petitioners their separation
pay but that the latter rejected such offer which was accepted HELD
only by 22 out of the 38 original complainants. NO
- CONCLUSION: RETRENCHMENT IS DEFECTIVE IN THE FACE OF - A283 of the LC provides:
FINDING THAT REQUIRED NOTICES TO PETITIONERS AND DOLE Article 283. Closure of establishment and reduction of
ARE NOT GIVEN. But this doesn’t make the retrenchment personnel. — The employer may also terminate the
illegal. employment of any employee due to the installation of labor
- Where the dismissal of employee is for just cause and is saving devices, redundancy, retrenchment to prevent losses
proven to be but he is not accorded right to due process, or the closing or cessation of operation of the establishment
dismissal is upheld but employer must be sanctioned for non- or undertaking unless the closing is for the purpose of
compliance. circumventing the provisions of this Title, by serving a written
Labor Law 1 A2010 - 21 - Disini
notice on the workers and the Ministry of Labor and Employer - In the instant case, the LA found no sufficient and convincing
at least one (1) month before the intended date thereof. In evidence to sustain petitioner's essential contention that it was
case of termination due to the installation of labor saving acting in order to prevent substantial and serious losses.
devices or redundancy, the worker affected thereby shall be - The principal difficulty with LPC' s case as above presented
entitled to a se pay equivalent to at least his one (1) month was that no proof of actual declining gross and net revenues
pay or to at least one (1) month pay for every year of service, was submitted. No audited financial statements showing the
whichever is higher. In case of retrenchment to prevent financial condition of petitioner corporation during the above
losses and in cases, of closures or cessation of operations of mentioned crop years were submitted.
establishment or undertaking not due to serious business - LPC conspicuous failed to specify the cost-reduction measures
losses or financial reverses, the separation pay shall be actually undertaken in good faith before resorting to
equivalent to one (1) month pay or at least one half (1/2) retrenchment. Upon the other hand, it appears from the record
month pay for every year of service, whichever is higher. A that petitioner, after reducing its work force, advised 110 casual
fraction of at least six (6) months shall be considered one (1) workers to register with the company personnel officer as extra
whole year. workers.
- In ordinary connotation, the phrase "to prevent losses" means - LPC argued that it did not actually hire casual workers but that
that retrenchment or termination of the services of some it merely organized a pool of "extra workers" from which
employees is authorized to be undertaken by the employer workers could be drawn whenever vacancies occurred by
sometime before the losses anticipated are actually sustained reason of regular workers going on leave of absence but the LA
or realized. It is not, in other words, the intention of the and the NLRC did not accord much credit to LPC's explanation.
lawmaker to compel the employer to stay his hand and keep all *AS REGARDS The RETIREMENTS effected by LPC
his employees until sometime after losses shall have in fact - On this point, SC finds for LPC saying that ”although the CBA
materialized ; if such an intent were expressly written into the expired on 31 December 1977, it continued to have legal
law, that law may well be vulnerable to constitutional attack as effects as between the parties until a new CBA had been
taking property from one man to give to another negotiated and entered into.” This proposition finds legal
- When, or under what circumstances does the employer support in Article 253 of the Labor Code, which provides:
becomes legally privileged to retrench and reduce the number Article 253 — Duty to bargain collectively when there exists a
of his employees? collective bargaining agreement. — When there is a collective
- The general standards in terms of which the acts of petitioner bargaining agreement, the duty to bargain collectively shall
employer must be appraised: also mean that neither party shall terminate nor modify such
1) the losses expected should be substantial and not agreement during its lifetime. However, either party can
merely de minimis in extent. If the loss purportedly sought serve a written notice to terminate or modify the agreement
to be forestalled by retrenchment is clearly shown to be at least sixty (60) days prior to its expiration date. It shall be
insubstantial and inconsequential in character, the bona fide the duty of both parties to keep the status quo and to
nature of the retrenchment would appear to be seriously in continue in full force and effect the terms and conditions of
question. the existing agreement during the 60-day period and/or until
2) The substantial loss apprehended must be reasonably a new agreement is reached by the parties. (Emphasis
imminent, as such imminence can be perceived objectively supplied)
and in good faith by the employer. There should, in other - Accordingly, in the instant case, despite the lapse of the
words, be a certain degree of urgency for the formal effectivity of the CBA by virtue of its own provisions, the
retrenchment, which is after all a drastic recourse with law considered the same as continuing in force and effect until
serious consequences for the livelihood of the employees a new CBA shall have been validly executed.
retired or otherwise laid-off. - Hence, LPC acted within legal bounds when it decided to retire
3) Because of the consequential nature of retrenchment, it several employees in accordance with the CBA. That the
must be reasonably necessary and likely to effectively employees themselves similarly acted in accordance with the
prevent the expected losses. The employer should have CBA is plain from the record.
taken other measures prior or parallel to retrenchment to - Even after the expiration of the CBA, LPC's employees
forestall losses, i.e., cut other costs than labor costs. To continued to receive the benefits and enjoy the privileges
impart operational meaning to the constitutional policy of granted therein. If the workers chose to avail of the CBA despite
providing "full protection" to labor, the employer's its expiration, equity — if not the law—dictates that the
prerogative to bring down labor costs by retrenching must be employer should likewise be able to invoke the CBA.
exercised essentially as a measure of last resort, after less - The fact that several workers signed quitclaims will not by
drastic means — e.g., reduction of both management and itself bar them from joining in the complaint. Quitclaims
rank-and-file bonuses and salaries, going on reduced time, executed by laborers are commonly frowned upon as contrary
improving manufacturing efficiencies, trimming of marketing to public policy and ineffective to bar claims for the full
and advertising costs, etc. — have been tried and found measure of the worker's legal rights.
wanting. - AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU:
4) If already realized, and the expected imminent losses In labor jurisprudence, it is well establish that quitclaims
sought to be forestalled, must be proved by sufficient and/or complete releases executed by the employees do not
and convincing evidence. The reason for requiring this estop them from pursuing their claims arising from the unfair
quantum of proof is readily apparent: any less exacting labor practice of the employer. The basic reason for this is
standard of proof would render too easy the abuse of this that such quitclaimants and/or complete releases are against
ground for termination of services of employees. public policy and, therefore, null and void. The acceptance of
-Garcia v. National Labor Relations Commissions: termination pay does not divest a laborer of the right to
. . . But it is essentially required that the alleged losses in prosecute his employer for unfair labor practice acts.
business operations must be prove[n] (NAFLU vs. Ople, - Cariño vs. ACCFA, (1966) ~ Justice Sanchez, said:
[1986]). Otherwise, said ground for termination would be Acceptance of those benefits would not amount to estoppel.
susceptible to abuse by scheming employers who might be The reason is plain. Employer and employee, obviously, do
merely feigning business losses or reverses in their business not stand on the same footing The employer drove the
ventures in order to ease out employees. employee to the wall. The latter must have to get hold of
- WON an employer would imminently suffer serious or money. Because, out of job, he had to face the harsh
substantial losses for economic reasons is essentially a question necessities of life. He thus found himself in no position to
of fact for the Labor Arbiter and the NLRC to determine. resist money proffered. His, then, is a case of adherence, not
of choice. One thing sure, however, is that petitioners did not
Labor Law 1 A2010 - 22 - Disini
relent their claim. They pressed it. They are deemed not to Villanueva, and dismissing in the main the complaint for illegal
have waived any of their rights. Renuntiatio non praesumitur dismissal. It held that Blucor was justified in terminating the
Disposition Petition for Certiorari is partially GRANTED and services of [respondents] due to retrenchment under Article
NLRC’ s decision affirming that portion of the Decision of the 283 of the Labor Code. The NLRC ordered Blucor to pay
Labor Arbiter ordering the reinstatement judgment of respondents their separation pay, service incentive leave pay
employees who had been retired by LPC under the applicable and proportionate 13th month pay.
provisions of the CBA is AFFIRMED. - Respondents moved for the reconsideration of the September
(*all illegally retrenched were ordered to be reinstated and 14, 2001 resolution of the NLRC. Alleging that the said
given backwages; those who executed quitclaims-said amount resolutions of NLRC were issued with grave abuse of discretion
shall be deducted from their backwages and where amounting to lack or excess of jurisdiction, respondents filed a
reinstatement is no longer possible, backwages + separation Petition for Certiorari with the CA.
pay na lang. BUT those who were retired by LPC were found to - The CA ruled that the dismissal was unjustified, as Blucor had
be valid as per the CBA. failed to prove with clear and satisfactory evidence that
legitimate business reasons existed to justify retrenchment. By
themselves, Blucor's Income Tax Return and Audited Financial
EMCO PLYWOOD CORP V ABELGAS Statements for the year 2000 did not sufficiently prove the
[PAGE 14] existence or the imminence of substantial losses.

ISSUE
WON the CA was correct in disregarding the Income Tax Return
and the Audited Financial Statements of the herein petitioners
BLUCOR MINERALS CORP V AMARILLA as basis for retrenchment due to serious business losses
458 SCRA 37
PANGANIBAN; May 4, 2005 HELD
YES
NATURE - Before any reduction of personnel becomes legal, any claim of
Petition for review on certiorari actual or potential business losses must satisfy the following
established standards: (1) the losses incurred are substantial,
FACTS not de minimis; (2) the losses are actual or reasonably
- Respondent Amarilla is a regular employee of herein Petitioner imminent; (3) the retrenchment can be fairly regarded as
Blucor Minerals Corporation ('Blucor,' for brevity), having necessary and likely to be effective in preventing the expected
worked at Blucor's mining business since January 4, 1987 and losses; and (4) sufficient and convincing evidence prove the
assigned in the latter's internal security force. Co-respondent alleged losses, if already incurred, or the expected imminent
Aldiano is also a regular employee of Blucor, assigned at the losses sought to be forestalled are proven.
latter's services and engineering department since August 9, - It is a well-settled rule that the employer bears the burden of
1995 and continued to work thereat in the course of Blucor's proving the existence or the imminence of substantial losses, a
usual business operations. Co-respondent Parcon is likewise a burden that is by nature an affirmative defense. It is the duty of
regular employee of Blucor since September 10, 1998, assigned the employer to prove with clear and satisfactory evidence that
at the latter's field operation. On July 31, 2000, Blucor notified legitimate business reasons exist to justify retrenchment;
Amarilla, Aldiano and Parcon to the effect that Blucor is failure to do so necessarily results in a finding that the dismissal
terminating their employment due to retrenchment, effective was unjustified. Absent any convincing evidence that the
August 31, 2000. alleged losses are substantial and actual, the dismissal of
- Respondents questioned their termination from employment employees would be unjustified.
by filing a complaint before the arbitration branch of NLRC, for - To prove that it incurred losses, petitioners presented its
illegal dismissal against Blucor Minerals Corporation and its Income Tax Return and Audited Financial Statements for the
President, alleging that herein petitioner did not incur year 2000 alone. Previously, however, the company had
substantial losses in its operation so as to justify their admittedly enjoyed profitable initial years of operation. This
retrenchment. situation falls short of the stringent requirement of the law that
- Blucor Minerals Corporation opposed the complaint, alleging the employer must sufficiently and convincingly prove its
that they maintained two operations called Blucor-1 and Blucor- allegation of substantial losses. It is interesting to note that
2 and that due to the economic crisis affecting the country and while petitioners admit that the company began to incur losses
the fact that the Blucor-1 operation yielded gold with low grade only in 2000, Blucor effectively terminated respondents'
or quality, Blucor incurred serious business losses, so that it services on August 31 of that same year. When respondents
resorted to cost-reduction measures by closing the Blucor-2 requested copies of the company's financial statement to see
operation and retrenching some workers, including herein for themselves the state of Blucor's finances, petitioners
respondents. In support thereof, Blucor presented its annual informed them that their request was premature. The latter
income tax return and financial statements showing the net loss would now have this Court decide that the corporation indeed
in the amount of P2,038,846.10 for the year 2000. suffered substantial losses necessitating retrenchment, based
- After the parties filed their respective pleadings, Executive solely on the tax returns and financial statements for the year
Labor Arbiter Villanueva rendered his decision, declaring Blucor 2000.
Minerals Corporation and its President guilty of illegal dismissal - Petitioners likewise failed to show any reasonable necessity for
- Labor Arbiter Villanueva also ruled that since reinstatement is the retrenchment. Although the law recognizes it as a valid
no longer feasible in this case, payment of separation pay is means to avert substantial losses, retrenchment must be
more appropriate. exercised as a "measure of last resort when other less drastic
- Blucor Minerals Corporation appealed to NLRC, contending means have been tried and found to be inadequate.
that the Labor Arbiter committed grave abuse of discretion in Disposition Petition denied
ignoring the financial statement for the year 2000 operations as
adequate proof of their serious business losses warranting the SAN MIGUEL CORP V ABELLA
retrenchment of complainants. Blucor argued that the
jurisprudence, i.e., Lopez Sugar Corporation v. Federation of
[PAGE 59]
Free Workers and Asian Alcohol Corporation v. NLRC, cited by
the Labor Arbiter are obsolete and no longer controlling. PHIL CARPET EMPLOYEES ASSN V STO TOMAS
- Subsequently, NLRC promulgated its assailed resolution, 483 SCRA 128
vacating and setting aside the decision of Labor Arbiter
Labor Law 1 A2010 - 23 - Disini
CALLEJO SR; February 22, 2006 expected losses that would have been incurred had operations
been continued, may not amount to serious business losses
mentioned in the law. 50 The employer must also show that its
FACTS
losses increased through a period of time and that the condition
- Phil. Carpet Mfg. Corp. (PCMC) retrenched 88 workers in 2004.
of the company will not likely improve in the near future.
Of the 88, 77 were Union members. The Union alleged illegal
Disposition Petition granted.
dismissal. The company said they were suffering losses due to
the Asian financial crisis, the 9/11 and the Iraq war. They
showed figures to the effect that the net income and net profit NATURE OF LOSS
of the company decreased in increasing percentages from 2000
to 2001 to 2002 to 2003.
- [The SC later found out that the decrease in net income
LOPEZ SUGAR CORP V FEDERATION OF FREE
ensued because PCMC declared cash dividends for its WORKERS
shareholders amounting to P28,000,000.00.] [PAGE 150]
ISSUE EDGE APPAREL INC V NLRC
WON the dismissals were illegal
[PAGE 262]
HELD
YES BOGO-MEDELLIN SUGARCANE PLANTERS ASSN V
- Retrenchment is an authorized cause for the termination of NLRC (ALU, MONTILLA)
employment under Article 283 of the Labor Code. However, the
retrenchment effected by PCMC is invalid due to a substantive 296 SCRA 108
defect, non-compliance with the substantial requirements to PANGANIBAN; September 25, 1998
effect a valid retrenchment; it necessarily follows that the
termination of the employment of petitioner Union's members FACTS
on such ground is, likewise, illegal. - The workers performed the functions of computer, sampler
- Retrenchment is defined as the termination of employment and scalers. They joined and became members of Associated
initiated by the employer through no fault of the employee and Labor Unions, with Bonifacio Montilla as its. The company told
without prejudice to the latter, resorted by management during him to withdraw his membership from the Associated Labor
periods of business recession, industrial depression or seasonal Unions or else they will not be hired at the start of the milling
fluctuations or during lulls over shortage of materials. It is a season and will be dismissed. The workers did not heed the
reduction in manpower, a measure utilized by an employer to warning and stuck to their membership with the private
minimize business losses incurred in the operation of its respondent union. As a consequence and as earlier warned of
business. being dismissed if they persisted in their union activities,
- The prerogative of an employer to retrench its employees notices of termination were sent to the workers informing them
must be exercised only as a last resort, considering that it will that their services will be terminated due to financial difficulties.
lead to the loss of the employees' livelihood. It is justified only While the said notices stated that their services will be
when all other less drastic means have been tried and found terminated 30 days from date, they were not allowed to work
insufficient or inadequate. Moreover, the employer must prove within that 30 day period and Montilla was immediately
the requirements for a valid retrenchment by clear and replaced by Gavino Negapatan. The workers alleged that their
convincing evidence; otherwise, said ground for termination dismissal was sought due to their membership [in] the private
would be susceptible to abuse by scheming employers who respondent union as they have not violated any company rules
might be merely feigning losses or reverses in their business and regulations. There is also no allegation to this effect by the
ventures in order to ease out employees. respondents and the latter strongly advocated retrenchment to
- The requirements are: prevent losses as their basis in terminating the [private
(1) that the retrenchment is reasonably necessary and likely respondents]. Aggrieved of the respondents' actuations they
to prevent business losses which, if already incurred, are not filed the present complaint or before the expiration of the 30
merely de minimis, but substantial, serious, actual and real, days notice. Just on the 30th day of the notice of termination,
or if only expected, are reasonably imminent as perceived four of the workers were paid their corresponding
objectively and in good faith by the employer; separation/gratuity pay and accordingly signed their Quitclaim
(2) that the employer served written notice both to the and Release.
employees and to the Department of Labor and Employment
at least one month prior to the intended date of ISSUE
retrenchment; WON the retrenchment was justified
(3) that the employer pays the retrenched employees
separation pay equivalent to one month pay or at least 1/2 HELD
month pay for every year of service, whichever is higher; NO
(4) that the employer exercises its prerogative to retrench - Retrenchment is the termination of employment effected by
employees in good faith for the advancement of its interest management during periods of business recession, industrial
and not to defeat or circumvent the employees' right to depression, seasonal fluctuations, lack of work or considerable
security of tenure; and reduction in the volume of the employer's business. Resorted to
(5) that the employer used fair and reasonable criteria in by an employer to avoid or minimize business losses, it is a
ascertaining who would be dismissed and who would be management prerogative consistently recognized by this Court
retained among the employees, such as status (i.e., whether and allowed under Article 283 of the Labor Code as follows:
they are temporary, casual, regular or managerial "ART. 283. Closure
employees), efficiency, seniority, physical fitness, age, and of establishment and reduction of personnel. — The employer
financial hardship for certain workers. may also terminate the employment of any employee due to
- What the law speaks of is serious business losses or the installation of labor saving devices, redundancy,
financial reverses. Sliding incomes or decreasing gross retrenchment to prevent losses or the closing or cessation of
revenues are not necessarily losses, much less serious business operation of the establishment or undue taking unless the
losses within the meaning of the law. The bare fact that an closing is for the purpose of circumventing the provisions of
employer may have sustained a net loss, such loss, per se, this Title by serving a written notice on the workers and the
absent any other evidence on its impact on the business, nor on Ministry of Labor and Employment at least one (1) month
Labor Law 1 A2010 - 24 - Disini
before the intended date thereof . . . In case of retrenchment - In the 1990s, JFSI had eight (8) outlets for its coffee shop and
to prevent losses . . ., the separation pay shall be equivalent restaurant business.
to one (1) month pay for every year of service, which ever is - In 1997, faced with dropping sales, however, it shut down
higher. A fraction of at least six (6) months shall be three of these shops to avert serious business losses.
considered one (1) whole year." - 1998 saw JFSI operations in the red. JFSI incurred a total net
- In a number of cases, the Court has laid down the following loss of P2,541,537.70 as of December 31, 1998. As a result,
requisites of a valid retrenchment: (1) the losses incurred are JFSI shut down more outlets, leaving it with just three operating
substantial and not de minimis; (2) the losses are actual or outlets at the end of 1998.
reasonably imminent; (3) the retrenchment is reasonably - Bleak business conditions continued to plague the company
necessary and is likely to be effective in preventing the and by the end of the first quarter of 1999, the remaining
expected losses; and (d) the alleged losses, if already incurred, branches were also closed.
or the expected imminent losses sought to be forestalled, are - On April 5, 1999, the petitioners, filed a complaint for illegal
proven by sufficient and convincing evidence. In the present dismissal, separation pay, service incentive leave pay, 13th
case, petitioners miserably failed to prove (1) substantial losses month pay, attorney’s fees, remittance of SSS and Pag-Ibig
and (2) the reasonable necessity of the retrenchment. contributions, and refund of excess withholding taxes against
No Sufficient and Substantial JFSI.
Evidence of Business Loss - Following failed attempts to reach an amicable settlement
- To justify retrenchment, the employer must prove serious between complainants and respondents, formal hearings
business losses. Indeed, not all business losses suffered by the ensued before the Labor Arbiter.
employer would justify retrenchment under this article. The - On October 25, 1999, the Labor Arbiter rendered a decision
Court has held that the "'loss' referred to in Article 283 cannot finding respondent not liable for illegal dismissal, but directing it
be just any kind or amount of loss; otherwise, a company could to pay the complainants separation pay, service incentive leave
easily feign excuses to suit its whims and prejudices or to rid pay and attorney’s fees
itself of unwanted employees." - In holding that the petitioners were entitled to separation pay,
- In the case at bar, Petitioner Corporation claimed that the the Labor Arbiter recognized that JFSI did suffer business losses,
retrenchment of private respondents was justified, because it but that he did not consider these serious enough so as to
suffered business losses, as evidenced by its Comparative warrant denial of the petitioners’ separation pay.
Statement of Revenue and Expenses for crop years for two - Respondents appealed to the NLRC
years. In their rebuttal, petitioners allege the following: (1) the - NLRC affirmed the decision appealed from with the
comparative financial statement of the corporation duly reflects modification of deleting the award for attorney’s fees.
its income and expenses in a given taxable year and, despite its - JFSI moved for reconsideration, but this was denied
different nomenclature, is substantially the same as a profit and - It filed a special civil action for certiorari with the Court of
loss statement or any other financial statement; and (2) the Appeals
National Internal Revenue Code (NIRC) requires the certification - The Court of Appeals granted the writ of certiorari prayed for
of an independent certified public accountant only if the by JFSI, and declared the decision of the NLRC null and void for
taxpayer's gross receipts exceed P25,000 in any quarter of any having been issued with grave abuse of discretion.
taxable year. - Petitioners moved for reconsideration, but the appellate court
- The contentions of petitioners are untenable. A comparative denied the motion in its resolution
statement of revenue and expenses for two years, by itself, is
not conclusive proof of serious business losses. The Court has ISSUE
previously ruled that financial statements audited by WON the termination of petitioners’ employment due to serious
independent external auditors constitute the normal method of business losses suffered by JFSI precluded payment of
proof of the profit and loss performance of a company. While separation pay
Petitioner Corporation avers that it was not required to file
audited financial statements under Section 232 of the Tax HELD
Code, it failed to establish its exemption through any evidence YES
showing that its quarterly gross revenues did not exceed - In the instant case, it was duly established that respondent
P25,000. Thus, its claim that it did not need to have its financial company incurred losses in 1998, which led it to close several
statements certified by a certified public accountant is without outlets, resulting in the lay-off of petitioners. Both the Labor
basis in fact and in law and does not excuse it from complying Arbiter and the NLRC ruled that the losses were not so severe
with the usual requirement. Besides, the requirement of the Tax as to prevent the respondent from paying separation pay to the
Code is one thing, and the requirement of the Labor Code is petitioners. The Court of Appeals ruled to the contrary.
quite another. Moreover, the financial statement of Petitioner - To find out whether the appellate court erred or not, a review
Corporation for two crop years is insufficient proof of serious of the evidence based on financial statements using ratio
business losses that would justify the retrenchment of private analyses is called for.
respondents. - To test the liquidity of JFSI for the periods under consideration,
working capital ratio is used. The current ratios derived clearly
show that in 1997, JFSI did not have sufficient current assets to
CAMA V JONI’S FOOD SERVICES
pay its current liabilities. It was even less liquid in 1998,
425 SCRA 259 indicating that the firm faced difficulty in paying current
QUISUMBING; March 10, 2004 obligations as they fell due.
- Using the gross profit ratio, which indicates the mark-up on
NATURE the company’s products, we find that in 1997, for every peso of
Petition for review on certiorari of a decision and resolution of sales generated by respondent, gross profit or mark-up
the CA amounted to almost 52 centavos, but this went down in 1998 to
just a fraction over 49 centavos
FACTS - If we were to employ the net profit (loss) ratio, which is widely
- Respondent Joni’s Food Services, Inc., (JFSI) is a corporation used as a measure of the overall profitability of business
engaged in the coffee shop and restaurant business, with operations, it can be seen that for every peso of sales earned
several branches or outlets. Feliciano is its president and by the respondent in 1997, less than half a centavo (0.39%)
general manager. represented profit. This is an inadequate and unsatisfactory
- Petitioners were employees of JFSI having been hired on profit ratio. The situation was worse in 1998, since for every
various dates during the 1970s to the 1990s. peso of sales made by respondent, no profit was made, but
Labor Law 1 A2010 - 25 - Disini
instead a loss was incurred. A loss of 50.1% recorded in 1998 Ratio What the law speaks of is serious business losses or
appears to us quite serious. financial reverses. Clearly, sliding incomes (decreasing gross
- The Constitution, while affording full protection to labor, revenues) are not necessarily losses, much less serious
nonetheless, recognizes “the right of enterprises to reasonable business losses within the meaning of the law.
returns on investments, and to expansion and growth.” - Requisites of a valid retrenchment: (a) the losses expected
- In line with this protection afforded to business by the should be substantial and not merely de minimis in extent; (b)
fundamental law, Article 283 of the Labor Code clearly makes a the substantial losses apprehended must be reasonably
policy distinction. It is only in instances of “retrenchment to imminent; (c) the retrenchment must be reasonably necessary
prevent losses and in cases of closures or cessation of and likely to effectively prevent the expected losses; and (d)
operations of establishment or undertaking not due to serious the alleged losses, if already incurred, and the expected
business losses or financial reverses” that employees whose imminent losses sought to be forestalled, must be proved by
employment has been terminated as a result are entitled to sufficient and convincing evidence.”
separation pay. Reasoning
- In other words, Article 283 of the Labor Code does not obligate - In the nature of things, the possibility of incurring losses is
an employer to pay separation benefits when the closure is due constantly present, in greater or lesser degree, in the carrying
to serious losses. To require an employer to be generous when on of business operations, since many of the factors which
it is no longer in a position to do so, in our view, would be impact upon the profitability or viability of such operations may
unduly oppressive, unjust, and unfair to the employer. be substantially outside the control of the employer. Employer
Disposition The petition is denied for lack of merit. bears the burden of proving his allegation of economic or
business reverses with clear and satisfactory evidence, it being
in the nature of an affirmative defense.
PHILIPPINE CARPET V STO. TOMAS
- In this case, the loss per se, absent any other evidence, and
[PAGE 272] viewed in the light of the amounts of gross receipts the
business generated historically, may not be deemed the serious
SLIDING INCOME business loss contemplated by law. Neither did petitioners
present any evidence whatsoever regarding the impact of the
said net loss on the business nor on expected losses that would
SAN MIGUEL JEEPENEY SERVICE V NLRC have been incurred had operations been continued.
265 SCRA 35 2. YES
PANGANIBAN; November 28, 1996 Ratio Being regular employees, they are entitled to security of
tenure and their services may be terminated only for causes
provided by law. They are also to be accorded the benefits
NATURE provided under the Labor Code, including separation pay for
Civil action of Certiorari alleging grave abuse of discretion of loss of employment resulting from retrenchment to prevent
NLRC losses or closure/cessation of operation not due to serious
business losses.
FACTS Reasoning
- The 23 complainants were formerly working (as drivers, - Complainants were unarguably performing work necessary
dispatchers and mechanic) with San Miguel Jeepney Service and desirable in the business of SMJS. Without the services
(SMJS), with services ranging from two to eight years. SMJS had rendered by private respondents, petitioners could not have
a contract with the U.S. Naval Base Facility located in San conducted their business of providing transportation services
Miguel, San Antonio, Zambales, to provide transportation within the naval base. This plus the fact that private
services to personnel and dependents inside said facility. respondents had each rendered from two to eight years of
- When this contract expired, owner and general manager of service cause them to come squarely within Art. 280 of the LC
SMJS, “opted not to renew the existing contract nor bid on the and are considered regular employees. The mere fact that they
new contract”, due to financial difficulties, he having suffered a were paid on commission basis does not affect or change their
net loss the prior year. As a consequence, the services of the status as regular employees.
complainants were terminated. - Being regular employees, they are entitled to the protection of
- By that time, however, the 23 had already filed a complaint for minimum wage status. Hence, the separation pay due them
non-compliance with the minimum wage law from 1980 may be computed on the basis of the minimum wage prevailing
onwards, plus non-payment of the 13th month pay, legal holiday at the time their services were terminated.
pay, overtime pay, service incentive leave pay and separation Disposition Assailed resolution is AFFIRMED. The separation
pay. pay of the private respondents equivalent to one-half month
- Labor Arbiter: Complainants were not entitled to such pay for every year of service shall be computed at the then
benefits (13th month, holiday, service incentive pay), being prevailing minimum daily wage of P53.
workers on a purely commission basis.
- NLRC: Modified the LA’s ruling, holding that “all the
complainants are regular employees in the contemplation of Art PROOF OF LOSS
280; thus, they are entitled to separation pay.
Petitioners’ Claims
> They cannot be held liable for separation pay because it had LOPEZ SUGAR CORP V FEDERATION OF FREE
been “experiencing financial reverses since 1986.” They cited WORKERS
figures showing “sliding incomes.” [PAGE 270]
> They argue that in order to award separation pay, there must
be some numerical and factual basis for the computation
thereof, which they claim is absent in this case.
BOGO-MEDELLIN SUGAR CANE PLANTERS ASSN
INC V NLRC
ISSUES [PAGE 273]
1. WON there is factual bases for SMJS’ contention that it has
suffered “serious business losses”
2. WON complainant-workers should be granted separation pay
MITSUBISHI MOTORS V CHRYSLER
[PAGE 102]
HELD
1. NO
Labor Law 1 A2010 - 26 - Disini
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
DANZAS INTERCONTINENTAL INC V DAGUMAN
unless the closing is for the purpose of circumventing the
456 SCRA 383 provisions of this Title, by serving a written notice on the
TINGA; April 15, 2005 worker and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of
NATURE termination due to the installation of labor saving devices or
Petition for review of the CA decision redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or
FACTS to at least one (1) month pay for every year of service,
- Danzas Intercontinental, Inc. is engaged in the business of whichever is higher. In case of retrenchment to prevent losses
forwarding and brokerage and in cases of closures or cessation of operations of
Respondents: establishment or undertaking not due to serious business losses
- Henry Daguman, Amador Castro, Richard Salvador and Jonas or financial reverses, the separation pay shall be equivalent to
Culala, in a letter dated August 14, 1999, were notified by the one (1) month pay or at least one-half (½) month pay for every
respondents that due to losses the brokerage department of year of service, whichever is higher. A fraction of at least six
Danzas to which the complainants belonged shall be closed on (6) months shall be considered one (1) whole year.
September 14, 1999 for which they will be given a separation - It is neither the function of the law nor its intent to supplant
pay equal to one month or one half month for every year of the prerogative of management in running its business, such as,
service which ever is higher. However, respondents contend to compel the latter to operate at a continuing loss simply
that the brokerage department was not closed and is in fact because it has to maintain its workers in employment. Such an
under operation by Elizabeth Gotiam, Sevilla Enzon, Shelbie act would be tantamount to a taking of property without due
Ocampo, Jenie Prado, Roden Reyes and Rodel Trias who are process of law.HOWEVER, the burden of proving that the
newly hired personnel of the respondents precisely to take over termination was for a valid or authorized cause rests on the
the tasks of complainants and that the names of these people employer who must comply with certain substantive and
appear as such newly hired employees in the company’s payroll procedural requirements. For instance, the requirements for a
and in the lists of employees that were submitted to the SSS valid retrenchment which must be proved by clear and
and the HMDF. the brokerage department was not really closed convincing evidence are: (1) that retrenchment is reasonably
but its responsibilities just transferred to Ms. Elizabeth Gotiam necessary and likely to prevent business losses which, if already
and her staff, hence, their dismissal should be considered illegal incurred, are not merely de minimis, but substantial, serious,
and they should be reinstated to their former positions and actual and real, or if only expected, are reasonably imminent as
should be awarded backwages plus moral and exemplary perceived objectively and in good faith by the employer; (2)
damages. that the employer served written notice both to the employees
- Petitoners: and to the Department of Labor and Employment at least one
> Danzas and Claude Schaer claim that they had to close the month prior to the intended date of retrenchment; (3) that the
brokerage department because its accumulated losses had employer pays the retrenched employees separation pay
already amounted to P5.449M and that as a consequence of equivalent to one (1) month pay or at least one-half (½) month
such closure they had to resort to the retrenchment of the pay for every year of service, whichever is higher; (4) that the
personnel belonging to the brokerage department which include employer exercises its prerogative to retrench employees in
the complainants. They further aver that new employees were good faith for the advancement of its interest and not to defeat
hired not to replace private respondents but to monitor the or circumvent the employees’ right to security of tenure; and
activities of outside brokers who were engaged to finish the (5) that the employer used fair and reasonable criteria in
work for the company’s remaining clients. Thus, the ascertaining who would be dismissed and who would be
engagement of new employees was coterminous with the retained among the employees, such as status, efficiency,
completion of the work for these clients and only for the seniority, physical fitness, age, and financial hardship for
purpose of winding up the company’s brokerage business on certain workers.
account of E.O. 11. Belatedly, they claimed that, whether they - The condition of business losses justifying retrenchment is
like it or not, the brokerage department can no longer be normally shown by audited financial documents like yearly
opened because respondent company is no longer allowed to balance sheets and profit and loss statements as well as annual
engage in the business of brokerage under Executive Order No. income tax returns. Financial statements must be prepared and
11 which limits the exercise of the broker’s profession to Filipino signed by independent auditors. Otherwise, they may be
nationals only. assailed as self-serving. Since the losses incurred must be
- The Labor Arbiter dismissed the complaint . The NLRC affirmed substantial and actual or reasonably imminent, it is necessary
said decision that the employer show that the losses increased through a
- Respondents claim that the NLRC committed grave abuse of period of time and that the condition of the company is not
discretion in affirming the findings of the Labor Arbiter that likely to improve in the near future.
there was sufficient evidence to prove that the Brokerage - The same evidence is generally required when the
Department of Danzas Intercontinental has been suffering termination of employees is by reason of closure of the
losses to justify its closure. The CA denied petitioners’ appeal. establishment or a division thereof for economic reasons,
although the more overriding consideration is, of course, good
ISSUES faith. The employer must prove that the cessation of or
1. WON petitioners were able to prove that the brokerage withdrawal from business operations was bona fide in character
department was incurring substantial business losses which and not impelled by a motive to defeat or circumvent the
would justify retrenchment. tenurial rights of employees. Parenthetically, if the business
2. WON the brokerage department was indeed closed down losses that justify the closure of the establishment are duly
proved, the right of affected employees to separation pay is lost
HELD for obvious reasons. Otherwise, the employer closing his
1. NO business is obligated to pay his employees their separation pay.
- The labor arbiter and the NLRC both found that petitioners - It is worth noting in this regard that the employer’s
validly exercised their management prerogatives recognized prerogative to close or abolish a department or section of his
under Article 283 of the Labor Code, viz: establishment for economic reasons such as to minimize
- ART. 283. Closure of establishment and reduction of expenses and reduce capitalization is as much recognized as
personnel. -- The employer may also terminate the employment management’s prerogative to close the entire establishment
of any employee due to the installation of labor saving devices, and cease operations due to adverse economic conditions. In
Labor Law 1 A2010 - 27 - Disini
the instant case, petitioners presented in evidence an affidavit NATURE
of the company’s financial comptroller, financial statements for Petition for review on certiorari of a decision of the Court of
the year 1999 and a quarterly report in support of the Appeals
company’s claim of losses. Petitioners maintain that they were
not given an opportunity to present the company’s audited FACTS
financial statements before the NLRC because private - Respondent Jaime Sahot started working as a truck helper for
respondents’ appeal thereto was dismissed without notice to the petitioner when he was 23. Later on the company were
petitioners. Since the case was brought to the CA on certiorari, renamed several times until it became SBT Trucking
the audited financial statements attached to petitioners’ Corporation. For 36 years before his dismissal, respondent
Comment on Petition were no longer considered. Consequently, continuously served the trucking business of the petitioners.
the CA ruled that the financial documents presented by - in 1994, Sahot was 59 years old, he had been incurring
petitioners are insufficient to prove their claim of business absences as he was suffering from various ailments, particularly
losses. the pain in his left thigh. He filed a week-long leave when he
- As they have the burden of proving the existence of an was treated for his various ailments. He filed a formal request
authorized cause, petitioners should have presented the for extension of his leave, and during this time he was
company’s audited financial statements before the labor arbiter threatened that if he refused to go back to work he would be
who is in the position to evaluate evidence. That they failed to terminated. He could not retire on pension because petitioners
do so and only presented these documents to the CA on never paid his correct SSS premiums. He could no longer work
certiorari is lamentable considering that the admission of as his left thigh hurt abominably. Eventually petitioners
evidence is outside the sphere of the CA’s certiorari jurisdiction. dismissed him from work on June 30.
Neither can this Court in the present petition admit in evidence - Sahot filed a complaint for illegal dismissal. Petitioners claim
the company’s audited financial statements much more make a that Sahot was their “industrial partner”; that respondent only
ruling on the question of whether the company incurred became their employee in 1994; that Sahot went on leave and
substantial losses justifying retrenchment on the basis thereof never reported back to work nor did he file an extension of his
as this Court is not a trier of facts. Besides, it cannot even be leave (therefore, should be deemed to have voluntarily
ascertained from the audited financial statements attached to resigned)
the instant petition whether the losses incurred by the company - LA: pro-petitioners (no illegal dismissal, they were industrial
were indeed attributable to the brokerage department. We partners, but still pay financial assistance)
therefore agree with the appellate court that petitioners failed - NLRC: pro-respondent (employee, no abandonment of job,
to substantiate their claim of valid retrenchment. entitled to separation pay for 29 years)
2. NO - CA: affirmed with modification (employee, with separation pay
- The petitioners’ evidence in support of their claim that the for 36 years)
company’s brokerage department was closed down is wanting.
For instance, the records contain a letter from petitioners ISSUES
addressed to their clients insinuating that private respondents 1. WON there was an employer-employee relationship between
voluntarily left the company and that the brokerage department petitioners and respondent Sahot (or WON Sahot is an
was merely reorganized and not closed down. “industrial partner” of the petitioners)
- Petitioners’ assertion that the brokerage department was 2. WON there was a valid dismissal
closed down because it has been found to be unprofitable and 3. WON Sahot is entitled to separation pay
because the company did not want to run afoul of E.O. 11 which
prohibits corporations with foreign equity to engage in the HELD
brokerage business is controverted by the foregoing letter 1. YES. No partnership, Sahot was employee.
which clearly expresses that the brokerage department was Ratio The elements to determine the existence of an
merely restructured to improve brokerage services. Moreover, employment relationship are: (a) the selection and engagement
petitioners’ allegations are unsubstantiated and self-serving. of the employee; (b) the payment of wages; (c) the power of
Apart from a letter from the SEC requiring the company to dismissal; and (d) the employer’s power to control the
appear and show cause why its articles of incorporation should employee’s conduct. The most important element is the
not be amended to delete the business of customs brokerage employer’s control of the employee’s conduct, not only as to
from its primary purpose, which does not even appear to have the result of the work to be done, but also as to the means and
been complied with, petitioners have not presented any methods to accomplish it.
evidence in support of its bullish claim that the brokerage Reasoning
department has been closed down. - Private respondent actually engaged in work as an employee:
- On the contrary, respondents’ contention to the effect that he did not have the freedom to determine where he would go,
the company continued in operation is supported by what he would do, and how he would do it; merely followed
documentary evidence such as affidavits, transshipment permit instructions of petitioners as long as he was paid his wages.
and certificate of importation to the effect that the brokerage - ON PARTNERSHIP: A1767, NCC- contract of partnership is
department continued in operation at least until June 2000. where 2 or more persons bind themselves to contribute money,
- The hiring of new employees purportedly to oversee the property or industry to a common fund, with the intention of
performance of outside brokers negates the need for the dividing the profits among themselves.
termination of private respondents due to closure of the …as applied in this case: no written agreement exist to prove
brokerage department. The termination of respondents was partnership; no proof respondent was receiving a share in the
therefore unjustified either as retrenchment to prevent losses profits, no proof that he actively participated in the
because petitioners’ evidence to prove business losses was management, administration and adoption of policies of the
insufficient, or closure of the establishment because the business.
brokerage department did not actually cease operations. - “if doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be tilted
BURDEN OF PROOF in favor of the latter
2. NO
Ratio In termination cases, the burden is upon the employer to
SY V CA (SAHOT) show by substantial evidence that the termination was for
398 SCRA 301 lawful cause and validly made. A277, LC puts the burden of
proving that the dismissal of an employee was for a valid or
QUISUMBING; February 27, 2003
authorized cause on the employer, without distinction whether
the employer admits or does not admit the dismissal. For an
Labor Law 1 A2010 - 28 - Disini
employee’s dismissal to be valid, (a) the dismissal must be for a confidence. Private respondents filed a complaint for illegal
valid cause, and (b) the employee must be afforded due dismissal. The Labor Arbiter found in their favor, stating that the
process. dismissal was not founded on valid and justifiable grounds.
Petitioners appeal with the NLRC was denied, as was their
Reasoning petition for certiorari with the CA for lack of merit.
- ON VALID CAUSE: if disease as a ground for termination, refer to
A284, LC and Sec8, Book VI, Rule I of the Omnibus ISSUES
Implementing Rules of the Labor Code where a certification by WON private respondents were illegally dismissed
competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a period HELD
of 6 months even with proper medical treatment. If curable, YES
then employee would be required to take a leave, then - The onus of proving that the dismissal of the employee was for
reinstate to formal position upon restoration of his normal a valid and authorized cause rests on the employer. Failure to
health. The requirement for a medical certificate cannot be discharge the same would mean the dismissal was not justified
dispensed with; otherwise, it would sanction the unilateral and and therefore illegal.
arbitrary determination by the employer of the gravity or extent - The requisites for a valid dismissal are (a) the employee must
of the employee’s illness and thus defeat the public policy in be afforded due process (b) the dismissal must be for a valid
the protection of labor. cause. Petitioner complied with the first requisite by furnishing
…as applied in the case: petitioners did not comply with the the employees with written notices stating cause for
medical certificate requirement before Sahot’s dismissal was termination, and having decided to do so, the reasons therefor.
effected - Petitioner accused private respondents of gross neglect of
- ON DUE PROCESS: The employer is required to furnish an duty and loss of confidence. Gross negligence is defined as the
employee with 2 written notices before the latter is dismissed: failure to exercise slight care or diligence. A perusal of the
(1) the notice to apprise the employee of the particular acts or records show they weren’t even remotely negligent of their
omissions for which his dismissal is sought, which is the duties. They were able to illustrate with candor and sincerity
equivalent of a charge; and (2) the notice informing the the procedure they took prior to the loss—petitioner’s
employee of his dismissal, to be issued after the employee has allegations on the other hand, were not supported by any
been given reasonable opportunity to answer and to be heard substantive evidence. Assuming arguendo they were negligent,
on his defense. a single act cannot be categorized as habitual and thus cannot
…as applied in the case: No notice given, but instead what be a just cause for dismissal.
they did to threaten the employee with dismissal, then - Loss of confidence on the other hand must be based on the
actually implement the threat when the occasion presented willful breach of trust and founded on clearly established facts.
itself because of private respondent’s painful left thigh Petitioner failed to establish with certainty the facts upon which
3. YES such a breach of confidence could be based. Private
Ratio. An employee who is terminated because of disease is respondents were thus illegally dismissed.
entitled to “separation pay equivalent to at least one month Disposition petition is DENIED for lack of merit
salary or to one-half month salary for every year of service,
whichever is greater.
…as applied in the case: entitled to separation pay computed WHEN EFFECTED
at P2,080 times 36 years or P74, 880.
Disposition petition is DENIED and the decision of the Court
of Appeals dated February 29, 2000 is AFFIRMED. Petitioners LOPEZ SUGAR CORP V FEDERATION OF FREE
must pay private respondent Jaime Sahot his separation pay for WORKERS
36 years of service at the rate of one-half monthly pay for every [PAGE 270]
year of service, amounting to P74, 880.00, with interest of six
per centum (6%) per annum from finality f this decision until
fully paid. CAJUCOM V TPI
451 SCRA 70
NATIONAL BOOKSTORE INC V CA (YMASA, SANDOVAL-GUTIERREZ; February 11, 2005
GABRIEL)
378 SCRA 194 NATURE
Petition for review on certiorari
BELLOSILLO; February 27, 2002
FACTS
FACTS - TPI Philippines Cement Corporation (TP Cement) and TPI
- Petitioner National Bookstore employed private respondents Philippines Vinyl Corporation (TP Vinyl) employed Atty.
Ymasa and Gabriel as Cash Custodian and Head Cashier. They Benedicto A. Cajucom VII as Vice-President for Legal Affairs with
were routinely tasked with counting the previous day’s sales a monthly salary of P70,000.00.
and placing them in separate plastic bags to be deposited in - As a result of the economic slowdown then experienced in
INTERBANK and PCIB. The bags were held for safekeeping in the this country, respondent TP Cement, having no viable projects,
Branch vault but upon retrieval to deposit the money with shortened its corporate term from 50 years to 2 years and 7
roving tellers, the money was counted again but the amount for months. Thus, respondents implemented cost-cutting
PCIB was short of P42,758. measures resulting in the retrenchment or termination from the
- Private respondents were asked by Management to explain in service of their employees, including petitioner.
writing why they should not be dismissed for the loss of - Petitioner’s Claim
company funds and were placed under preventive suspension. > Petitioner contested respondents’ action, claiming that his
Private respondents in turn denied responsibility, emphasizing retrenchment was based erroneously on respondents’ probable
they had no access to the vault and that they were thoroughly losses, instead of their actual, substantial and imminent
searched by the guard before leaving. They also asserted their losses, as shown by the following: (1) an increase or
loyalty and sincerity in their work as they had been employed raise in his monthly salary from P70,000.00 in 1995 to
there over 13 years. P80,000.00 in 1996; (2) hiring by respondents of more
- Petitioner found their explanation unsatisfactory and marketing and accounting employees for the period from July
terminated them for gross neglect of duty and loss of 1997 to December 1998; (3) acquisition, in 1998, of a
Labor Law 1 A2010 - 29 - Disini
warehouse; and (4) expansion in 1998 of their operations by [PAGE 14]
including sales and marketing of oil products. Petitioner
further claimed that respondents were motivated by revenge in
terminating his services. This stemmed from his October 7, INDUSTRIAL TIMBER CORP V ABABON
1996 memorandum to respondents’ Executive Vice-President 480 SCRA
Thun Tritasavit, also a respondent herein, questioning his YNARES-SANTIAGO; January 5, 2006
financial transactions detrimental to respondents’ interests.
NATURE
ISSUE Petitions for review under Rule 45 ROC assailing the decision of
WON the dismissal of the complainant is illegal CA, which set aside the decision of NLRC and the resolution
denying MFR
HELD
NO FACTS
Ratio To be valid, three requisites must concur, as provided in - Industrial Plywood Group Corporation (IPGC) is the owner of a
Article 283 of the Labor Code, as amended, namely: (1) The plywood plant located at Agusan, Pequeño, Butuan City, leased
retrenchment is necessary to prevent losses and the same is to Industrial Timber Corporation (ITC) August 30, 1985 for a
proven; (2) Written notice to the employees and to the DOLE at period of five years. Thereafter, ITC commenced operation of
least one month prior to the intended date thereof; and (3) the plywood plant and hired 387 workers.
Payment of separation pay equivalent to one month pay or at - March 16, 1990, ITC notified the DOLE and its workers that
least ½ month pay for every year of service, whichever is effective March 19, 1990 it will undergo a "no plant operation"
higher.” due to lack of raw materials and will resume only after it can
Reasoning secure logs for milling.
1. The Court is persuaded that retrenchment due to substantial - Meanwhile, IPGC notified ITC of the expiration of the lease
losses has been sufficiently established and that the dismissal contract in August 1990 and its intention not to renew the
of complainant pursuant to Art. 283 of the Labor Code, was same.
justified. TPI acted in good faith in dismissing Cajucom as - June 26, 1990, ITC notified the DOLE and its workers of
proven by the ff acts of the company: shutdown due to the non-renewal of anti-pollution permit that
TPI began downsizing their operations as early as April 1996 expired in April 1990. This and the alleged lack of logs for
They moved to a smaller and cheaper three-storey building to milling constrained ITC to lay off all its workers until further
reduce rental costs. notice. This was followed by a final notice of closure or
Voluntary termination from the service of some employees cessation of business operations on August 17, 1990 with an
was encouraged upon legal consultation to the complainant. advice for all the workers to collect the benefits due them under
They increased the salary of complainant from P70,000.00 to the law and CBA.
P80,000.00. In order to accommodate such increase, - October 15, 1990, IPGC took over the plywood plant after it
respondent Tritasavit agreed to deduct the same from his was issued a Wood Processing Plant Permit , which included the
own salary, thereby, reducing his (respondent Tritasavit’s) anti-pollution permit, by the DENR coincidentally on the same
total monthly salary and making it lower than that of day the ITC ceased operation of the plant.
complainant. - Virgilio Ababon, et al. to file a complaint against ITC and IPGC
They sold some company vehicles and used the proceeds to for illegal dismissal, unfair labor practice and damages. They
meet their operational expenses and pay their obligations. alleged, among others, that the cessation of ITC's operation was
The audited financial reports prepared by Sycip Gorres Velayo intended to bust the union and that both corporations are one
and Co. show that as of 31 December 1997, TPI Philippines and the same entity being controlled by one owner.
Cement Corporation incurred losses at P12,375,166.00. - January 20, 1992, after requiring both parties to submit their
Respondent was in fact very honest to complainant by respective position papers, LA held that there was lack of
forewarning him, a year in advance, of the possibility of his evidence to prove that it was used to perpetuate fraud or illegal
separation from the service, should there be no changes in act; upheld the validity of the closure; and ordered ITC to pay
the economic condition, and by helping complainant in separation pay of 1/2 month for every year of service.
seeking another job by referring him to other companies. - Ababon, et al. appealed to the NLRC. NLRC set aside the
2. The fact that respondents did not comply with the one-month decision of the LA and ordered the reinstatement of the
notice requirement would not invalidate the dismissal but the employees to their former positions, and the payment of full
petitioner is entitled to an award of nominal damages which the back wages, damages and attorney's fees.
Court fixed at P20,000.00. - ITC and IPGC filed MFR. However, it was dismissed for being
3. It bears reiterating that under Article 283, petitioner is filed out of time having been filed only on the date of actual
entitled to an award of separation pay equivalent to one-half receipt by the NLRC on June 29, 1993, three days after the last
(1/2) month’s pay for every year of service (with a fraction of at day of the reglementary period. Thus, they filed a Petition for
least six (6) months considered one (1) whole year). Since he Relief from Resolution, which was treated as a 2nd MFR by the
had been employed for four (4) years, or from June 1, 1995 to NLRC and dismissed for lack of merit.
December 30, 1998, with a monthly salary of P80,000.00, he Petitioners filed a Notice of Appeal with the SC. Subsequently,
should be paid P160,000.00 as separation pay. they filed MFR/ 2nd petition for relief with the NLRC.
Disposition petition is party GRANTED. The challenged - SC dismissed the Notice of Appeal for being a wrong mode of
Decision and the Resolution of the Court of Appeals are appeal from the NLRC decision. On the other hand, the NLRC
AFFIRMED with MODIFICATION in the sense that respondents granted the Second Petition for Relief and set aside all its prior
are hereby ordered to pay petitioner (1) P160,000.00 as decision and resolutions.
separation pay; and (2) P20,000.00 as nominal damages. - October 2, 1995, Virgilio Ababon, et al. filed a Petition for
Certiorari with the SC. Pursuant to St. Martin's Funeral Home v.
PROCEDURE (FOR BOTH NLRC, it was referred to the CA for appropriate action and
disposition.
RETRENCHMENT AND REDUNDANCY) - October 21, 2002, the CA set aside the decision on the 2nd
petition for relief of the NLRC and reinstated its initial decision
SEBUGERO V NLRC and resolution.
- Both filed their respective MFRs which were denied, hence, the
[PAGE 270] present consolidated petitions for review

EMCO PLYWOOD CORP V ABELGAS


Labor Law 1 A2010 - 30 - Disini
ISSUES - Having established that ITC's closure of the plywood plant was
1. WON NLRC should have taken cognizance of the most recent done in good faith and that it was due to causes beyond its
MFR control, the conclusion is inevitable that said closure is valid.
2. WON Ababon, et al. were illegally dismissed due to the Consequently, Ababon, et al. could not have been illegally
closure of ITC's business; and whether they are entitled to dismissed to be entitled to full backwages. However, they are
separation pay, backwages, and other monetary awards entitled to separation pay equivalent to one month pay or at
least one-half month pay for every year of service, whichever is
HELD higher.
1. YES - Although the closure was done in good faith and for valid
- Substantial justice is best served by allowing the petition for reasons, we find that ITC did not comply with the notice
relief despite procedural defect of filing MFR requirement. While an employer is under no obligation to
- Under Art 218 (c) LC, NLRC may, in the exercise of its conduct hearings before effecting termination of employment
appellate powers, correct, amend, or waive any error, defect or due to authorized cause, however, the law requires that it must
irregularity whether in substance or in form. Further, Art 221 LC notify the DOLE and its employees at least one month before
provides that in any proceeding before the Commission or any the intended date of closure.
of the LA, the rules of evidence prevailing in courts of law or Disposition the Decision of CA, which set aside the decision
equity shall not be controlling and it is the spirit and intention of and resolution of NLRC, are hereby REVERSED. The May 24,
this Code that the Commission and its members and the Labor 1995 Decision of the NLRC reinstating the decision of the Laf
Arbiters shall use every and all reasonable means to ascertain finding that the closure or cessation of ITC's business valid, is
the facts in each case speedily and objectively and without AFFIRMED with the MODIFICATIONS that ITC is ordered to pay
regard to technicalities of law or procedure, all in the interest of separation pay equivalent to one month pay or to at least one-
due process. half month pay for every year of service, whichever is higher,
- Sec14 Rules of Procedure of the NLRC that MFR shall not be and P50,000.00 as nominal damages to each employee.
entertained except when based on palpable or patent errors,
provided that the motion is under oath and filed within 10
calendar days from receipt of the order, resolution or decision RE-HIRING EFFECT
should not be interpreted as to sacrifice substantial justice to
technicality. The limitation of the period is to forestall or avoid
an unreasonable delay in the administration of justice, from ATLANTIC GULF AND PACIFIC CO V NLRC
which the NLRC absolved ITC and IPGC because the filing of (GAMBOA, TUASON)
their MFR was due to excusable negligence. 307 SCRA 714
2. NO
- The records reveal that respondent ITC actually underwent 'no PUNO; May 28, 1999
plant operation' since 19 March 1990 due to lack of log supply.
This s admitted by complainants. Since then several subsequent NATURE
incidents prevented respondent ITC to resume its business Special civil action for certiorari
operations. Without the raw materials respondent ITC has
nothing to produce. Without the permits it cannot lawfully FACTS
operate the plant. And without the contract of lease respondent - Atlantic Gulf (AG&G) is a corporation engaged in general
ITC has no option but to cease operation and turn over the plant construction work. It reportedly incurred huge operating losses
to the lessor. of P134.8 million and net losses of P35.42 million as the
- The right to close the operation of an establishment or construction industry experienced a major slump. To save
undertaking is one of the authorized causes in terminating itself, Atlantic implemented a redundancy program wherein 177
employment of workers, the only limitation being that the employees were separated from employment. Among them
closure must not be for the purpose of circumventing the were private respondents Gamboa, Tuason, and Din, all
provisions on termination of employment in the LC. members of the AG&P United Rank and File Association (AG&P
- According to Art 283 LC, a partial or total closure or cessation URFA). They all received the benefits due them under the LC.
of operations of establishment or undertaking may either be More than a year later, they charged the company with unfair
due to serious business losses or financial reverses or labor practice and illegal dismissal.
otherwise. Under the first kind, the employer must sufficiently - The LA rendered a decision in their favor as it was similar to
and convincingly prove its allegation of substantial losses, while the cases filed by the 36 employees affected by AG&P’s
under the second kind, the employer can lawfully close shop retrenchment program in 1988. There they found that the
anytime as long as cessation of or withdrawal from business company’s redundancy program has no basis for
operations was bona fide in character and not impelled by a implementation on account of the substantial profits obtained
motive to defeat or circumvent the tenurial rights of employees, by the company from 1983 to 1988. Thus, the redundancy
and as long as he pays his employees their termination pay in program was but a mere scheme to get rid of the complainants,
the amount corresponding to their length of service. Just as no all active union members. The receipt by the complainants of
law forces anyone to go into business, no law can compel their respective separation pay, even if without protestation or
anybody to continue the same. It would be stretching the intent reservation, does not stop them from asserting their right to
and spirit of the law if a court interferes with management's security of tenure and self organization. As mere salaried
prerogative to close or cease its business operations just employees, complainants were faced with no other choice but to
because the business is not suffering from any loss or because accept the money to enable them to meet the demands of
of the desire to provide the workers continued employment. everyday living. However, the NLRC set aside the decision of
- In sum, under Art 283 LC, three requirements are necessary the LA with regard to Gamboa, Tuason and Din.
for a valid cessation of business operations: (a) service of a - Since the cases a quo stemmed from the same circumstances
written notice to the employees and to the DOLE at least one as the ones previously filed by the thirty six (36) AG & P
month before the intended date thereof; (b) the cessation of employees, they share the same core issue: Was the
business must be bona fide in character; and (c) payment to redundancy/retrenchment program undertaken by AG & P in
the employees of termination pay amounting to one month pay 1988 and the resulting termination of the employment of 177 of
or at least one-half month pay for every year of service, its employees, including private respondents herein, valid?
whichever is higher.
- In these consolidated cases, we find that ITC's closure or ISSUE
cessation of business was done in good faith and for valid WON the redundancy/retrenchment program undertaken by AG
reasons. & P in 1988 and the resulting termination of the employment of
Labor Law 1 A2010 - 31 - Disini
177 of its employees, including private respondents herein, was December 6, 1996 are SET ASIDE. The Temporary Restraining
valid Order issued on 4 February 1998 is made permanent.

HELD
- As already stated, the Labor Code recognizes retrenchment as LIABILITY
one of the authorized causes for terminating the employer-
employee relationship and the decision to retrench or not to
retrench is a management prerogative. In the case at bar, the CAPITOL MEDICAL CENTER V MERIS
company losses were duly established by the financial 470 SCRA 236
statements presented by both parties. CARPIO MORALES; September 16, 2005
‘In the case at bar, there is no question that respondent’s
income had been continuously decreasing – P205 million in
1984; P175 million in 1985 and P101 million in 1986. In FACTS
1987, however, it declared a loss of P34 million. The - Capitol hired Dr. Meris one of its stockholders, as in charge of
declining trend in respondent’s income and losses in 1987 its Industrial Service Unit (ISU) at a monthly salary of
confirms its allegation that respondent is predicting a bleak P10,270.00.
future considering the slump not only in foreign contracts but - Until the closure of the ISU, Dr. Meris performed dual functions
with respect to domestic contracts as well. True enough, of providing medical services to Capitol’s more than 500
respondent incurred further tremendous losses in 1990 in the employees and health workers as well as to employees and
amount of P176,181,505.00. In other words, the losses or workers of companies having retainer contracts with it.
abrupt down fall in income which respondent wanted to abate - Dr. Meris received from Capitol’s president and chairman of
by resorting to the reduction in the number of employees was the board, Dr. Clemente, a notice advising him of the
imminent and real.’ management’s decision to close or abolish the ISU and the
‘Indeed, the records show that aside from its ‘redundancy consequent termination of his services as Chief thereof
program’, respondent company had to resort to other cost- - Dr. Meris, doubting the reason behind the management’s
cutting measures in order to stave off impending losses. decision to close the ISU and believing that the ISU was not in
- Petitioners contend that the ‘redundancy program’ was fact abolished as it continued to operate and offer services to
actually a union-busting scheme of management, aimed at the client companies with Dr. Clemente as its head and the
removing union officers who had declared a strike. This notice of closure was a mere ploy for his ouster in view of his
contention cannot stand in the face of evidence of substantial refusal to retire despite Dr. Clemente’s previous prodding for
losses suffered by the company. Moreover, while it is true that him to do so, sought his reinstatement but it was unheeded.
the company rehired or reemployed some of the dismissed - Dr. Meris thus filed a complaint against Capitol and Dr.
workers, it has been shown that such action was made only as Clemente for illegal dismissal and reinstatement with claims for
company projects became available and that this was done in backwages, moral and exemplary damages, plus attorney’s
pursuance of the company’s policy of giving preference to its fees.
former workers in the hiring of project employees. The rehiring
or reemployment does not negate the imminence to (sic) ISSUE
losses, which prompted private respondent to retrench. WON Capitol validly terminated Dr. Meris’s service as ISU head
- As to the waivers and quitclaims signed, not all waivers and
quitclaims are invalid as against public policy. If the agreement HELD
was voluntarily entered into and represents a reasonable NO
settlement, it is binding on the parties and may not later be - The right to close the operation of an establishment or
disowned simply because of a change of mind. In the case at undertaking is explicitly recognized under the Labor Code as
bar, the documents of waiver were executed by the affected one of the authorized causes in terminating employment of
employees without any force or duress used against them by workers, the only limitation being that the closure must not be
private respondent or its representatives. The documents for the purpose of circumventing the provisions on termination
embodied reasonable settlements of the parties’ claims. As a of employment embodied in the Labor Code. The phrase
matter of fact, the employees received separation pay “closures or cessation of operations of establishment or
equivalent to one month pay for every year of service, which undertaking” includes a partial or total closure or cessation.
was more than what they were entitled to receive. And the phrase “closures or cessation x x x not due to serious
- It is necessary to distinguish ‘redundancy’ from business losses or financial reverses” recognizes the right of the
‘retrenchment’. Both are mentioned in Article 283 of the Labor employer to close or cease his business operations or
Code as just causes for the closing of establishments or undertaking even if he is not suffering from serious business
reduction of personnel. ‘Redundancy’ exists when the services losses or financial reverses, as long as he pays his employees
of an employee are in excess of what is required by an their termination pay in the amount corresponding to their
enterprise. ‘Retrenchment’, on the other hand, is one of the length of service.
economic grounds for dismissing employees and is resorted to - As long as the company’s exercise of the same is in good faith
primarily to avoid or minimize business losses. Private to advance its interest and not for the purpose of defeating or
respondent’s ‘redundancy program’, while denominated as circumventing the rights of employees under the law or a valid
such, is more precisely termed ‘retrenchment’ because it is agreement, such exercise will be upheld.
primarily intended to prevent serious business losses. - The ultimate test of the validity of closure or cessation of
“As already stated, the Labor Code recognizes retrenchment establishment or undertaking is that it must be bona fide in
as one of the authorized causes for terminating the employer- character.[39] And the burden of proving such falls upon the
employee relationship and the decision to retrench or not to employer.
retrench is a management prerogative. In the case at bar, the - From the letter of Dr. Clemente to Dr. Meris, it is gathered that
company losses were duly established by the financial the abolition of the ISU was due to the “almost extinct demand
statements presented by both parties. for direct medical service by the private and semi-government
- The petitioner’s contention that the redundancy program was corporations in providing health care for their employees;” and
actually a union-busting scheme of management, aimed at that such extinct demand was brought about by “the existing
removing union officers who had declared a strike. This trend of industrial companies allocating their health care
contention cannot stand in the face of evidence of substantial requirements to Health Maintenance Organizations (HMOs) or
losses suffered by the company. thru a tripartite arrangement with medical insurance carriers
Disposition petition is GRANTED. The public respondent’s and designated hospitals.”
Decision dated 30 September 1996 and Resolution dated
Labor Law 1 A2010 - 32 - Disini
- The records of the case, however, fail to impress that there
was indeed extinct demand for the medical services rendered
by the ISU. ISSUE
- The termination of the services of Dr. Meris not having been WON the closure of MAME and GBS was done in good faith and
premised on a just or authorized cause, he is entitled to either for legitimate business reasons
reinstatement or separation pay if reinstatement is no longer
viable, and to backwages. HELD
Disposition The decision of the Court of Appeals dated YES
February 15, 2002 is hereby AFFIRMED with MODIFICATION. - The owner of a business can lawfully close his shop. No law
As modified, judgment is hereby rendered ordering Capitol can force anyone to go into business, no law can compel
Medical Center, Inc. to pay Dr. Cesar Meris separation pay at anyone to continue the same. It would be stretching the intent
the rate of One (1) Month salary for every year of his and spirit of the law if the government were to unjustly interfere
employment, with a fraction of at least Six (6) Months being with the management’s prerogative to close or cease its
considered as One (1) Year, full backwages from the time of his business operations, just because said business is not suffering
dismissal from April 30, 1992 until the expiration of his term as from losses or simply to provide the workers the continued
Chief of the ISU or his mandatory retirement, whichever comes employment.
first; other benefits due him or their money equivalent; and Reasoning
attorney’s fees. - The governing article under the labor code with regard closure
is Article 283. Under this article, it seems clear that business
D. CLOSING OF BUSINESS closures will not be interfered with provided however that what
is considered as due to workers be complied with. In addition to
the separation pay required to be paid, the establishment would
also have to serve the workers and the the DOLE notice one
RIGHT month before the intended date of closure.
- As part of the proof submitted by the respondents, they
presented various notices not only to the employees and DOLE
MAC ADAMS METAL V MAC ADAM METAL but also to the SSS, BIR, DTI, And the Municipal licensing
ENGINEERING Division of Antipolo.
414 SCRA 411 Disposition Petition dismissed.
CORONA; October 24, 2003
CATATISTA V NLRC (VICTORIAS MILLING CO INC)
NATURE 247 SCRA 46
Petition for review on certiorari of the decision of the CA ROMERO; August 3, 1995
FACTS NATURE
- Mac Adams Metal Engineering (MAME) and GBS Engineering petition for review of the NLRC decision Cebu City dated March
Services (GBS) were both owned by spouses Geronimo and 8, 1991 which reversed Labor Arbiter decision dated October
Lydia Sison. From the facts of the case, the spouses decided to 18, 1988 and the resolution dated July 23, 1991 which denied
retire from business in 1988 when the wife became sickly. In petitioners' motion for reconsideration.
July 1992, in a genral meeting of the workers, she announced
her plan to close shop effective early 1993. The announcement FACTS
was done early so that the employees can look for alternative - Petitioners CATATISTA, JAIME MONSERATE, FRANCISCO
work. ELISAN, FERNANDO DE LA PENA, DIEGO TUPAS, ROSENDO
- After the announcement, some employees decided to form a MONSERATE, ERNESTO SIBUNAL, DIOSCORO HINO-O, AURELIO
union, MAMEWU, ostensibly for the purpose of making DESCATAMIENTO, LODOVICO DELA PENA, and DIONISIO
representations with the management to reconsider its decision BALLADOS, were regular plantation workers in Hacienda
to close shop or to see to it that all benefits due the employees Binanlutan, one of the six haciendas operated and managed by
would be paid. In the course of the negotiation, the Union private respondent Victorias Milling Company, Inc. with an area
demanded among others that the separation pay to be given of 14.8 hectares planted to sugarcane.
should be 45 days for every year of service. This was not - June 1984 – Victorias decided to permanently stop and close
accepted by Mrs. Sison. It was found out later that even before its sugarcane operations in Hacienda Binanlutan "due to low
Mrs sison could announce her plans to shut down, member of sugar prices which affected the viability and profitability of said
the Union were already sabotaging the operations through work hacienda" and convert it instead into an ipil-ipil plantation. In
slowdowns, picketing, refusal to report to work, and ultimately view of such decision, management subsequently held a
strikes. conference with all thirteen field workers to explain to them the
- It was alleged by the workers that MAME and GBS were being reason for this move, as well as the computation of their
closed to bust the Union and that these two businesses will termination pay
continue under the business names, MBS Machine and - July 10, 1984 – in a letter, each of the thirteen petitioners was
Industrial supply (MBS) and MVS Heavy Equipment Rental and formally informed of Victoria’s decision to close and stop
Builders (MVS). These two companies were subsequently sugarcane operations and the reason for such closure and that
impleaded as run-away shops MAME and GBS. MBS is partly "considering that they have been hired specifically for Hacienda
owned by Geronimo Sison while MVS is owned by Dominic Binanlutan's operations and considering further that there is no
Sison, son of the Spouses Sison. It should be noted that the MBS plan to revive sugarcane operations at said company farm,"
was engaged in manufacturing carton boxes and other allied their services would be terminated effective August 1, 1984.
products and MVS was engaged in leasing out heavy - Petitioners received their termination pay or retirement pay
equipment. under the pension plan, whichever was higher.
- the Union filed a complaint for unfair labor practice against the - March 18, 1987 – Catatista et al filed a complaint against
two companies. The Labor Arbiter found for the respondents Victorias with the arbitration branch of NLRC for illegal
which was affirmed by the NLRC. The CA also affirmed the dismissal, damages and attorney's fees.
ruling of the Labor Arbiter and the NLRC that there was a - October 18, 1988 - Labor Arbiter Rodolfo Lagoc ordered
legitimate and bona fide closure and cessation of the business Victorias to reinstate Catatista et al without loss of seniority and
by MAME and GBS. with backwages for three (3) years without any qualifications
- NRLC > reversed the decision of the Labor Arbiter
Labor Law 1 A2010 - 33 - Disini
- Catatista et al’s MFR to NLRC decision was denied for lack of reverses, the separation pay shall be equivalent to one (1)
merit. month pay or at least one-half (1/2) month pay for every year
- Petitioners claim that NLRC abused its discretion in of service, whichever is higher. A fraction of at least six (6)
rendering its questioned decision when it misappreciated or months shall be considered one (1) whole year."
failed to consider the following: - The termination of employment of the employees of Hacienda
1. Victorias’ net profit from its company-wide operations for Binanlutan brought about by the closure is to be considered as
1983 and 1984 at a staggering amount of P 11,508,406.00 and retrenchment as Hacienda Binanlutan is only one of the six
P48,229,400.00, respectively haciendas of private respondent. Clearly, private respondent's
2. Victorias’ own admission of profits in the raw and refined purpose in converting said hacienda into an Ipil-ipil plantation
sugar production as stated in page 4, of its Position Paper dated and terminating the service of petitioners is to cut down on
November 2, 1988; losses which it had adequately shown to have suffered through
3. Victorias’ payment of wages and benefits for company an income statement for the fiscal year which ended August 31,
hacienda workers more than what is prescribed by law. It even 1984.
granted wage increases at P1.20/day in 1983 to 1985 CBA - This Court has held that "the requisites of a valid
which private respondent alleged to be the years it incurred retrenchment are: (a) the losses expected should be substantial
losses in the hacienda operation; and not merely de minimis in extent; (b) the substantial losses
4. There is a stipulation in the CBA wherein the company shall apprehended must be reasonably imminent; (c) the
comply with statutory salary increases in the event it is decreed retrenchment must be reasonably necessary and likely to
by law-, effectively prevent the expected losses; and (d) the alleged
5. Victorias’ had not submitted a separate financial statement losses, if already incurred, and the expected imminent losses
or balance sheet for its company haciendas except only an sought to be forestalled, must be proved by sufficient and
income statement. Obviously, such income statement cannot convincing evidence."
show such items as retained earnings, fixed assets, and real - We see no grave abuse of discretion on the part of NLRC
networth which could be found only in financial statements or when it found that "company haciendas including Hacienda
balance sheets that is determinative of losses or profits of any Binanlutan incurred huge losses from years 1982 to 1983 in the
business; amount of P2,842,778.03."9 Private respondent showed that
6. Only Hacienda Binanlutan, where Catatista et al were Hacienda Binanlutan itself suffered a net loss of P22,624.88.10
employed, has closed its operation exempting other company It is significant to note that petitioners failed to dispute these
haciendas such as Florencia, Candelaria, Pacita, Begonia and submissions of private respondent which more than satisfy the
Bacayan; first and fourth requirements for a valid retrenchment. The
7. Catatista et al have already worked for two months in the losses incurred are clearly substantial and sufficiently proven by
ipil-ipil plantation before they were terminated from the service; means of an income statement of Hacienda Binanlutan and the
8. Catatista et al worked also in other company owned financial statement of the company haciendas. Said losses are
haciendas after milling season in Hacienda Binanlutan and in not only imminent but had, in fact, already been incurred by
case the need arises and return again to Hacienda Binanlutan private respondent since 1982. This was even more alarming in
upon ressumption of work; 1984 considering the worldwide economic situation, as well as
9. Victorias’ change only on crops from sugarcane to ipilipil the low sugar prices during that year, events which were
trees which is definitely the same agricultural undertaking with obviously beyond the control of private respondent.
the same need for workers for its operation; - Having determined that private respondent suffered losses
10. After Catatista et al’s termination, Victorias’ hired a and had to resort to retrenchment of its employees in Hacienda
laboronly contractor to supply workers in the ipil-ipil plantation Binanlutan to prevent further losses, this Court holds that
to the exclusion of Catatista et al; private respondent was within its rights in closing Hacienda
11. The uncontroverted fact that Hacienda Binanlutan was not Binanlutan and in terminating the service of petitioners.
losing in its operation in 1984 but was converted to ipil-ipil - In any case, Article 283 of the Labor Code is clear that an
plantation only for reason of 'land use' which is the idea of Mr. employer may close or cease his business operations or
Virgilio Flores who was then Vicgtorias’ Division Head of undertaking even if he is not suffering from serious business
Research and Development losses or financial reverses, as long as he pays his employees
their termination pay in the amount corresponding to their
ISSUES length of service. It would, indeed, be stretching the intent and
WON Catatusta et al were illegally terminated from work spirit of the law, if we were to unjustly interfere in
resulting from the closure of Hacienda Binanlutan, one of the management's prerogative to close or cease its business
company farms owned by Victorias operations just because said business operation or undertaking
(Corollary to the above issue is the validity of the closure of a is not suffering from any loss. This Court, in the case of
business based on the following) - Maya Farms Employees Organization, et al. v. NLRC
A. WON Victorias’ is in good faith when it closed its business "The rule is well-settled that labor laws discourage
B. WON such closure is due to causes beyond its control as interference with an employer's judgment in the conduct of
enunciated in the case of Armed Forces of the Philippines his business. Even as the law is solicitous of the welfare of
Mutual Benefit Association v. Armed Forces Mutual Benefit employees, it must also protect the right of an employer to
Association, Inc. Employees Union exercise what are clearly management prerogatives. As long
as the company's exercise of the same is in good faith to
HELD advance its interest and not for the purpose of defeating or
NO circumventing the rights of employees under the laws or valid
- Article 283 of the Labor Code provides that: agreements, such exercise will be upheld."
"The employer may also terminate the employment of any - Dangan v. NLRC > management's prerogative to close or
employee due to the installation of labor-saving devices, abolish a department or section of the employer's
redundancy, retrenchment to prevent losses or the closing or establishment for economic reasons. We reasoned out that
cessation of operation of the establishment or undertaking since the greater right to close the entire establishment and
unless the closing is for the purpose of circumventing the cease operations due to adverse economic conditions is granted
provisions of this title, by serving a written notice on the an employer, the closure of a part thereof to minimize expenses
workers and the Department of Labor and Employment at and reduce capitalization should similarly be recognized.
least one (1) month before the intended date thereof. x x x In - Special Events & Central Shipping Office Workers Union
case of retrenchment to prevent losses and in cases of v. San Miguel Corporation > the determination of the
closures or cessation of operations of establishment or usefulness of a section, being a company prerogative, the
undertaking not due to serious business losses or financial closure may not be questioned, specially in this case where it is
Labor Law 1 A2010 - 34 - Disini
impelled by economic reasons due to the continuous losses - Cheniver is a corporation operating its printing business in
sustained in its operation, coupled with the lack of demand for Makati. The respondents are members of the labor union and
the services of such section. former employees of Cheniver.
A. YES - June 5, 1992 – Cheniver informed its employees that it will
- We are satisfied with private respondent's good faith when it transfer its operations to Batangas. Reasons for the transfer are
closed Hacienda Binanlutan. expiration of lease contract on the premises of the Makati palnt,
(1) the necessary notice to the affected employees and to the and local authorities’ action to force out Cheniver’s operations
then Ministry of Labor and Employment have been sufficiently from Makati because of alleged hazards to residents nearby.
complied with. - Cheniver gave its employees until the end of June to inform
(2) the affected employees were paid their separation pay management if they wanted with Cheniver in its transfer,
which was computed at one month pay for every year of service otherwise it would hire replacements. Aug1 was the scheduled
or based on private respondent's pension plan, whichever was start of operations in the new plant in Batangas.
higher. - Aug 4, 1992 – Cheniver wrote its employees to report to the
(3) there was then no brewing labor dispute which could have new location within 7days, otherwise they will be deemed to
served as a motive for closing Hacienda Binanlutan, contrary to have lost interest in the job and would be replaced. However,
petitioners' insinuation that their demand for meal allowances no one reported for work in batangas, even after extension of
prompted private respondent to close Hacienda Binanlutan, a period of time to report to work.
reason which we deem to be rather trivial. In fact, petitioners - Respondents filed a complaint for unfair labor practice and
admitted that they received their meal allowances illegal dismissal, and demanded separation pay (among others).
(4) it took Catatista et al almost three years to file their - LA ruled that the transfer of operations was valid and absolved
complaint which does not seem to be the natural reaction of cheniver of charges for unfair labor practice and illegal
persons aggrieved. dismissal. It however ordered payment of separation pay. NLRC
B. YES affirmed.
- A283 LC provides that the employer may terminate the – cheniver contends that the transfer of its business is neither
employment of his employees to prevent losses, For an closure nor retrenchment, thus separation pay should not be
employer to validly terminate the service of his employees awarded. Also, employees were not terminated but they
under this ground, he has to comply with two requirements, resigned because they find the new site to far from their
namely: residences
(a) serving a written notice on the workers and the DOLE at
least one month before the taking effect of the closure, and ISSUE
(b) payment of separation pay equivalent to one month pay or WON employees are entitled to separation pay considering that
at least one-half (1/2) month pay for every year of service, the transfer of the plant was valid
whichever is higher, with a fraction of at least six months to be
considered one whole year. HELD
Disposition petition is hereby DISMISSED. The decision of 1. YES
public respondent NLRC (Fourth Division) dated March 8, 1991 Ratio Art. 283 of the Labor Code provides (in part):
is AFFIRMED. ART. 283. Closure of establishment and reduction of
personnel. - The employer may terminate the employment of
any employee due to the installation of labor saving devices,
ALABANG COUNTRY CLUB INC V NLRC
redundancy, retrenchment to prevent losses or the closing or
[PAGE 266] cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
CAPITOL MEDICAL CENTER INC V MERIS provisions of this Title
[PAGE 279] xxx
- In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
INDUSTRIAL TIMBER CORP V ABABON undertaking not due to serious business losses or financial
[PAGE 277] reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. xxx
PARTIAL CLOSURE Reasoning
- there appears no complete dissolution of Cheniver’s business
undertaking but the relocation of its plant to Batangas, in our
JAT GENERAL SERVICE V NLRC view, amounts to cessation of petitioner's business operations
[PAGE 266] in Makati. It must be stressed that the phrase “closure or
cessation of operation of an establishment or undertaking not
due to serious business losses or reverses” under Art. 283
includes both complete cessation of all business operations and
the cessation of only part of a company's business
- There is no doubt that petitioner has legitimate reason to
relocate its plant because of the expiration of the lease contract
on the premises it occupied. That is its prerogative. But even
though the transfer was due to a reason beyond its control,
CHENIVER DECO PRINT TECHNICS CORP V NLRC Cheniver has to accord its employees some relief in the form of
(CFW-MAGKAKAISANG LAKAS NG MGA severance pay.
MANGGAGAWA SA CHENIVER) - Since the closure of the plant is not on account of serious
325 SCRA 758 business losses, Cheniver shall give respondents separation pay
equivalent to at least 1 month or ½ month pay for every year of
QUISUMBING; February 17, 2000
service
- that the employees resigned is not convincing. The transfer of
NATURE Cheniver to another place hardly accessible to its workers
Special civil action for certiorari resulted in the latter's untimely separation from the service not
to their own liking, hence, not construable as resignation
FACTS Disposition petition denied. NLRC resolutions AFFIRMED.
Labor Law 1 A2010 - 35 - Disini
- The claim of petitioners that they were compelled to close
down the company to prevent further losses is belied by their
resumption of operations barely a month after the corporation
supposedly folded up.
- Moreover, petitioners attribute their loss mainly to their failure
to obtain an export quota from the Garments and Textile Export
REQUISITE Board (GTEB). Yet, as pointed out by respondents, the
corporation resumed its business without first obtaining an
export quota from the GTEB. Besides, these export quotas
ME-SHURN CORP V ME-SHURN WORKERS UNION pertain only to business with companies in the United States
and do not preclude the corporation from exporting its products
448 SCRA 41 to other countries. In other words, the business that petitioner
PANGANIBAN; January 11, 2005 corporation engaged in did not depend entirely on exports to
the United States.
FACTS - If it were true that these export quotas constituted the
- Regular rank and file employees of Me-Shurn Corporation determining and immediate cause of the closure of the
organized Me-Shurn Workers Union-FSM, an affiliate of the corporation, then why did it reopen for business barely a month
February Six Movement (FSM), their union had a pending after the alleged cessation of its operations?
application for registration with the Bureau of Labor Relations - Proper written notices of the closure were not sent to the
(BLR). DOLE and the employees at least one month before the
- Ten days after the organization petitioner corporation started effectivity date of the termination, as required under the Labor
placing on forced leave all the rank and file employees who Code. Notice to the DOLE is mandatory to enable the proper
were members of the union’s bargaining unit. authorities to ascertain whether the closure and/or dismissals
- The union filed a Petition for Certification Election with the were being done in good faith and not just as a pretext for
Med-Arbitration Unit of the Department of Labor and evading compliance with the employer’s just obligations to the
Employment (DOLE), Reg Office No. 3. affected employees. This requirement is intended to protect the
- Instead of filing an answer to the Petition, the corporation filed workers’ right to security of tenure. The absence of such
a comment stating that it would temporarily lay off employees requirement taints the dismissal.
and cease operations, on account of its alleged inability to meet - The determination to cease operations is a management
the export quota required by the Board of Investment. prerogative that the State does not usually interfere in. Indeed,
- Respondent union filed a Notice of Strike against petitioner no business can be required to continue operating at a loss,
corporation on the ground of unfair labor practice (illegal simply to maintain the workers in employment. That would be
lockout and union busting). a taking of property without due process of law. But where it is
- The corporation imposed a precondition for the resumption of manifest that the closure is motivated not by a desire to avoid
operation and the rehiring of laid off workers which was for further losses, but to discourage the workers from organizing
remaining union officers to sign an Agreement containing a themselves into a union for more effective negotiations with
guarantee that upon their return to work, no union or labor management, the State is bound to intervene.
organization would be organized and instead, the union officers
were to serve as mediators between labor and management.
After the signing of the Agreement, the operations of the TEMPORARY CESSATION OF OPERATION
corporation resumed in September 1998.

ISSUE
BASIS
WON the dismissal of the employees of petitioner Meshurn
Corporation is for an authorized cause (WON there was a valid SAN PEDRO HOSPITAL OF DIGOS INC V SEC OF
reason for the closure of the business or temporary cessation of LABOR
operation)
263 SCRA 98
HELD PANGANIBAN; October 11, 1996
NO
- To justify the closure of a business and the termination of the NATURE
services of the concerned employees, the law requires the Petition for certiorari of a decision of NLRC.
employer to prove that it suffered substantial actual losses.
The cessation of a company’s operations shortly after the FACTS
organization of a labor union, as well as the resumption of - The HOSPITAL’s collective bargaining agreement (CBA)3 with
business barely a month after, gives credence to the the UNION, which is the exclusive bargaining agent4 of the
employees’ claim that the closure was meant to discourage hospital's rank-and-file workers, ended in Dec 1990. The
union membership and to interfere in union activities. These following year, both parties negotiated for the renewal of their
acts constitute unfair labor practices. CBA, but they failed to reach an agreement. Eventually, the
- The reason invoked by petitioners to justify the cessation of UNION went on strike, until the DOLE Secretary assumed
corporate operations was alleged business losses. Yet, other jurisdiction over the labor dispute.5 The Secretary issued an
than generally referring to the financial crisis in 1998 and to order directing the striking workers to return to work; the
their supposed difficulty in obtaining an export quota, HOSPITAL to accept all returning workers under the same terms
interestingly, they never presented any report on the financial prior to the work stoppage; and both parties to desist from
operations of the corporation during the period before its committing any act that may aggravate the situation.
shutdown. Neither did they submit any credible evidence to - Before the HOSPITAL could receive such order, however, it
substantiate their allegation of business losses. already notified the DOLE by letter, that it would temporarily
- However, as previously stated, in all the proceedings before suspend operations for 6 months effective June 15, 1991, or up
the two quasi-judicial bodies and even before the CA, no
evidence was submitted to show the corporation’s alleged 3
The CBA is the end result of the collective bargaining process [see ART.250, Labor
business losses. It is only now that petitioners have belatedly Code]. Both the employer and the exclusive bargaining agent [see footnote 2] have
submitted the corporation’s income tax returns from 1996 to the duty to bargain collectively, which duty is explained under ARTS.252-253.
1999 as proof of alleged continued losses during those years. 4
An exclusive bargaining agent is defined under ART.255.
5
See ART.263(g).
Labor Law 1 A2010 - 36 - Disini
to Dec 15, 1991. The HOSPITAL thus refused the return of its HOSPITAL expressly represented that the suspension was to be
striking workers on account of such suspension of operations. for 6 months only. Absent any other information, the natural
Several conciliation conferences were held, where the HOSPITAL presumption will be that the HOSPITAL would resume
stated that it would submit the necessary documents showing operations after 6 months, and therefore, it follows that a new
its serious financial condition "should the need be in earnest". CBA will be needed to govern the employment relations of the
No such documents came, and after the Secretary’s ocular parties, the old one having already expired. Clearly then, under
inspection, he ruled, among others, that the subject suspension the circumstances, the Secretary cannot be to have gravely
was not for a valid cause but was actually for defeating the abused his discretion for ordering the parties to enter into a
workers' right to self-organization. He also enjoined the new CBA.
HOSPITAL to enter into a new CBA with the UNION. Disposition DOLE Secretary’s decision AFFIRMED. But since
the HOSPITAL permanently closed after the 6-month
ISSUES suspension, which closure it has duly justified, SC sustained the
1. WON the Secretary is correct in concluding that the subject permanent closure and did not anymore compel the HOSPITAL
temporary suspension was for circumventing the return-to-work to negotiate with the UNION for a new CBA. SC, in addition,
order he issued penalized the HOSPITAL for the illegal temporary suspension by
2. WON the Secretary gravely abused his discretion when he awarding backwages to the UNION members from the time they
ordered the HOSPITAL to enter into a new CBA despite his were refused admittance by the HOSPITAL, until the expiration
knowledge that it had actually ceased operations. Is it correct of the temporary suspension.

HELD
JAT GENERAL SERVICES V NLRC
1. YES
Ratio Temporary suspension of operations is a valid exercise [PAGE 266]
of management prerogative provided it is not carried out in
order to circumvent the provisions of the Labor Code or to MAYON HOTEL & RESTAURANT V ADONA
defeat the rights of the employees under the Code. The [PAGE 269]
determination to suspend operations is a management
prerogative that the State usually does not interfere with, as no
business can be required to continue operating at a loss simply ME-SHURN CORP V ME-SHURN WORKERS UNION
to maintain the workers in employment. To require such [PAGE 282]
continued operation would be tantamount to a taking of
property without due process, which the employer has a right to
resist. But where it is shown that the closure is motivated not EFFECT ON EMPLOYER-EMPLOYEE
by a desire to prevent further losses, but to discourage the
workers from organizing themselves into a union for more RELATIONSHIP
effective negotiation with management, the State is bound to
intervene.
- The burden of proving that such a temporary suspension is SAN PEDRO HOSPITAL OF DIGOS V SEC OF LABOR
bona fide falls upon the employer. In this instance, the [PAGE 282]
HOSPITAL had to establish the fact of its precarious financial
health; that its cessation of operation was really necessitated
by its financial condition; and that said condition would E. INSTALLATION
probably be improved by such suspension. The HOSPITAL could
have partly met the foregoing requirements by submitting its
financial statements or records as proof of its financial crisis. Its ABAPO V CA (SAN MIGUEL CORP)
unexplained and continued failure to submit its financial 439 SCRA 594
statements raises grave doubts as to the truth of the claimed
financial crisis and the real purpose of the subject suspension.
SANDOVAL-GUTIERREZ; September 30, 2004
The HOSPITAL was recklessly pushing its luck when it believed
that the Secretary could be convinced without first obtaining NATURE
and examining its financial statements and the notes thereto. Petition for review of the decision of CA
The fact that the conciliator never asked for them is no excuse
for not presenting them, as such was the HOSPITAL’s duty. FACTS
Neither is it acceptable for petitioner to allege that the latest - The petitioners are former employees of private respondent
financial statement (for 1991) were still being prepared, since San Miguel Corporation (SMC) who were hired on different dates
the financial statement for the prior years 1989 and 1990 would and assigned to SMC's Mandaue Brewery Plant.
have sufficed. Petitioner, having wretchedly failed to justify by - Sometime in 1991, SMC conducted a viability study of its
even the most rudimentary proof its temporary suspension, business operations and adopted a modernization program.
must bear the consequences thereof. Thus, the Secretary did SMC then brought into the Mandaue plant high-speed machines
not act with grave abuse of discretion in finding the temporary to be used in the manufacture of its beer. These machines were
suspension illegal. installed in bottling lines 6 and 7. The main line operation
2. NO known as lines 1, 2, 3, 4, and 5 ceased to operate. As a
- Art. 286 of the Code provides that "bona fide suspension… consequence, several functions of the employees were declared
for a period not exceeding 6 months . . . shall not terminate redundant.
employment." Sec.12, Rule 1, Book VI of the Omnibus - On February 13, 1992, SMC sent to Office of Region VII,
Rules provides that the employer-employee relationship shall Department of Labor and Employment (DOLE), two letters with
be deemed suspended in case of the suspension referred to the information that it was terminating the services of the
above, it being implicitly assumed that once operations are employees named in the attached list. On February 7, 1992 and
resumed, the employment relationship is revived. If a valid September 28, 1992, SMC sent notices to the affected
suspension of operation merely suspends the employees informing them that they would be given a
relationship, with more reason will an illegal suspension, separation pay amounting to 175% of their respective monthly
as in this case, not affect the employment relationship. salaries for every year of service, a 3-year free hospitalization
- There is, thus, no basis for the HOSPITAL to claim that a new coverage, and free training and consultation for livelihood
CBA should not be entered into or that collective bargaining programs and small-scale business enterprises, as well as
should not be conducted during the temporary suspension. The assistance in local and overseas job placements.
Labor Law 1 A2010 - 37 - Disini
- Accordingly, the employees concerned received the said - Syjuco offered the said premises for lease to petitioner
amounts and executed their respective quitclaims before the Sundowner Dev Corp.
Officers of Region VII DOLE. - Mabuhay then offered to sell its assets and personal properties
- Two years later, those employees filed with the Labor Arbiter in the premises to petitioner to which petitioner agreed.
two separate complaints, alleging that SMC did not institute a - Syjuco turned over the possession of the leased premises to
modernization program, hence, the company committed an petitioner who took possession and occupied the same.
illegal mass lay-off. They prayed that their separation from the - The National Union of Workers in Hotel, Restaurant and Allied
service be declared illegal and that they be paid their Services (NUWHRAIN) picketed the leased premises, barricaded
backwages, separation pay in lieu of reinstatement, and other the entrance to the leased premises and denied petitioner's
benefits. Labor Arbiter rendered a Decision dismissing the officers, employees and guests free access to and egress from
complaints. On appeal, NLRC affirmed the Labor Arbiter’s said premises.
decision. - Secretary of Labor ordered all striking employees to return to
- Petitioners then filed with CA a special civil action for certiorari work and for respondent Mabuhay to accept all returning
which was dismissed. Petitioners' motion for reconsideration employees pending final determination of the issue of the
was denied. The grounds relied upon by the CA in dismissing absorption of the former employees of Mabuhay.
the petition are: petitioners failed to attach to their petition a - Mabuhay: it had sold all its assets and personal properties to
certified true copy of the assailed Resolution of the NLRC in petitioner and that there was no sale or transfer of its shares
NLRC Case No. V-0099-97; and they filed the petition 7 days whatsoever and that Mabuhay completely ceased operation and
late. surrendered the premises to petitioner so that there exists a
legal and physical impossibility on its part to comply with the
ISSUE return to work order specifically on absorption.
WON CA gravely abused its discretion in dismissing the petition - NUWHRAIN: there was connivance between Mabuhay and
petitioner in selling the assets and closing the hotel to escape
HELD its obligations to the employees of Mabuhay and so it prays that
- Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as petitioner accept the workforce of Mabuhay and pay backwages
amended, is clear that failure to comply with the requirement from April 15, 1986 to April 28, 1987, the day Mabuhay stopped
that the petition shall be accompanied by a certified true copy operation.
of the resolution being challenged is a sufficient ground for the - Drilon issued an order requiring petitioner to absorb the
dismissal of the petition. members of the union and to pay backwages from the time it
- With respect to the delay in the filing of the petition, started operations up to the date of the order. \
petitioners accepted the finding of the Court of Appeals that - Petitioner filed motion for reconsideration of the aforesaid
there was indeed a delay of 7 days. order alleging that the theory of implied acceptance and
- Granting that the petition is in order, it is still dismissible. In a assumption of statutory wrong does not apply in the instant
similar case (involving the same issue — the validity of the case; that the prevailing doctrine that there is no law requiring
termination of SMC employees at the Mandaue Brewery), it was bona fide purchasers of the assets of an on-going concern to
held that the installation of labor-saving devices by SMC at the absorb in its employ the employees of the latter should be
Mandaue plant was a proper ground for terminating applied in this case; that the order for absorption of the
employment. The quitclaims and releases, signed by the employees of Mabuhay as well as the payment of their
employees concerned as reasonable settlements, are binding backwages is contrary to law.
upon the parties.
Disposition Petition denied. CA decision affirmed in toto ISSUES
1. WON the purchaser of the assets of an employer corporation
can be considered a successor employer of the latter's
F. FLOATING STATUS employees (WON Sundowner can be compelled to absorb the
employees of respondent Mabuhay)
2. WON there was bad faith
DISEASE
HELD
1. NO
SY V CA Ratio As a general rule, there is no law requiring a bona fide
[PAGE 276] purchaser of assets of an on-going concern to absorb in its
employ the employees of the latter.
- However, although the purchaser of the assets or enterprise is
G. SPECIAL CASE OF BUSINESS not legally bound to absorb in its employ the employers of the
TRANSFERS seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or
clothed with bad faith. (see no. 2)
NATURE OF LABOR CONTRACT - Nature of labor contract: The rule is that unless expressly
assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a
SUNDOWNER DEV CORP V DRILON (NUWHRAIN, transferee of an enterprise, labor contracts being in personam,
PENANO) thus binding only between the parties. A labor contract merely
180 SCRA 14 creates an action in personam and does not create any real
GANCAYCO; December 6 1989 right which should be respected by third parties. This conclusion
draws its force from the right of an employer to select his
employees and to decide when to engage them as protected
FACTS
under our Constitution, and the same can only be restricted by
- Hotel Mabuhay, Inc. (Mabuhay) leased the premises belonging
law through the exercise of the police power.
to Santiago Syjuco, Inc. (Syjuco) located in Ermita, Manila. Due
2. NO
to non-payment of rentals, Syjuco filed an ejectment case
- contrary to the claim of the public respondent that the
against Mabuhay. Mabuhay offered to amicably settle the case
transaction between petitioner and Mabuhay was attended with
by surrendering the premises to Syjuco and to sell its assets
bad faith, the court finds no cogent basis for such contention.
and personal property to any interested party.
Thus, the absorption of the employees of Mabuhay may not be
imposed on petitioner.
Labor Law 1 A2010 - 38 - Disini
- It is undisputed that when Mabuhay surrendered the leased
premises to Syjuco and asked Syjuco to offer same to other HELD
lessees, it was Syjuco who found petitioner and persuaded YES
petitioner to lease said premises. Mabuhay had nothing to do Ratio The dismissal must not only be for a valid or authorized
with the negotiation and consummation of the lease contract cause as provided by law but the rudimentary requirements of
between petitioner and Syjuco. due process-notice and hearing-must also be observed before
an employee may be dismissed.
Reasoning
H. PROCEDURAL DUE PROCESS – NATURE - Petitioner Salaw was terminated without due process of law.
AND REQUIREMENTS - The requirement of notice is intended to inform the employee
concerned of the employer's intent to dismiss him and the
reason for the proposed dismissal; on the other hand, the
1. REQUIREMENTS requirement of hearing affords the employee the opportunity to
answer his employer's charges against him and accordingly to
defend himself before dismissal is effected.
IN GENERAL - The initial act of the bank in convening the disciplinary council
would have been a proper step had Salaw been allowed the
assistance of counsel. That would have complied with the
AGABON V NLRC demands of due process had complainant been given the
[PAGE 35] opportunity to present his own defense and confront the
witnesses, if any, and examine the evidence against him.
- But the records indicate that there was a denial of Salaw’s
ESSENCE OF DUE PROCESS constitutional right when his subsequent request to refute the
allegations against him was granted and a hearing was set
CENTRAL PANGASINAN ELEC COOP V MACARAEG "without counsel or representative."
- Section 5 (of Rule 14, Book 5 of the IRR of the Labor Code) of
[PAGE 195] the said Rule requires that "the employer shall afford the
VALIAO V CA worker ample opportunity to be heard and to defend himself
[PAGE 11] with the assistance of his representative, if he so desires."
- The evidence which Associated Bank anchors on is the sworn
statement of Salaw which was executed without the assistance
RIGHT TO COUNSEL of counsel.
- Even if administrative and quasi-judicial bodies are not strictly
governed by the procedural rules in adjudicating cases, the
SALAW V NLRC (ASSOCIATED BANK, TENGCO, right to counsel is a requirement of substantial due process.
TUAZON) Disposition Judgment set aside and the judgment of the labor
202 SCRA 7 arbiter is reinstated.
SARMIENTO; September 27, 1991

NATURE
Petition for certiorari to review the decision of the NLRC

FACTS
NOTICE
- Espero Salaw was employed by the Associated Bank in 1967
as a credit-investigator-appraiser. His job involved the following COLEGIO DE SAN JUAN DE LETRAN - CALAMBA V.
activities: inspecting, investigating, appraising, and identifying VILLAS
the company's foreclosed assets; giving valuation to its real
properties, and verifying the genuineness and encumbrances of 399 SCRA 550
the titles of properties mortgaged to the bank. CORONA; March 26, 2003
- November 27, 1984 – The investigation unit of the Philippine
Constabulary were able to make Salaw execute a sworn NATURE
statement, stating that he disposed acquired assets of the bank Petition for review on certiorari
in the form of 20 sewing machines electronic generators for
P60,000 with the help of another bank employee Reynaldo FACTS
Madrigal. The said sworn statement was executed without - Respondent Belen Villas was employed by the petitioner
assistance of counsel. School as high school teacher.
- December 1984 – Salaw was informed by the bank manager She applied for a study leave for six months. The principal of
Tuazon that the bank’s disciplinary would be convened and that the high school department told Villas that her request for study
he attend the proceedings without counsel. leave was granted for one (1) school year subject to certain
- April 1, 1985 – Salaw was terminated effective March 27, 1985 conditions.
for alleged serious misconduct or willful disobedience and fraud - Respondent alleged that she intended to utilize the first
or willful breach of the trust reposed upon him by the bank. semester of her study leave to finish her masteral degree at the
- Salaw then filed a complaint for illegal termination against the Philippine Women’s University (PWU). Unfortunately, it did not
Associated Bank, Tengco (as chairman of the board) and Tuazon push through so she took up an Old Testament course in a
(as bank manager). school of religion and at the same time utilized her free hours
- The Labor Arbiter ruled that Salaw was illegally dismissed and selling insurance and cookware to augment her family’s
ordered his reinstatement or payment of backwages and income. However, during the second semester of her study
benefits. leave, she studied and passed 12 units of education subjects at
- The respondents appealed and the NLRC reversed the decision the Golden Gate Colleges in Batangas City.
of the Labor Arbiter. - In response to the letters sent her by petitioner to justify her
study leave, she submitted a certification from Golden Gate
ISSUE Colleges and a letter explaining why she took up an Old
WON Salaw was illegally terminated
Labor Law 1 A2010 - 39 - Disini
Testament course instead of enrolling in her masteral class petitioner school. In the meantime, she was employed as a
during the first semester. teacher at the San Pedro Parochial School during school year
- The President and Rector of the School, Fr. Ramonclaro G. 1980-1981 and at the Liceo de San Pedro, Biñan, Laguna during
Mendez, O. P., wrote her, stating that her failure to enroll during school year 1981-1982.
the first semester was a violation of the conditions of the study - In 1982, she applied anew at petitioner school which hired her.
leave and that the reasons she advanced for failure to enroll - On May 31, 1997, Hilaria reached the compulsory retirement
during the first semester were not acceptable. age of 65. Retiring pursuant to Article 287 of the Labor Code,
- Respondent then filed a case for illegal dismissal and the case as amended by Republic Act 7641, petitioner school pegged her
was assigned to the Voluntary Arbitrator who found that retirement benefits at P59,038.35, computed on the basis of
respondent was illegally dismissed. Hence this petition. fifteen years of service from 1982 to 1997. Her service from
1955 to 1970 was excluded in the computation, petitioner
ISSUE school having asserted that she had, in 1971, abandoned her
WON respondent’s alleged violation of the conditions of the employment.
study grant constituted serious misconduct which justified her - Hilaria insisted, however, that her retirement benefits should
termination from petitioner School be computed on the basis of her thirty years of service,
inclusive of the period from 1955 to 1970. She thus concluded
HELD that she was entitled to P190,539.90.
1. NO
Reasoning ISSUE
- Under the Labor Code, there are twin requirements to justify a WON Hilaria’s services for petitioner school during the period
valid dismissal from employment: (a) the dismissal must be for from 1955 to 1970 should be factored in the computation of her
any of the causes provided in Article 282 of the Labor Code retirement benefits
(substantive aspect) and (b) the employee must be given an
opportunity to be heard and to defend himself (procedural HELD
aspect). - Hilaria cannot be credited for her services in 1955-1970 in the
- In the case at bar, the requirements for both substantive and determination of her retirement benefits. For, after her one
procedural aspects were not satisfied. year leave of absence expired in 1971 without her requesting
- We affirm the findings of the Court of Appeals that there was for extension thereof as in fact she had not been heard from
no violation of the conditions of the study leave grant. Thus, until she resurfaced in 1982 when she reapplied with petitioner
respondent could not be charged with serious misconduct school, she abandoned her teaching position as in fact she was
warranting her dismissal as a teacher in petitioner School. employed elsewhere in the interim and effectively relinquished
Petitioner has failed to convince us that the alleged violations of the retirement benefits accumulated during the said period.
the study leave grant constituted serious misconduct which - It is not disputed that the approved one year leave of absence
justified the termination of respondent’s employment. The most without pay of Hilaria expired in 1971, without her, it bears
respondent could be charged with was simple misconduct repeating, requesting for extension thereof or notifying
- Misconduct is improper or wrongful conduct. It is the petitioner school if and when she would resume teaching. Nor
transgression of some established and definite rule of action, a is it disputed that she was rehired only in 1982 after filing anew
forbidden act, a dereliction of duty, willful in character, and an application, without her proffering any explanation for her
implies wrongful intent and not mere error of judgment. Under more than a decade of absence. Under the circumstances,
Article 282 of the Labor Code, the misconduct, to be a just abandonment of work at petitioner school in 1971 is indubitably
cause for termination, must be serious. This implies that it must manifest.
be of such grave and aggravated character and not merely - It should be noted that when Hilaria abandoned her teaching
trivial or unimportant. position in 1971, the law in force was Republic Act 1052 or the
- We similarly affirm the Voluntary Arbitrator’s decision that Termination Pay Law, as amended by Republic Act 1787,
respondent is not entitled to moral and exemplary damages Section 1 of which provides:
and attorney’s fees because there is no evidence showing that SEC. 1. In cases of employment, without a definite period, in
bad faith or malice attended the dismissal of respondent. Moral a commercial, industrial, or agricultural establishment or
damages are recoverable only where the dismissal is attended enterprise, the employer or the employee may terminate at
by bad faith or fraud, or constitutes an act oppressive to labor, any time the employment with just cause; or without just
or is done in a manner contrary to morals, good customs or cause in the case of an employee by serving written notice on
public policy. A dismissal may be contrary to law but, by itself the employer at least one month in advance, or in the case of
alone, it does not necessarily establish bad faith an employer, by serving such notice to the employee at least
Disposition Petition is DENIED. one month in advance or one-half month for every year of
service of the employee, whichever is longer, a fraction of at
least six months being considered as one whole year.
AGABON V NLRC
The employer, upon whom no such notice was served in case
[PAGE 35] of termination of employment without just cause may hold
the employee liable for damages.
The employee, upon whom no such notice was served in case
of termination of employment without just cause shall be
entitled to compensation from the date of termination of his
STA. CATALINA COLLEGE V NLRC (TERCERO) employment in an amount equivalent to his salaries or wages
416 SCRA 233 corresponding to the required period of notice.
CARPIO MORALES; November 19, 2003 xxx
- Above-stated law should thus apply in the case at bar.
NATURE Abandonment of work being a just cause for terminating the
Petition for review on cetiorari services of Hilaria, petitioner school was under no obligation to
serve a written notice to her.
FACTS - As Hilaria was considered a new employee when she rejoined
- In June 1955, Hilaria was hired as an elementary school petitioner school upon re-applying in 1982, her retirement
teacher at the Sta. Catalina College. In 1970, she applied for benefits should thus be computed only on the basis of her years
and was granted a one year leave of absence without pay on of service from 1982 to 1997.
account of the illness of her mother. After the expiration in - In the absence of a retirement plan or agreement providing for
1971 of her leave of absence, she had not been heard from by retirement benefits of employees in the establishment, an
Labor Law 1 A2010 - 40 - Disini
employee upon reaching the age of sixty (60) years or more, and confidence on petitioner was well justified. Private
but not beyond sixty-five (65) years which is hereby declared respondents had every right to dismiss petitioner. Petitioner’s
the compulsory retirement age, who has served at least five (5) long period of disappearance from the scene and departure for
years in the said establishment, may retire and shall be entitled abroad before making a claim of illegal dismissal does not
to retirement pay equivalent to at least one-half (1/2) month contribute to its credibility.
salary for every year of service, a fraction of at least six (6) 2. YES
months being considered as one whole year. Ratio The due process prescribed in Article 277 of the Labor
Disposition Petition granted in part. Code, as amended, and in Sections 2 and 7, Rule I, Book VI of
TWO NOTICE RULE the Implementing Rules of the Labor Code, are mandatory. Two
notices should be sent to the employee. The first notice
apprises the employee of the particular acts or omissions for
AGABON V NLRC which his dismissal is sought; while the second informs the
employee of the employer’s decision to dismiss him. The latter
[PAGE 35] must come after the employee is given a reasonable period
from receipt of the first notice within which to answer the
CAINGAT V NLRC charge, and ample opportunity to be heard and defend himself
453 SCRA 142 with the assistance of his representative, if he so desires. In this
QUISUMBING; March 10, 2005 case, the respondents only sent the first notice, gleaned from
the June 20, 1996 memorandum. There was no second notice.
Neither the public notice in the Philippine Daily Inquirer, a
NATURE newspaper of general circulation, nor the demand letter could
This petition for review on certiorari of the decision of the CA constitute substantial compliance. What the public notice did
upholding the dismissal of petitioner. was to inform the public that petitioner was already separated
as of June 20, 1996, the same day he was suspended.
FACTS - The management failed to observe fully the procedural
- In 1983, petitioner Bernardino A. Caingat was hired by requirement of due process for the termination of petitioner’s
respondent Sta. Lucia Realty and Development, Inc. (SLRDI) as employment in its failure to provide two notices as required in
officer-in-charge of maintaining the facilities and checking the Article 277 of the Labor Code, as amended, and in Sections 2
deliveries of construction materials in the different malls and and 7, Rule I, Book VI of the Implementing Rules of the Labor
subdivisions developed by the SLRDI. In 1990, petitioner Code, which are mandatory.
became the General Manager of SLRDI’s sister companies, R.S. 3. NO, the dismissal is still valid as previously held in Agabon v.
Night Hawk Security and Investigation Agency, Inc., and R.S. NLRC
Maintenance and Services, Inc. Ratio In Agabon v. NLRC, we said that if the dismissal was for
- In 1991, the Finance Manager discovered that petitioner cause, the lack of statutory due process should not nullify the
deposited company funds in the latter’s personal account and dismissal, or render it illegal or ineffectual. But the violation of
used the funds to pay his credit card purchases, utility bills, the petitioner’s right to statutory due process by respondents
trips abroad, and acquisition of a lot in Laguna. warrants the payment of indemnity in the form of nominal
- The company then sent the petitioner a letter which reads: damage.
- Upon verification of financial records of the R.S. Nighthawk Disposition The assailed Resolutions of the Court of Appeals
Security & Investigation Agency, Inc. and the R.S. Maintenance in are hereby MODIFIED. Petitioner Bernardino A. Caingat’s
& Services Corporation, where you were designated as dismissal from employment by private respondents is upheld on
Manager, it was found that you have misappropriated company the ground of loss of trust and confidence on a managerial
funds in the sum of about P5,000,000.00 from 1992 up to the employee, a just cause for termination. However, for failure to
present. comply fully with the requirement of notice as part of due
- On August 13, 1996, without conducting any investigation, process, the private respondents are ORDERED to pay
respondent R.S. Maintenance filed a complaint docketed as Civil petitioner Bernardino A. Caingat the amount of P30,000.00 as
Case No. 65841 for sum of money and damages with prayer for nominal damages.
writ of preliminary attachment before the Pasig Regional Trial
Court, Branch 67.
- On August 27, 1998, petitioner filed before the Labor Arbiter, a HAYLIFT MANILA INC V CA
complaint, for illegal dismissal against the respondents. [PAGE 226]
- Petitioner avers that he was dismissed from his employment
by respondents without just and legal cause and respondents
dismissed him from employment without due process of law.
GENUINO ICE CO INC V MAGPANTAY
[PAGE 206]
ISSUES
1. WON he was dismissed for just cause
2. WON petitioner was denied due process of law
HEARING
3. WON the violation of the due process requirement renders
the dismissal illegal MAGOS V NLRC
HELD 300 SCRA 484
1. YES BELLOSILLO; December 28, 1998
Ratio The petitioner held a position of utmost trust and
confidence. He was entrusted with cash fees for the NATURE
maintenance and security services of 80 subdivisions and This special civil action for certiorari
clubhouses. He used company funds for payment of his
personal bills. Instead of accounting for his alleged FACTS
unauthorized disbursements, petitioner suddenly departed from - Danilo J. Magos became an employee of PEPSI on 5 April 1987.
the country and returned only after more than three years and He rose from the ranks until he was appointed Route/Area
claimed that he was illegally dismissed and he was entitled to Manager covering different areas in Northern Mindanao. On 1
the alleged misappropriated funds by way of commission apart March 1991 he was assigned to handle the Butuan Plant in
from the monthly salary he received. Given the circumstances Surigao City. In July 1991 PEPSI entered into a Sales and
of this case, we can conclude that management’s loss of trust Distributorship Agreement with one Edgar Andanar covering the
Labor Law 1 A2010 - 41 - Disini
entire Siargao Island. The Agreement included, among others, of his personal convictions. Thus, inspite of a finding of good
the following terms: (a) that the Distributor shall be the sole faith on Magos' part and lack of damage on PEPSI, it affirmed
agent of PEPSI in the entire Siargao Island, Surigao City, and (b) the Arbiter's finding of illegal dismissal and the award of
that PEPSI would not directly or indirectly sell to or serve indemnity. Additionally, in consideration of Magos' good faith
anybody in the covered territory of the Distributor unless and long service, the Commission also awarded him one-half
extremely necessary. (1/2) month separation pay for every year of service.
- Andanar complained formally to the Plant General Manager - Both parties sought recosideration Magos faulted the NLRC for
Val Lugti that petitioner was still serving Tony Chua and Boy its failure to award him the reliefs prayed for in his complaint,
Lim, clients who were both within the area of the agreement. while PEPSI questioned the grant of separation pay in Magos
On 15 April 1992 District Manager Reynaldo Booc issued a favor. On 29 August 1995 the NLRC denied both motions for
memorandum to petitioner to stop effective immediately reconsideration.
"giving deals to Siargao Island dealers, unless and only, if
Andanar cannot supply them due to unavoidable circumstances ISSUE
beyond his control," and only up to a specified limit. Magos WON the employee was given due process as regards his
reported to Booc a negative trend in the sales of PEPSI in termination
Siargao Island as a result of Andanar's shortage of stocks and
the conversion to Coke of several wholesalers, notably Boy Lim. HELD
On 16 and 24 June 1992 Ramonito Endozo and Ramon Ganzon, YES
respectively, reported the sales of Pepsi products by salesman - Both the NLC and the Labor Arbiter found that no formal
Prudencio Palen to Boy Lim at "7:1" deal allegedly upon hearing was conducted regarding petitioner's dismissal.
instructions of petitioner. Such sales were either made to Although a hearing is essential to due process, we did hold that
fictitious dealers or diverted to other dealers without receipts. no formal hearing was necessary when the petitioner had
- On the basis of these reports, Magos was notified by Booc of already admitted his responsibility for the act he was accused
his temporary recall effective 1 July 1992 on the ground of his of. Even though petitioner in this case never admitted the
"continued refusal to follow orders/instructions of a superior accusations of dishonesty against him, he impliedly
after 2 or more successive reminders or warnings." 4 He was acknowledged his insubordination as shown in his petition.
also required to submit a written explanation, which he did on - During the investigation, Petitioner had however admitted as a
30 June 1992 citing among others: (a) the lack of proper sign of good faith, various "saving measures" that he undertook
turnover of jurisdiction to distributor and guidelines thereto; (b) to prevent the competitors from easing out Private Respondent
the rapid conversion to Coke of previous big account dealers from its dominant market hold in Siargao Island
like Boy Lim in Siargao; and, (c) the lack of ability of Andanar to - Petitioner was subsequently terminated despite all the
supply such dealers. Finding Magos' explanation insufficient pertinent explanations he had given to his immediate superiors
PEPSI on 27 July 1992 notified Magos of an administrative for alleged violation of the above-mentioned Company Rules
investigation against him on grounds of disobedience and and Regulations and for alleged loss of trust and confidence.
breach of trust and confidence as shown by the reports of - Evidently, Magos regarded his sales to Siargao Island dealers
Endozo and Ganzon, the audit reports of the Home Office covered by the Sales and Distributorship Agreement with
Auditors, the complaint of Andanar and the memorandum of Andanar as "saving measures." As a consequence, he earned
Booc. 6 On 7 September 1992, Magos was notified of his the ire of his superiors for persistently ignoring the agreement.
termination for disobedience and breach of trust and He further risked losing his job by presenting what he deemed
confidence. 7 as "pertinent explanations" to justify the questioned sales.
- On 25 September 1992 Magos filed a complaint for illegal Thus, even if no hearing was conducted on Magos'
dismissal and non-payment of wages, 13th month pay, disobedience, the requirement of due process was sufficiently
premium pay for holidays and rest days, night shift pay and met where petitioner was accorded the chance to explain his
allowances. After petitioner waived his right to a formal hearing, side. The award of indemnity in the sum of P2,000.00 thereto is
the Labor Arbiter set a date for the submission of position no longer warranted in the light of this finding.
papers. However, petitioner failed to submit a position paper
even after his two motions for extension to file the same were
CAURDANETAAN PIECE WORKERS UNION V
granted. After the lapse of the extended period by nine (9)
days, the Labor Arbiter issued an order submitting the case for LAGUESMA
resolution and considering the petitioner to have waived his 285 SCRA 291
right to submit evidence. 9 Petitioner's subsequent motion for PANGANIBAN; February 24, 1998
reconsideration was denied on the ground that such a motion
was not allowed by the NLRC rules. NATURE
- On 18 March 1993 the Labor Arbiter ruled that the dismissal Petition for Certiorari
was valid on grounds of insubordination and loss of confidence
upon proof of Magos' sale of PEPSI products despite the FACTS
oppossion of his superiors. Magos' claims for 13th month pay, - Petitioner union has ninety-two (92) members who worked as
holiday pay, rest day pay and night shift differentials were 'cargador' at the warehouse and ricemills of private respondent
denied as he was a managerial employee. The Labor Arbiter, Corfarm at Umingan, Pangasinan since 1982.
however, found that Magos was dismissed without due process - They were paid by private respondent on a piece rate basis.
as it was done in an arbitrary and perfunctory manner without When private respondent denied some benefits to these
any investigation to provide him with an opportunity to present cargadores, the latter organized petitioner union. Upon learning
his side. Accordingly, PEPSI was ordered to give Magos financial of its formation, private respondent barred its members from
assistance of P2,000.00. working with them and replaced them with non-members of the
- Petitioner appealed to the NLRC imputing grave abuse of union sometime in the middle of 1992.
discretion to the Labor Arbiter for denying him the right to - On July 9, 1992, petitioner filed a petition for certification
present evidence on his behalf and for sustaining the legality of election before the Regional Office No. I of the Department of
his dismissal. Labor and Employment
- On 16 May 1995 the NLRC also found that the dismissal of - While this petition for certification election was pending,
petitioner was done in an arbitrary manner as there was no petitioner also filed on November 16, 1992, a complaint for
record of any investigation conducted. However, the illegal dismissal, unfair labor practice, refund of illegal
Commission opined that there was enough breach of confidence deductions, payment of wage differentials, various pecuniary
to justify Magos' dismissal considering that he was duty-bound benefits provided by laws, damages, legal interest,
to follow and obey the instructions of his superiors irrespective
Labor Law 1 A2010 - 42 - Disini
reinstatement and attorney's fees, against private respondent complainant or herein petitioner.
before the Regional Arbitration Branch No. 1 of Dagupan City - Private respondent had been duly informed of the pendency of
- On November 24, 1992, Labor Arbiter Ricardo Olairez, directed the illegal dismissal case, but it chose not to participate therein
the parties to submit position paper and to appear for hearing without any known justifiable cause. The labor arbiter sent
on the said date. Only the complainant petitioner submitted its notices of hearing or arbitration to the parties, requiring them
position paper. to submit position papers at 1:30 p.m. on November 14, 1992.
- Likewise in the scheduled hearing on December 14, 1992, Respondent Corfarm did not attend the hearing. According to
private respondent did not appear thus Labor Arbiter Olairez Respondent NLRC, there was no proof that Respondent Corfarm
allowed the president of petitioner union Juanito Costales to received such notice. In any case, petitioner filed a Motion to
testify and present its evidence ex-parte. Admit Amended Complaint on December 23, 1992. Again,
- On December 16 1992, another notice was sent to the parties another notice for hearing or arbitration on January 7, 1993 was
to appear on [the] January 7, 1993 hearing by Labor Arbiter sent to the parties. This was received by petitioner's counsel as
Emiliano de Asis. evidenced by the registry return receipt duly signed by private
- Before the scheduled hearing on January 7, 1993, complainant respondent's counsel, Atty. Alfonso Bince, Jr. It was only on
petitioner filed a motion to amend complaint and to admit January 28, 1993, however, that Atty. Bince entered his
amended complaint. appearance as counsel for Respondent Corfarm. On May 10,
- On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an 1993, Corfarm was again given a new period of ten (10) days
Order granting the petition for certification election earlier filed. within which to submit its position paper and documentary
- Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal evidence; "otherwise, [the labor arbiter] will be constrained to
dismissal case ordered respondents to submit their position resolve this case based on available evidence on record." As
paper, together with their documentary evidence, if any, within evidenced by a registry return receipt, a copy of said directive
10 days from receipt of the order was received by respondent's counsel on May 25, 1993. Still
- On September 7, 1993, public respondent Laguesma issued a and all, Corfarm failed to file its position paper. Clearly, private
Resolution denying the appeal filed by private respondent respondent was given an opportunity to present its evidence,
against the order of Med-Arbiter Limos granting the petition for but it failed or refused to avail itself of this opportunity without
certification election. any legal reason. Due process is not violated where a person is
- Acting on said denial, private respondent filed a motion for given the opportunity to be heard, but chooses not to give his
reconsideration which was granted in an Order dated January 4, side of the case.
1994 by public respondent Laguesma dismissing the petition for - Contrary to the conclusions of the NLRC and the arguments of
certification election for lack of employer-employee private respondent, the findings of the labor arbiter on the
relationship. question of illegal dismissal were based on credible, competent
- Petitioner in turn filed a motion for reconsideration but it was and substantial evidence.
denied by public respondent Laguesma when he reaffirmed the - It is to be borne in mind that proceedings before labor
dismissal of petition for certification election. agencies merely require the parties to submit their respective
- Thus, the union filed its first petition for certiorari affidavits and position papers. Adversarial trial is addressed to
- On September 14, 1993, Labor Arbiter Rolando D. Gambito the sound discretion of the labor arbiter. To establish a cause of
issued his decision finding the dismissal of petitioner's members action, only substantial evidence is necessary; i.e., such
illegal. On appeal by both parties, NLRC set aside the appealed relevant evidence as a reasonable mind might accept as
decision and remanded the case to the labor arbiter for further adequate to support a conclusion, even if other minds equally
proceedings. Petitioner's motion for reconsideration was later reasonable might conceivably opine otherwise.
denied. - As ruled in Manalo vs. Roldan-Confesor:
- The solicitor general, who was supposed to represent both "Clear and convincing proof is '. . . more than mere
public respondents, joined petitioner in praying that the petition preponderance, but not to extent of such certainty as is
in the First Case "be granted and that judgment be rendered required beyond reasonable doubt as in criminal
annulling" the assailed Orders of Respondent Laguesma. The cases . . .'while substantial evidence '. . . consists of more
SolGen likewise filed another "Manifestation and Motion (In Lieu than a mere scintilla of evidence but may be somewhat less
of Comment)" in the Second Case, praying that "judgment be than a preponderance . . .' Consequently, in the hierarchy of
rendered annulling the resolution of NLRC ordering public evidentiary values, We find proof beyond reasonable doubt at
respondent to proceed with the case instead of remanding the the highest level, followed by clear and convincing evidence,
same to the labor arbiter of origin. preponderance of evidence, and substantial evidence, in that
- In a Resolution dated March 29, 1995, 13 this Court ordered order."
the consolidation of the two cases. - Evidence to determine the validity of petitioner's claims, which
the labor arbiter relied upon, was available to Respondent
ISSUE NLRC. These pieces of evidence are in the case records.
WON private respondent was denied due process - It must be stressed that labor laws mandate the speedy
administration of justice, with least attention to technicalities
HELD but without sacrificing the fundamental requisites of due
NO process. In this light, the NLRC, like the labor arbiter, is
- Petitioner assails the NLRC for setting aside the labor arbiter's authorized to decide cases based on the position papers and
decision and remanding the case for further proceedings. other documents submitted, without resorting to the technical
Petitioner argues that the order of remand "will only prolong the rules of evidence. Verily, Respondent NLRC noted several
agony of the 92 union members and their families for living or documentary evidence sufficient to arrive at a just decision.
existing without jobs and earnings to give them support." Indeed, the evidence on record clearly supports the conclusion
- Further, petitioner contends that the Labor Arbiter had of the labor arbiter that the petitioners were employees of
rendered a decision on September 14, 1993 in favor of respondent, and that they were illegally dismissed.
petitioner based on the available records of the case after - Why Respondent NLRC refused to rule directly on the appeal
giving more than ample opportunities to private respondents cannot be explained. The remand of a case or an issue to the
herein to submit their position paper and other pleadings labor arbiter for further proceedings is unnecessary, considering
alleging their evidences against the causes of action of that the NLRC was in a position to resolve the dispute based on
petitioner alleged in the complaint for illegal dismissal, unfair the records before it and particularly where the ends of justice
labor practice, non-payment of various benefits granted by would be served thereby. Remanding the case would needlessly
existing laws during their employment, illegal deductions or delay the resolution of the case which has been pending since
diminution of their underpaid daily wages, non-payment of 1992.
wage increases and other causes of action pleaded by the Disposition both petitions are GRANTED
Labor Law 1 A2010 - 43 - Disini
- His main cause of action is his illegal dismissal, and the claim
for night shift differential is but an incident of the protest
NATIONAL SEMICONDUCTOR (HK) DISTRIBUTION,
against such dismissal. Thus, the burden of proving that
LTD V NLRC (SANTOS) payment of such benefit has been made rests upon the party
291 SCRA 348 who will suffer if no evidence at all is presented by either party.
BELLOSILLO; June 26, 1998 - Jimenez v. National Labor Relations Commission:
As a general rule, one who pleads payment has the burden
FACTS of proving it. Even where the plaintiff must allege non-
- Petitioner National Semiconductor (HK) Distribution, Ltd., a payment, the general rule is that the burden rests on the
foreign corporation, manufactures and assembles electronic defendant to prove payment, rather than on the plaintiff to
parts for export. prove non-payment. The debtor has the burden of showing
- Respondent Edgar Philip C. Santos was employed by NSC as a with legal certainty that the obligation has been discharged
technician in its Special Products Group assigned to the by payment.
graveyard shift starting at ten o’ clock in the evening until six o’ - By choosing not to fully and completely disclose
clock in the morning. information to prove that it had paid all the night
- On 8 January 1993 Santos did not report for work on his shift. shift differentials due to private respondent,
He resumed his duties as night shift Technician Support only on petitioner failed to discharge the burden of proof.
9 January 1993. However, at the end of his shift the following - Complainant should be awarded a night shift differential but
morning, he made two (2) entries in his daily time record (DTR) limited to three (3) years considering the prescriptive period of
to make it appear that he worked on both the 8th and 9th of money claims.
January 1993. 2. YES
- His immediate supervisor, Mr. Joel Limsiaco, checked the DTRs - Santos was accorded full opportunity to be heard before he
and found out that Santos indeed did not report for work on 8 was dismissed.
January. But when he checked Santos’ DTR again in the - The essence of due process is simply an opportunity to be
morning of 9 January 1993 he found the entry made by Santos heard, or as applied to administrative proceedings, an
for the day before. opportunity to explain one’s side.
- Informal investigations were conducted by management. - Petitioner furnished private respondent notice as to the
Santos was required in a memorandum to explain in writing particular acts which constituted the grounds for his dismissal.
within 48 hours from notice why no disciplinary action should be - By requiring him to submit a written explanation within 48
taken against him for dishonesty, falsifying daily time record hours from receipt of the notice, the company gave him the
DTR and violation of company rules and regulations. opportunity to be heard in his defense. Private respondent
- Santos submitted his written explanation alleging that he was availed of this chance by submitting a written explanation. -
ill on the day he was absent. As regards the entry on 8 Furthermore, investigations on the incident were actually
January, he alleged that it was merely due to oversight or conducted on 9 January 1993 and 11 January 1993.
carelessness on his part. - Respondent was notified on 14 January 1993 of the
- Finding Santos' explanation unsatisfactory, NSC dismissed him management’s decision to terminate his services.
on the ground of falsification of his DTR, which act was inimical - It is clear that the minimum requirements of due process have
to the company and constituted dishonesty and serious been fulfilled by petitioner.
misconduct. - That the investigations conducted by petitioner may not be
- Santos filed a complaint for illegal dismissal and non-payment considered formal or recorded hearings or
of back wages, premium pay for holidays and rest days, night investigations is immaterial.
shift differential pay, allowances, separation pay, moral - A formal or trial type hearing is not at all times and in all
damages and attorney’s fees. instances essential to due process, the requirements of which
- The Labor Arbiter found that Santos was dismissed on legal are satisfied where the parties are afforded fair and reasonable
grounds although he was not afforded due process, hence, NSC opportunity to explain their side of the controversy. It is
was ordered to indemnify him P1,000.00. deemed sufficient for the employer to follow the natural
- NSC appealed to the NLRC which affirmed the Labor Arbiter. sequence of notice, hearing and judgment.
- NSC imputes grave abuse of discretion to the NLRC in Disposition Petition was dismissed.
affirming the Labor Arbiter’s award of night shift differentials
and P1,000.00 indemnity for alleged violation of due process. It LA CARLOTA PLANTERS ASSN INC V NLRC
contends that the question of non-payment of night shift [PAGE 238]
differentials was never raised as an issue nor pursued and
proved by Santos in the proceedings before the Labor Arbiter;
that Santos was already paid his night shift differentials, and LAVADOR V “J” MARKETING CORP
any further payment to him would amount to unjust 497 SCRA
enrichment; and, that the P1,000.00 indemnity is totally SANDOVAL-GUTIERREZ; June 28, 2005
unjustified as he was afforded ample opportunity to be heard.
NATURE
ISSUES
Petition for review on certiorari
1. WON the complainant should be awarded a night shift
differential
FACTS
2. WON the requirements of due process substantially were
- January 7, 1991: Elsie T. Lavador was employed by “J”
complied with in dismissing the worker
Marketing Corporation as a daily paid worker. Eventually, she
was promoted as assistant cashier in respondent’s branch office
HELD
at Butuan City, receiving a monthly salary of P3,834.00.
1. YES
- Claiming that respondent failed to remit the P1,000.00
- The fact that Santos neglected to substantiate his claim for
payment of Robert Braza; to issue official receipt for the
night shift differentials is not prejudicial to his cause.
P1,259.00 check payment of Chelito M. Delliva; and to apply the
- The burden of proving payment rests on petitioner NSC.
same to his account, respondent issued inter-office memoranda
Santos’ allegation of non-payment of this benefit, to which he is
dated June 9, 1999 and August 23, 1999 charging petitioner
by law entitled, is a negative allegation, which need not be
with misappropriation and directing her to submit a written
supported by evidence unless it is an essential part of his cause
explanation. In the meantime, respondent reassigned her as
of action.
receptionist.
Labor Law 1 A2010 - 44 - Disini
- September 1, 1999: after evaluating the evidence against recognition of this fundamental right granted to the latter
petitioner, respondent issued a notice terminating her services under the Labor Code and its Implementing Rules.”
for loss of trust and confidence. - In this case, the dismissal of petitioner from the service is due
- Lavador filed with the Office of the Labor Arbiter a complaint to dishonesty or a just cause. But due process was not observed
for illegal dismissal against respondent and Rogelio U. Soyao, as no hearing was conducted despite her request. Thus,
its Executive Vice President and General Manager. respondents should be held liable for violation of her right to
- Labor Arbiter rendered a Decision finding that petitioner was due process and should pay her indemnity in the form of
not illegally dismissed from the service but ordering nominal damages, pursuant to our ruling in Agabon, which we
respondents to pay her P12,392.73 as salary differential and fix at P20,000.00.
P1,239.27 attorney’s fees. Disposition Petition is GRANTED.
- Upon appeal, the NLRC rendered a Decision affirming with
modification the Decision of the Labor Arbiter in the sense that
the award of salary differential and attorney’s fee is deleted.
Petitioner's MFR was denied.
- On appeal, CA rendered a Decision affirming with modification
the assailed NLRC Decision. While the said court upheld the SEPARATE OPINION
termination of petitioner’s employment, however, it ordered
respondents to pay her P10,000.00 as damages for violating her
right to due process. Petitioner's MFR was denied. PANGANIBAN
- reiterates his dissent in Agabon v. NLRC & Serrano v. NLRC
ISSUE that a violation of due process should be sanctioned by
WON petitioner was deprived of her right to due process reinstatement and back wages, not merely nominal damages.

HELD
YES
POSITION PAPER
- Section 2, Rule XXIII, Book V of the Implementing Rules of the
Labor Code provides fro the standards of due process and SHOPPES MANILA INC V NLRC (CAYUCA & TORNO)
requirements of notice to be followed in all cases of termination
of employment. 419 SCRA 354
- Santos vs. San Miguel Corporation: Procedural due process CALLEJO; January 14, 2004
requires the employer to give the employee two notices. First is
the notice apprising him of the particular acts or omissions for NATURE
which his dismissal is sought. Second is the subsequent notice Petition for review of decision of CA.
informing him of the employer’s decision to dismiss him.
- Homeowners Savings and Loan Association, Inc. vs. NLRC: FACTS
Actual adversarial proceeding becomes necessary only for - Shoppes Manila is a domestic corporation engaged in
clarification or when there is a need to propound searching garments manufacturing using the brand name “KAMISETA.”
questions to unclear witnesses. This is a procedural right which - On May 6, 1994, the petitioner employed private respondent
the employee must, however, ask for. It is not an inherent right. Lorie Torno as trimmer In April 1997 the private respondent and
- Petitioner requested that an investigation be conducted but a co-employee, Maricar Buan, were tasked to handle the
respondents vehemently refused. Clearly, petitioner was inventory of finished products.
deprived of her right to due process. - Shoppes Manila received information from the head of its
- Agabon vs. National Labor Relations Commission: production department that Buan and the private respondent
Procedurally, (1) if the dismissal is based on a just cause under had been stealing “KAMISETA” items from the factory.
Article 282, the employer must give the employee two written - On July 30, 1997, the private respondent’s supervisor, Ms.
notices and a hearing or opportunity to be heard if requested by Myrasol O. Silva, conducted the inspection and submitted a
the employee before terminating the employment: a notice report to the effect that she found Kamiseta property in Torno’s
specifying the grounds for which dismissal is sought, a hearing residence. Shoppes Manila issued a disciplinary action form
or an opportunity to be heard and after hearing or opportunity suspending the private respondent indefinitely without pay. On
to be heard, a notice of the decision to dismiss; x x x. August 25, 1997, a notice of dismissal was addressed to the
- From the foregoing rules four possible situations may be private respondent specifying the charge against her.
derived: (1) the dismissal is for a just cause under Article 282 of - Torno failed to appear during the scheduled hearing.
the Labor Code, for an authorized cause under Article 283, or Consequently, the petitioner decided to dismiss the private
for health reasons under Article 284, and due process was respondent from her employment. Despite mandatory
observed; (2) the dismissal is without just or authorized cause conferences, the parties did not reach an amicable settlement.
but due process was observed; (3) the dismissal is without just - In due course, the parties submitted their respective position
or authorized cause and there was no due process; and (4) the papers and replies. The petitioner filed a motion for the labor
dismissal is for just or authorized cause but due process arbiter to conduct a formal investigation on its claim that a full
was not observed. blown hearing during which the witnesses can be cross-
xxx In the fourth situation, the dismissal should be upheld. examined by the opposing counsel was necessary to ascertain
While the procedural infirmity cannot be cured, it should not the truth.
invalidate the dismissal. However, employer should be held - LA Tumanong (labor arbiter given jurisdiction over the case)
liable for non-compliance with the procedural requirements of was replaced by LA Cuyuca who issued an order declaring that
due process. the case was submitted for decision. The petitioner filed a
xxx The violation of the petitioners’ right to statutory due manifestation and motion informing LA Cuyuca that a formal
process by the private respondent warrants the payment of hearing had been set by LA Tumanong and requested that the
indemnity in the form of nominal damages. The amount of case be set for hearing anew. However, no action was taken by
such damages is addressed to the sound discretion of the LA Cuyuca on the said motion. In August 1998 LA Cayuca
court, taking into account the relevant circumstances. rendered a decision in favor of Torno, holding that she was
xxx Considering the prevailing circumstances in the case at illegally dismissed. LA Cuyuca declared that the private
bar, we deem it proper to fix it at P30,000.00. We believe respondent was denied of her right to due process before she
this form of damages would serve to deter employers from was dismissed from her employment and that the petitioner
future violations of the statutory due process rights of failed to show that it notified the private respondent of the
employees. At the very least, it provides a vindication or charges against her.
Labor Law 1 A2010 - 45 - Disini
- Shoppes Manila appealed to the NLRC, arguing that LA the petitioner’s office to get the money, the respondent denied
Cuyuca’s failure to conduct a hearing deprived the petitioner of he had it. On June 25, 1993, the Guerreros came back together
its vested right; consequently, her decision was null and void. with Tanoy. This time, the respondent acknowledged he had the
NLRC dismissed the appeal. money but could not give it to them then. On June 29, 1993, he
Petitioner’s Claim returned US$800 to Guerrero’s father. The respondent also
- When LA Tumanong agreed to conduct a formal hearing of the issued a promissory note on the balance. The Guerreros
case and, indeed, set the case for hearing, the petitioner reported the matter to the Senior Crewing Manager, who
thenceforth acquired a vested right. immediately paid the deficiency. Respondent was served with a
notice giving him 72 hours to respond to the Guerreros’
ISSUE complaint, and placed on preventive suspension immediately.
WON Shoppes Manila had a vested right to a formal hearing - Respondent averred that Tanoy had approached him on May
because the first labor arbiter granted its motion (This case is 28, 1993, but he refused to accept the money due to the
under Position Paper as Requirement in the outline) petitioner’s policy against unauthorized handling of remittances
from its seamen. When the Guerreros went to his office, he
HELD informed them that he did not have the money, and on June 23,
NO, Shoppes Manila is not entitled to said right. 1993, Tanoy returned and begged him to accept the money
Ratio The holding of a formal hearing or trial is discretionary since he was leaving for the Visayas and Guerrero’s wife would
with the labor arbiter and is something that the parties cannot pick it up the following day. She did not come so he brought the
demand as a matter of right. money home. On June 25, 1993, the Guerreros went to his
- The requirements of due process are satisfied when the office but he advised them to come back since the money was
parties are given the opportunity to submit position papers in his house. The respondent then brought back the money to
wherein they are supposed to attach all the documents that his office and placed it inside his drawer. When the Guerreros
would prove their claim in case it be decided that no hearing returned on June 29, 1993, he discovered that US$200 was
should be conducted or was necessary. missing. He gave them the US$800 and promised to return the
Reasoning US$200. The respondent later learned that the Guerreros
- Pursuant to Section 5, Rule V of the New Rules of Procedure of submitted to the Senior Crewing Manager a complaint against
the NLRC, the labor arbiter has the authority to determine him. On July 2, 1993, he reimbursed the petitioner the balance
whether or not there is a necessity to conduct formal hearings of US$200.
in cases brought before him for adjudication. - Not finding the explanation acceptable, the petitioner
- It is entirely within the authority of the labor arbiter to decide dismissed Zialcita. Respondent filed a complaint for illegal
a labor case before him, based on the position papers and dismissal with money claims and damages before the NLRC.
supporting documents of the parties, without a trial or formal The Labor Arbiter ordered respondent to reinstate the
hearing. complainant. The NLRC vacated the decision on the ground that
- The order of LA Tumanong granting the petitioner’s motion for the case was decided prematurely without affording the
a hearing of the case was not conclusive and binding on LA petitioner the opportunity to present rebuttal evidence. Upon
Cuyuca who had the discretion either to hear the case before remand, the Labor Arbiter dismissed the complaint for lack of
deciding it, or to forego with the hearing (if in her view, there merit. The NLRC reversed the Arbiter’s decision. The CA
was no longer a need therefore as the case could be resolved affirmed the NLRC, finding that the date when the respondent
on its merits based on the records). received the money from Tanoy was pivotal. If he received it on
- The Court affirms the decision of the CA that Torno was not May 27, 1993, he would be guilty of gross misconduct for giving
legally dismissed. In order to effect a valid dismissal, the law the Guerreros a run-around. But if he received it only on June
requires that (a) there be just and valid cause as provided 23, 1993, the charge of gross misconduct against him would
under Article 282 of the Labor Code; and (b) the employee be fail. Since petitioner failed to show what sanction is imposed in
afforded an opportunity to be heard and to defend himself. its policies for the cited violation, the appellate court upheld the
Shoppes Manila had failed to show that it had complied with the NLRC ruling that the respondent should be reinstated and
two-notice requirement: (a) a written notice containing a punished only with 1 month suspension.
statement of the cause for the termination to afford the
employee ample opportunity to be heard and defend himself ISSUES
with the assistance of his representative, if he so desires; (b) if 1. WON Tanoy’s affidavit should be given credence although he
the employer decides to terminate the services of the was not cross-examined
employee, the employer must notify him in writing of the 2. WON there is just cause to dismiss respondent
decision to dismiss him, stating clearly the reason therefor
Disposition Petition is dismissed, and decision of CA is HELD
affirmed. 1. YES
Ratio Trial-type hearings are not required in labor cases and
these may be decided on verified position papers, with
C.F. SHARP & CO V ZIALCITA
supporting documents and their affidavits. It is not necessary
495 SCRA 387 for the affiants to appear and testify and be cross-examined by
QUISUMBING; July 17, 2006 the counsel for the adverse party. Be that as it may, Tanoy’s
affidavit is still insufficient to establish that the respondent was
NATURE guilty of gross misconduct as Tanoy failed to allege the specific
Petitioner seeking the reversal of the Decision of the CA date when he gave the money to the respondent. There is no
dismissing its petition for certiorari against the NLRC, as well as indubitable proof that as of June 14, 1993, respondent already
the Resolution denying its motion for reconsideration had the money.
2. NO
FACTS Ratio To be a valid ground for dismissal, loss of trust and
- Petitioner C.F. Sharp & Co., Inc. hired respondent Renato confidence must be premised on the fact that the employee
Zialcita as a clerk in its Crewing Department. It promoted him to concerned is invested with delicate matters, such as the
Assistant Crewing Manager and tasked him to process shipping handling or care and protection of the property and assets of
papers of the petitioner’s seamen. The petitioner alleged that the employer. It was not shown that respondent handled
seaman Marcial Tanoy returned to the country bringing with company property and assets. Respondent was remiss in his
him US$1,000 from another seaman, Fernando Guerrero. On duties when he received the money, failed to turn it over to the
May 27, 1993, Tanoy gave the money to respondent Zialcita. proper custodians, and failed to produce the entire amount
On June 14, 1993, when Guerrero’s father and sister came to when it was finally claimed. However, dismissal is
Labor Law 1 A2010 - 46 - Disini
incommensurate to the offense committed, especially in the
absence of any malicious intent or fraud on the respondent’s
part.
Obiter GLAXO WELLCOME PHILIPPINES INC V
- In termination cases, the employer bears the onus of proving NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA
that the dismissal was for just cause. When the breach of trust 453 SCRA 256
or loss of confidence alleged is not borne by clearly established PANGANIBAN; March 11, 2005
facts, as in this case, such dismissal on the cited grounds
cannot be allowed.
Disposition petition is DENIED. The assailed Decision of the NATURE
CA is AFFIRMED. Petition for Review of the decision of the CA

FACTS
FAILURE OF DUE PROCESS - Union NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA (NEW-
DFA) filed a Petition for Certification Election with the DOLE-NCR
seeking to represent the bargaining unit comprised of all the
EFFECT OF FAILURE – SUBSTANTIVE – regular rank-and-file employees of [petitioner] company GLAXO-
WELLCOME.
PROCEDURAL - Several days before the election GLAXO-WELLCOME issued a
circular relative to the improvement of the company’s
retirement policy bringing different employees to different
AGABON V NLRC resorts.
[PAGE 35] - In the meantime, GLAXO-WELLCOME adopted a new Car
Allocation Policy. Under the provisions of the said car plan, a
ALADDIN V CA prioritization schedule in the assignment of company vehicles is
to be fixed based on the sales performance of the employees.
460 SCRA 234 Pursuant to the same, several company cars had to be re-
AZCUNA; June 21, 2005 assessed and re-assigned in favor of other employees more
qualified under the priority list. Incidentally, included among the
NATURE vehicles that had to be re-allocated in accordance with the
Petition for certiorari priority schedule of the new car plan were [those] of union
officers Norman Cerezo and Jossie Roda de Guzman.
FACTS - Accordingly, a memorandum was sent by the company to
- Petitioner Aladdin Transport Corp hired Rafael Rodriguez in [Respondent] de Guzman advising her that she would have to
1990 as an accounting clerk. In 1997, respondent alleged that surrender the vehicle assigned to her in light of the new car
her sister had a fight with their personnel manager. He was policy. De Guzman refused to turn over said car and instead
then barred from entering the company’s premises. He was sought reconsideration from the company’s National Sales
then asked to take a leave of absence for a month. Manager. The latter did not accede to de Guzman’s request.
- While he was on leave, he received a letter from their De Guzman, thru counsel, wrote the company, asking that the
personnel manager asking him to shed light about the SSS withdrawal of her car be held in abeyance. The company,
contribution that he allegedly did not remit. Respondent merely however, rejected her petition. On December 7, 1990, de
said he tried to report to the office, but petitioner did not allow Guzman received another memorandum from the company,
him. Later he received a letter informing him of his preventive again instructing her to return the vehicle. The following day,
suspension. He wrote a letter to the President of the company de Guzman sent a letter to the company reiterating her plea for
but did not receive any reply. He then filed a complaint before the suspension of the withdrawal of her car. On December 17,
the labor arbiter. 1990, a final warning was sent to de Guzman instructing her to
- Petitioner alleges that respondent used company funds and return her assigned vehicle or else she would be charged for
lent them with interest to his co-employees. Petitioner also insubordination and be dismissed. Finally, because of de
alleges that respondent has illegally been making payroll Guzman’s staunch refusal to comply with the order, through a
salary deductions and has failed to remit SS contribution of his letter dated December 20, 1990, she was cited, and at the
co-employees. same time, terminated for gross insubordination. Norman
- The Labor Arbiter then ruled in favor of the petitioner. NLRC Cerezo was of the same case.
affirmed. The CA, however, found that even though there was - The Union alleged undue interference due to a massive
just cause in the dismissal, respondent was not given due electioneering and manipulative acts of GLAXO-WELLCOME
process. It ordered the payment of backwages and prior to and during the certification election and that the new
reinstatement. Car Allocation Policy adopted by the company was intended to
harass, retaliate and discriminate against union officers and
ISSUE members. Union also challenged the legality of the suspension
WON the CA erred in ordering the payment of backwages and dismissal of two of its officers, namely: Norman Cerezo and
Jossie Roda de Guzman. It argued that the suspension and
HELD dismissal were effected without any prior hearing (Which was
YES the only sticking issue in this case).
- Recently, this Court has had occasion to revisit the Serrano - Labor Arbiter dismissed the charges of unfair labor practice,
doctrine and the present rule is set forth in the Agabon v. NLRC, illegal dismissal and illegal suspension filed against GLAXO-
et al.,[5] namely, that where the dismissal is based on a just WELLCOME by union. NLRC affirmed the dismissal of the
cause, the failure to give the required notice does not invalidate complaint. NLRC likewise denied the motion for
the same, but merely holds the employer liable for damages for reconsideration.The CA affirmed the ruling of the National Labor
violating said notice of requirement. The amount of damages Relations Commission (NLRC) adopted the findings of the labor
was fixed at Thirty Thousand Pesos (P30,000) by way of nominal arbiter. It held that respondents had failed to proffer
damages. convincing evidence to prove that petitioner’s assailed
Disposition Petition GRANTED acts were ill-motivated and deliberately orchestrated to
interfere with or otherwise influence the conduct of the
certification elections.
Labor Law 1 A2010 - 47 - Disini
- Moreover, the CA ruled that there was nothing sent them a final warning, to which they also ably replied, it
objectionable per se about the programs or incentive served them a letter terminating their employment.
schemes that the company had provided for the - Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of
employees. The appellate court said that the grant of Rule 1 of Book VI of the Implementing Rules require strict literal
benefits to the employees, as well as the adoption of the compliance with the stated procedure; only substantial
Car Allocation Policy, constituted a proper exercise of compliance is needed. On this basis, the Memoranda sent to
the company’s management prerogatives. This plain respondents may be deemed to have sufficiently conformed to
company practice had been set up to make petitioner’s the first notice required under the Implementing Rules. The
employee benefits competitive with those of other Memoranda served the purpose of informing them of the
pharmaceutical corporations. De Guzman and Cerezo pending matters beclouding their employment and of extending
were among those adversely affected by the policy, to them an opportunity to clear the air. In fact, not only were
because they had failed to meet the sales performance respondents duly informed of the particular acts for which their
required thereunder, not because they were officers of dismissal was sought; they were, in truth and in fact, able to
the union. defend themselves and to respond to the charges with the
- However, the CA held that the dismissal of De Guzman assistance of a counsel of their own choosing. Respondents
and the suspension of Cerezo had not been validly were amply informed of the cause of their dismissal. Their
effected. Opining that their defiant actuation toward correspondence with petitioner took almost a month, which was
management constituted willful disobedience, which was a just sufficient “cooling time” within which the parties could have,
cause for the termination of their employment, the appellate and in fact had, tried to settle the problem amicably. Moreover,
court conceded the validity of the dismissal and suspension. petitioner’s Memoranda amply gave them a distinct, different
Nonetheless, the CA said that those actions (dismissal and and effective first level of remedy (which was to surrender the
suspension) effected by petitioner could not be deemed vehicles) to protect their jobs. Furthermore, they were still able
legal, because it had failed to comply with procedural to file a Complaint with the labor arbiter, with better knowledge
due process mandated by the Labor Code and with the of the cause of their dismissal, with longer time to prepare their
two-notice requirement under the Implementing Rules. case, and with greater opportunity to take care of the financial
According to the CA, petitioner did not accord private needs of their family pendente lite.
respondents the benefit of a proper charge, an opportunity to - Agabon v. NLRC effectively reverted to Wenphil and ruled that
defend themselves, and a formal investigation. a dismissal due to abandonment -- a just cause -- was not illegal
- The appellate court opined that the Memoranda were merely or ineffectual, even if done without due process; but that the
demands for respondents to comply with the order to turn over employer should indemnify the employee with “nominal
their assigned cars. Those Memoranda merely intimated the damages for non-compliance with statutory due process.”
possibility that De Guzman and Cerezo might be charged and - To stress, if the dismissal is based on a just cause under
dismissed if they continued to disobey the order. Article 282 of the Labor Code, the employer must give the
employee (1) two written notices and (2) a hearing (or at least,
ISSUE an opportunity to be heard). The first notice is intended to
WON the Court of Appeals erred in ruling that petitioner did not inform the employee of the employer’s intent to dismiss and the
observe procedural due process in terminating and suspending particular acts or omissions for which the dismissal is sought.
the employment of de Guzman and Cerezo, respectively The second notice is intended to inform the employee of the
employer’s decision to dismiss. This decision, however, must
HELD come only after the employee has been given a reasonable
YES, since there was substantial compliance through the period, from receipt of the first notice, within which to answer
memoranda. the charge; and ample opportunity to be heard with the
- In the present case, petitioner sent respondents a total of assistance of counsel, if the employee so desires.
three Memoranda stating that their stubborn refusal to comply - The twin requirements of (a) two notices and (b) hearing are
with the car policy and to surrender the subject vehicle necessary to protect the employee’s security of tenure, which is
constituted gross insubordination, for which they could be enshrined in the Constitution, the Labor Code and related laws.
dismissed. The December 5, 1990 Memorandum sent to Disposition Petition is GRANTED and the challenged Decision
Respondent De Guzman specified her acts that constituted REVERSED. The Decision of the NLRC dated August 28, 1998,
gross insubordination. affirming that of the labor arbiter dated August 15, 1995, is
- To each Memorandum, respondents were able to reply and REINSTATED.
expla sincein, with the aid of their counsel, why they had
refused to return the vehicles; and, in effect, why they should
not be dismissed for gross insubordination. Initially, they asked
petitioner not to implement the car policy in the light of the
Complaint and the Motion for the Issuance of a Writ of
Preliminary Injunction that they had filed. They explained that 2. OTHER PROCEDURAL MATTERS
they could not work effectively and efficiently for the company
without the cars that had been assigned to them.
- In their written replies to petitioner’s succeeding Memoranda BURDEN AND DEGREE OF PROOF
-- which reiterated that their actions constituted gross
insubordination and could result in their termination --
respondents, still through their counsel, reasoned that they BURDEN
were not claiming ownership of the car. They said that their
refusal to surrender the car to the company could not be EQUITABLE PCI BANK V CAGUIOA
denominated as gross insubordination, because they were
merely acting upon the advice of their counsel. They added 466 SCRA 658
that, to enjoin the implementation of the car policy, they had PANGANIBAN; August 12, 2005
already lodged with the NLRC a complaint for unfair labor
practice. NATURE
- Their counsel further alleged that De Guzman was Petition for Review of CA Decision
apprehensive that she might not immediately be given a
replacement upon the return of the car. He stressed that the FACTS
vehicle was necessary to prevent adverse effects on the sales - Generosa A. Caguioa was a Senior Manager of Equitable PCI
performance of respondents. Ultimately, after petitioner had Bank. She had worked for said bank for 35 years. On Feb 3,
Labor Law 1 A2010 - 48 - Disini
2000, George L. Go, respondent’s Chairman of the Board, called of the Bank) and uncontroverted by Caguioa. Such evidence is
her attention to the complaint of client Antonio Jarina regarding adequate to justify the conclusion that respondent was indeed a
an ‘accounting activities,’ involving her participation, which cost direct participant in and beneficiary of the unauthorized check-
him considerable damage. It was about bank checks, which discounting transactions.
were issued to Jarina in exchange for cash at a discounted rate 2. YES
-- all by means of his own capital. Jarina initially benefited from - It is not necessary that the affidavits and other documents
the ‘new transactions’ but in August 1997, no further interest presented conform with the technical rules of evidence since in
was credited into his account and his ‘principal’ had not been labor cases the rules of evidence prevailing in courts of law or
returned to him. The ‘scheme failed,’ resulting in his loss of equity are not controlling. It is sufficient that the documents
investments of around P4.3M. She denied any knowledge of the submitted by the parties have a bearing on the issue at hand
discounting activities. - VP and Internal Auditor Nuguid directed and support the positions taken by them. Therefore, the
her to explain and show cause why she ‘should not be information provided by Magadia, as corroborated by the Sworn
administratively/financially dealt with the bank’s Code of Statement of Sibayan, and the Complaint of Jarina, should be
Conduct’ in connection with the said incidents. She pointed to accorded probative value.
an Arlene Pascual as the culprit and claimed that Jarina picked - See A221 of LC and Sec 3 of Rule V of the New Rules of
on her as Ms. Pascual had already resigned and moved to the Procedure of the NLRC
US. But a certain Evelyn Magadia testified that Arlene would not Disposition Petition GRANTED and the assailed Decision and
have acted on her own had it not been for the instigation of Resolution REVERSED and SET ASIDE. The Decision of the labor
Caguioa and Ruth Amador. Magadia even declared that she arbiter is REINSTATED.
liaised for Arlene Pascual in the check discounting transactions,
and Arlene would sometimes instruct her to go to the Bank’s
CF SHARP & CO INC V ZIALCITA
New York branch in order to pick up and deliver envelopes
containing cash to complainant Genie Caguioa. Magadia stated [PAGE 290]
that the envelopes containing cash were the complainant’s
shares in the proceeds of the check discounting activity. DEGREE
- After evaluation and investigation, bank found her guilty of
‘having personally participated in the check discounting activity
of Mr. Antonio Jarina, and therefrom, personally CENTRAL PANGASINAN ELEC COOP INC V
benefited/profited to the prejudice of the bank.’ She was MACARAEG
dismissed with automatic forfeiture of benefits. She then filed
complaint. LA upheld the dismissal of Caguioa, finding her to [PAGE 195]
have violated its Code of Conduct. NLRC reversed ruling that
dismissal was illegal and invalid. CA held that Caguioa was SALVADOR V PHIL MINING SERVICE CORP
illegally dismissed for lack of clear and convincing evidence [PAGE 195]
which establish her direct participation in the alleged check
discounting activity/transaction remotely detrimental to the
business and interest of the petitioner bank. Revelations made PRESCRIPTION PERIOD
by Evelyn Magadia were insufficient to justify the dismissal.

ISSUES AZCOR MANUFACTURING INC V NLRC


1. WON the totality of the evidence proves that the bank legally [PAGE 197]
terminated the employment of respondent
2. WON CA gravely erred in ruling that the information provided
by Mrs. Magadia and the complaint of Mr. Jarina were hearsay OFFER TO REINSTATE
HELD
1. YES
RANARA V NLRC
- The Court is not proscribed from determining and resolving 212 SCRA 631
factual issues where, as in the present case, (a) the findings CRUZ; August 14, 1992
and conclusions of the labor arbiter, on one hand, and the NLRC
and the CA, on the other, are inconsistent on material and NATURE
substantial points; (b) the findings of the NLRC and the CA are Appeal from NLRC decision
capricious and arbitrary; and (c) the CA’s findings that are
premised on a supposed absence of evidence are in fact FACTS
contradicted by the evidence on record. - Petitioner Carlos Ranara had been working as a driver with
- Due process requires that in reaching a decision, a tribunal respondent Oro Union Construction Supply, when he was told by
must consider the entire evidence presented. Thus, it must (1) Fe Leonar, secretary of the other private respondent, Jimmy
accord all contending parties the opportunity to be heard and Ting Chang, not to come back the following day. Thinking that
(2) consider every piece of evidence presented in favor of each she was only joking, he reported for work as usual on Nov. 11,
party. 1989, but was surprised to find some other person handling the
- As the employer, petitioner bank has the burden of proving vehicle previously assigned to him. It was only then that Ranara
the legality of respondent’s dismissal. The petitioners’ case realized that he had really been separated. When he
rises or falls on the strength of the employer’s evidence, not on approached Leonar to ask why his services were being
the weakness of the employee’s defense. The employer, terminated, she replied that he was hard headed and that
however, needs only to adduce substantial evidence, which has Chang sis not like his services.
been defined to be such relevant evidence that a reasonable - Ranara filed a complaint 3 days later with DOLE for illegal
mind might accept as adequate to support a conclusion. dismissal, reinstatement with full back wages, underpayment of
- The records show that more than substantial evidence wages, overtime pay, non-payment of 13th month pay, service
supports LA’s finding that Caguioa had direct participation in incentive leave, separation pay and moral damages.
the check-discounting scheme, and that her dismissal was valid. - The private respondents denied charges, contending that the
Constituting substantial evidence were the Sworn Statement of petitioner had not been illegally dismissed. Chang said had not
Sibayan on the investigation he conducted; the Complaint of authorized Leonar, or even his mother who was the officer-in-
Jarina; the audit trail; and the schedule of withdrawals and charge during his absence at the time, to terminate Ranara's
deposits in Jarina’s account, a fact sworn to by Vivian Tiu (a VP
Labor Law 1 A2010 - 49 - Disini
employment. The truth was that it was Ranara who abandoned - PHESCHEM INDUSTRIAL CORPORATION employed respondent
his work when he stopped reporting from Nov. 11, 1989. PABLITO V. MOLDEZ as operator of its payloader and bulldozer
- LA held that Ranara had not been illegally dismissed. The at its quarrying site in Palompon, Leyte
decision stressed that at the hearing of December 28, 1989, - He was suspended from work without pay for a period of
Chang offered to re-employ the petitioner as he was needed in seven (7) days, without being informed of its reason. he
the store but the latter demurred, saying he was no longer reported back to work only to be told that the President of the
interested. This attitude, according to the Labor Arbiter, showed corporation, Tomas Y. Tan, was ill and his suspension had been
that it was the petitioner who chose to stop working for Chang extended for another 7 days without pay. Again, no reason was
and not the latter who terminated his employment. The decision offered for said decision. After the lapse of the extension,
was affirmed on appeal by NLRC. Hence, this appeal. respondent was not allowed to return to work. When he inquired
about the status of his employment, Viacrusis assured him that
ISSUE he will be rehired in due time. Eight (8) months passed but
WON petitioner Ranara did not abandon his work and was respondent received no word from petitioner
illegally dismissed - filed a complaint against petitioner for illegal suspension and
HELD dismissal. He prayed for reinstatement, or if reinstatement is
YES not possible, an award of separation pay
- We reject as a rank falsity the private respondents' claim that -corporation averred that dismissal for just cause. They said
the petitioner had not been illegally dismissed and in fact that the bulldozer operated by Moldez malfunctioned due to his
abandoned his work. negligence thus resulting to their loss of more or less 500,000
- On illegal dismissal: The secretary would not have presumed due to repair and non-utilization.
to dismiss him if she had not been authorized to do so, - Labor Arbiter held petitioner guilty of illegal dismissal and
considering the seriousness of this act. It is worth noting that ordered the reinstatement of respondent and payment of his
neither Chang's mother, who was the officer-in-charge in his backwages. This was affirmed by NLRC and CA
absence, nor Chang himself upon his return, reversed her act
and reinstated the petitioner. ISSUE
- It is clear that the petitioner was illegally dismissed without WON CA erred in affirming decisions and WON Moldez is
even the politeness of a proper notice. Without cause and entitled to separation pay in spite of his reinstatement
without any investigation, formal or otherwise, Ranara was
simply told that he should not report back for work the following HELD
day. When he did so just the same, thinking she had only - Decision of CA is affirmed. However, the circumstances in the
spoken in jest, he found that somebody else had been case at bar do not warrant the award of separation pay to
employed in his place. When he protested his replacement, he respondent in lieu of reinstatement to his former position
was even scolded for being "hard-headed" and not accepting - The legal consequences of an illegal dismissal are
his dismissal. reinstatement of the employee without loss of seniority rights
- On abandonment: The charge of abandonment does not and other privileges, and payment of his full backwages,
square with the recorded fact that three days after Ranara's inclusive of allowances, and other benefits or their monetary
alleged dismissal, he filed a complaint with the labor equivalent. The law intended reinstatement to be the general
authorities. The two acts are plainly inconsistent. Neither can rule. It is only when reinstatement is no longer feasible that
Ranara's rejection of Chang's offer to reinstate him be legally payment of separation pay is awarded to an illegally dismissed
regarded as an abandonment because the petitioner had been employee
placed in an untenable situation that left him with no other - Payment of separation pay as a substitute for reinstatement is
choice. allowed only under exceptional circumstances, (1) when
- On Offer to Reinstate: The fact that his employer later reasons exist which are not attributable to the fault or beyond
made an offer to re-employ him did not cure the vice of his the control of the employer, such as, when the employer, who is
earlier arbitrary dismissal. The wrong had been committed and in severe financial strait and has suffered serious business
the harm done. Notably, it was only after the complaint had losses, has ceased operations, implemented retrenchment, or
been filed that it occurred to Chang, in belated gesture of good abolished the position due to the installation of labor-saving
will, to invite Ranara back to work in his store. Chang's sincerity devices; (2) when the illegally dismissed employee has
is suspect. We doubt if his offer would have been made if contracted a disease and his reinstatement will endanger the
Ranara had not complained against him. At any rate, sincere or safety of his co-employees; or, (3) where strained relationship
not, the offer of reinstatement could not correct the earlier exists between the employer and the dismissed employee
illegal dismissal of the petitioner.
Disposition Petition GRANTED. Petitioner is entitled to
NUEVA ECIJA ELECTRIC CORP V NLRC
separation pay and 3 years' back wages in lieu of
reinstatement. [PAGE 229]

LAKPUE DRUG INC V BELGA


G. SANCTIONS AND REMEDIES [PAGE 208]

14.07 GENERAL RULE GREAT SOUTHERN MARITIME SERVICES CORP V


ACUNA
425 SCRA 422
NATURE OF REMEDIES – TWIN AUSTRIA-MARTINEZ; February 28, 2005
REMEDIES
NATURE
PHESCHEM V MOLDEZ Petition for Certiorari
458 SCRA 339 FACTS
PUNO; May 9, 2005 - Petitioner Great Southern Maritime Services Corporation is a
manning agency organized and existing under Philippine laws. It
FACTS is the local agent of petitioner Ferry Casinos Limited. Petitioner
Labor Law 1 A2010 - 50 - Disini
Pioneer Insurance and Surety Corporation is the surety WON the Petition for Certiorari filed by respondents should have
company of petitioner GSMSC. been denied outright
- On October 7, 1993, respondents Jennifer Anne B. Acuña,
Haydee Anne B. Acuña, Marites T. Clarion, Marissa C. Enriquez, HELD
Graciela M. Torralba, and Mary Pamela A. Santiago filed a NO
complaint for illegal dismissal against petitioners before the - Petitioners maintain that the petition for certiorari should have
Philippine Overseas Employment Administration (POEA) merited outright dismissal for non-compliance with the
- Respondents claim that: between the months of March and mandatory requirements of the rules. There is no statement
April 1993, they were deployed by petitioner GSMSC to work as indicating the material dates when the decision of the NLRC
croupiers (card dealers) for petitioner Ferry Casinos Limited was received and when the motion for reconsideration was
under a six-month contract with monthly salaries of US$356.45 filed. Likewise, the certification on non-forum shopping was not
plus fixed overtime pay of US$107 a month and vacation leave signed by respondents but by their counsel. In any event,
pay equivalent to two months salary pro rata, except for petitioners insist that respondents voluntarily resigned from
respondent Jennifer Anne B. Acuña who had a monthly salary of their employment.
US$250.56 plus fixed overtime pay of US$87.17 and vacation - Section 3 of Rule 46 of the Rules of Court provides that there
leave pay equivalent to two months salary pro rata; sometime are three material dates that must be stated in a petition for
in July 1993, Sue Smits, the Casino Manager, informed them certiorari brought under Rule 65: (a) the date when notice of
that their services were no longer needed; considering that the judgment or final order or resolution was received, (b) the
their plane tickets were already ready and they were subjected date when a motion for new trial or for reconsideration when
to harassment, they had no alternative but to sign documents one such was filed, and, (c) the date when notice of the denial
on July 11 and 12, 1993 specifying that they were the ones who thereof was received. This requirement is for the purpose of
terminated their employment; they were repatriated on July 25, determining the timeliness of the petition, since the perfection
1993. of an appeal in the manner and within the period prescribed by
- Petitioners denied the allegations of respondents and averred law is jurisdictional and failure to perfect an appeal as required
that respondents voluntarily resigned from employment. by law renders the judgment final and executory.
- On October 5, 1995, the POEA decided the case against - As a general rule, these requirements are mandatory,
petitioners meaning, non-compliance therewith is a sufficient ground for
- The POEA ruled that the respondents were illegally dismissed the dismissal of the petition.
since petitioners failed to prove that respondents’ voluntarily - In the case before us, the failure to comply with the rule on a
resigned from employment. It held that the alleged resignation statement of material dates in the petition may be excused
letters are only declarations of release and quitclaim. since the dates are evident from the records. A thorough
- Petitioners appealed to the NLRC scrutiny of the records reveals that the January 15, 1997
- NLRC set aside the decision of the POEA and dismissed the decision of the NLRC was received by respondents’ counsel on
complaint for illegal dismissal. The NLRC held that the January 24, 1997. On February 19, 1997, respondents filed a
contested letters are not only declarations of release and motion for reconsideration25 which was denied by the NLRC in a
quitclaim but resignations as well. It further held that there is Resolution dated April 30, 1997.26 Respondents’ counsel
no concrete evidence of undue pressure, force and duress in received the resolution on May 30, 1997 and they filed the
the execution of the resignation letters. The NLRC gave petition for certiorari on July 18, 1997.
credence to petitioners’ claim that respondents pre-terminated - In view of the retroactive application of procedural laws,
their contracts en masse because two of the respondents, Section 4, Rule 65 of the 1997 Rules of Procedure, is the
Haydee Anne B. Acuña and Marites T. Clarion, are now working governing provision. It provides that when a motion for
in Singapore. reconsideration is timely filed, the 60-day period for filing a
- Respondents filed a motion for reconsideration but the NLRC petition for certiorari shall be counted from notice of the denial
denied of said motion. While respondents’ motion for reconsideration
- On July 18, 1997, respondents filed a petition for certiorari was filed 16 days late, the NLRC nonetheless acted thereon and
before us, docketed as G.R. No. 129673. denied it on the basis of lack of merit. In resolving the merits of
- On October 3, 1997, petitioners prayed for outright dismissal the motion despite being filed out of time, the NLRC
of the petition for: (a) failure of respondents to submit a verified undoubtedly recognized that it is not strictly bound by the
statement of the material dates to show that the petition was technicalities of law and procedure. Thus, the 60-day period for
filed on time, and (b) filing a certification on non-forum filing of a petition for certiorari should be reckoned from the
shopping signed only by their counsel. In addition, petitioners date of the receipt of the resolution denying the motion for
argued that the issues raised are factual and there is no reconsideration, i.e., May 30, 1997, and thus, the filing made on
showing that the NLRC committed grave abuse of discretion. July 18, 1997 was well within the 60-day reglementary period.
- On January 27, 1998, the Solicitor General, in lieu of Comment, - As regards the verification signed only by respondents’
manifested that he is unable to sustain the position of the NLRC counsel, this procedural lapse could have warranted the
because the allegation that respondents voluntarily resigned outright dismissal of respondents’ petition for certiorari before
was not substantially established and respondents’ non- the Court of Appeals. However, it must be remembered that the
compliance with the formal requirements of the petition should rules on forum shopping, which were precisely designed to
be waived since the petition is meritorious. promote and facilitate the orderly administration of justice,
- The NLRC filed its own Comment praying for the dismissal of should not be interpreted with such absolute literalness as to
the petition and the affirmance of its decision with finality. It subvert its own ultimate and legitimate objective which is the
argued that in reversing the POEA, it focused its attention on goal of all rules of procedure - that is, to achieve substantial
the correct evaluation of the evidence on record which justice as expeditiously as possible.
substantially showed that petitioners did not dismiss - Needless to stress, rules of procedure are merely tools
respondents but that the latter resigned en masse on July 12, designed to facilitate the attainment of justice. They were
1993. conceived and promulgated to effectively aid the court in the
- The Court referred the petition to the Court of Appeals which dispensation of justice. Courts are not slaves to or robots of
set aside the decision of the NLRC and reinstated the decision technical rules, shorn of judicial discretion. In rendering justice,
of the POEA. courts have always been, as they ought to be, conscientiously
- On July 21, 1999, petitioners filed a motion for reconsideration guided by the norm that on the balance, technicalities take a
but the Court of Appeals denied it in a Resolution dated backseat against substantive rights, and not the other way
September 22, 1999. around. Thus, if the application of the Rules would tend to
frustrate rather than promote justice, it is always within our
ISSUE
Labor Law 1 A2010 - 51 - Disini
power to suspend the rules or except a particular case from its
operation. HELD
- As the Court eloquently stated in the case of Aguam vs. Court YES
of Appeals It is a far better and more prudent course of action Ratio Where an ironhanded application of the rules will result in
for the court to excuse a technical lapse and afford the parties a an unmistakable failure or miscarriage of justice, technicalities
review of the case on appeal to attain the ends of justice rather should be transgressed in order to resolve the case. (Fulgencio
than dispose of the case on technicality and cause a grave v NLRC)
injustice to the parties, giving a false impression of speedy Reasoning
disposal of cases while actually resulting in more delay, if not a - We agree with the ruling of the CA that as a rule, a party who
miscarriage of justice. did not appeal from a decision of a court cannot obtain
- Indeed, where a decision may be made to rest on informed affirmative relief other than that granted in the appealed
judgment rather than rigid rules, the equities of the case must decision. But it is absurd for the NLRC, and for the CA for that
be accorded their due weight because labor determinations matter, to rule that the petitioner was dismissed without a
should not only be secundum rationem but also secundum lawful or valid cause and yet declare that he is not entitled to
caritatem. monetary benefits as provided by law.
- In this case, the Court of Appeals aptly found compelling Obiter
reasons to disregard respondents’ procedural lapses in order to - Under the existing law, an employee who is unjustly dismissed
obviate a patent injustice. from work shall be entitled to reinstatement without loss of
Disposition Petition Denied seniority rights. It must be emphasized, though, that the Court
has declared that there are specific circumstances obtaining
where reinstatement is not a practicable remedy, as
CABATULAN V BUAT
when the relations between the employer and the employee
451 SCRA 234 have been so severely strained that it is no longer fitting to
CALLEJO SR; February 14, 2005 order reinstatement or when the employee decides not to be
reinstated. It must be stressed that the petitioner was charged
NATURE by the respondent spouses with qualified theft and was even
Certiorari on decision and resolution of CA reinstating the May coerced into withdrawing the labor case against them. No other
28, 1997 resolution of NLRC. conclusion may be deduced other than the categorical fact that
antagonism already caused a severe strain in the relationship
FACTS between respondent spouses and petitioner. Separation pay is
- Respondent spouses Julio and Cecilia Cosmiano were engaged the amount that an employee receives at the time of his
in the trucking business under the name “J.C. Trucking”. They severance from the service and is designed to provide the
rented out heavy equipment such as dump trucks, bucket employee with the wherewithal during the period that he is
loaders, fork loaders and log haulers. They hired petitioner as seeking another employment. The grant of separation pay does
operations manager and purchasing officer. not impede an award for backwages as the latter represents the
- On April 8, 1993, respondent spouses and their children went amount of earning lost by reason of unjustified dismissal. A
on a world tour and entrusted the business operations to more equitable settlement, therefore, would be an award of
Cabatulan. separation pay equivalent to at least one month pay for every
- On May 11, 1993, an altercation ensued between petitioner year of service in addition to his full backwages, allowances and
and a certain Isidro Alaan (security aide) regarding the other benefits.
purchase of spare parts. At about 1:30pm of the same day, Dispositive the petition is PARTIALLY GRANTED. The Decision
petitioner was asked to meet Vincent Cosmiano (Julio’s of the Court of Appeals, affirming the Resolution of the NLRC
brother). Before meeting Vincent, Cabatulan passed by the dated May 28, 1997, is AFFIRMED WITH MODIFICATIONS. The
premises of J.C. Trucking but was refused admission by Alaan respondent spouses Julio and Cecilia Cosmiano are ORDERED to
who was armed with an armalite rifle. Vincent Cosmiano pay to the petitioner separation pay equivalent to one month’s
advised Cabatulan not to report for work in the meantime and salary for every year of service in lieu of reinstatement, plus full
await the arrival of respondent spouses. Cabatulan agreed. backwages, without deduction or qualification, counted fro the
- On May 25, 1993, respondent spouses arrived. Petitioner was date of his dismissal until the finality of this decision, and
summoned to their residence and was informed that his indemnity of P2,000.00. No costs.
services were no longer needed.
- On June 11, 1993 petitioner filed a complaint for illegall TRIAD SECURITY & ALLIED SERVICES INC V
dismissal, underpayment of wages, unpaid wages,
proportionate 13th month pay and attorney’s fees against
ORTEGA
respondent spouses. 481 SCRA 591
- LA found for petitioner and granted 126K backwages; 35.7K CHICO-NAZARIO; February 6, 2006
separation pay; 1,750 unpaid wages; 4,985.18 13th month pay,
100K moral damages and 26,843.52 attorney’s fees –totaling NATURE
P295,278.70. Petition seeking to set aside CA decision which denied their
- On May 28, 1997, NLRC affirmed with the modification that petition and lifted a TRO earlier issued
monetary awards reduced to P168,435.18, deleted moral
damages and attorney’s fees reduced. Petitioner didn’t file FACTS
MFR, spouses did. NLRC granted. - Petitioner Triad Security and Allied services is a security
- On Dec 12, 1997, NLRC deleted backwages and accrued agency owned by Anthony Que.
salaries and awarded separation pay and indemnity in lieu - Respondents were formerly employed by Triad Security as
thereof. Petitioner filed MFR to reinstate decision of May 28, security guards
1997. - In March, 1999, respondents filed a complaint against
- On March 14, 2000, CA granted the petition and reinstated petitioners and a certain Gen. Carbonell for
May 28, 1997 decision. Petitioner filed a motion for partial underpayment/nonpayment of salaries, overtime pay, premium
reconsideration praying that he be awarded all the monetary pay for holiday and rest day, service incentive leave pay,
awards and/or benefits under Art. 279 of the Labor Code. holiday pay, and attorney’s fees. The complaint was amended
- On Jan 15, 2001, CA denied the motion. on 20 April 1999 to include the charges of illegal dismissal,
illegal deductions, underpayment/nonpayment of allowance,
ISSUE separation pay, and claims for 13th month pay, moral and
WON petitioner can avail of all the remedies in Art. 279
Labor Law 1 A2010 - 52 - Disini
exemplary damages as well as night shift differential. amounting to lack or excess of jurisdiction; and (3) there is no
- According to respondents: during the time that they were in appeal or any plain, speedy and adequate remedy in the
the employ of petitioners, compensation was below the ordinary course of law.
minimum wage; they were also made to render services - NLRC has the authority to rule on matters involving grave
everyday for 12 hours but were not paid the requisite overtime abuse of discretion that may be committed by a labor arbiter
pay, nightshift differential, and holiday pay. Petitioners failed (ART. 223. APPEAL Decisions, awards, or orders of the Labor
to provide them with weekly rest period, service incentive leave Arbiter are final and executory unless appealed to the
pay, and 13th month pay. So respondents filed a complaint Commission by any or both parties within ten (10) calendar days
before the Labor Standards Enforcement Division of the from receipt of such decisions, awards, or orders. Such appeal
Department of Labor on 6 January 1999. may be entertained only on any of the following grounds:
- Upon learning of the complaint, respondents’ services were (a) If there is prima facie evidence of abuse of discretion on the
terminated without the benefit of notice and hearing. part of the Labor Arbiter.
- Petitioners denied respondents’ claim of illegal dismissal. Reasoning
Petitioners explained that management policies dictate that the - Petitioners CLAIM (based on a limited understanding of ART
security guards be rotated to different assignments to avoid 223): that based on the rules of procedure of the NLRC, the
fraternization; that they be required to take refresher courses order granting the issuance of the 2nd alias writ of execution
at their headquarters. Respondents allegedly refused to could not have been the proper subject of an appeal before the
comply with these policies and instead went on leave or refused NLRC neither could petitioners have sought the remedy of
to report at headquarters. Petitioners claim that respondents certiorari from the NLRC. Petitioners argue that the rules of
worked for only eight hours a day, six days a week and that procedure of the NLRC do not provide for any remedy or
they received their premium pays for services rendered during procedure for challenging the order granting a writ of
holidays and rest day. The service incentive leave of execution; hence, the pertinent provision of the Revised Rules
respondents was allegedly made payable as soon as of Court should apply which in this case is Section 1 of Rule 41.
respondents applied for said benefit. It states:
- Labor Arbiter Jose G. de Vera found in favor of respondents, Section 1. Subject of appeal – An appeal may be taken
ordered the Triad to reinstate the guards, pay backwages, from a judgment or final order that completely disposes of
separation pay in the event reinstatement is not feasible the case, or of a particular matter therein when declared by
- On 18 September 2000, petitioners filed a motion to these Rules to be appealable.
recompute money claims as decreed arguing therein that - No appeal may be taken from:
respondents’ money claims as contained in the 28 February (f) An order of execution;
2000 decision were baseless and that their former counsel was - In all the above instances where the judgment or final order is
not furnished a copy of the computation nor was he allowed to not appealable, the aggrieved party may file an appropriate
submit comments thereon. special civil action under Rule 65.
- On 20 May 2003, petitioners filed before the Court of Appeals - Moreover, Rule III, Section 4 of the Rules of Procedure of the
a petition for certiorari with prayer for the issuance of a NLRC expressly proscribes the filing of a petition for certiorari –
temporary restraining order and/or writ of preliminary SECTION 4. PROHIBITED PLEADINGS & MOTIONS. The following
injunction. pleadings, motions or petitions shall not be allowed in the cases
- In a resolution promulgated on 12 June 2003, the Court of covered by these Rules:
Appeals issued a temporary restraining order enjoining the c) Petition for Certiorari, Mandamus or Prohibition.Therefore,
execution or enforcement of the 23 April 2003 order of the inasmuch as the NLRC had no authority to issue the writ of
labor arbiter. certiorari, recourse to the Court of Appeals was only proper.
- Petitioners’ victory with the Court of Appeals was, however, - Petitioners also maintain that the doctrine of exhaustion of
short-lived. In the decision now assailed before us, the Court of administrative remedies is not absolute as it accepts of certain
Appeals ruled that backwages payable to respondents should exceptions such as when an appeal would not be an adequate
be computed from the date of their termination from their jobs remedy there being an order or execution already issued and
until actual reinstatement as provided in Article 223 of the the implementation of said writ loomed as a great probability.
Labor Code. As petitioners failed to observe said pertinent 2. YES
provision of the law, the labor arbiter could not be charged with Reasoning
having committed a grave abuse of discretion when he issued - As the law now stands, an illegally dismissed employee is
the assailed 23 April 2003 order. entitled to two reliefs, namely: backwages and reinstatement.
- Moreover, the Court of Appeals took note of the “procedural These are separate and distinct from each other. However,
but fatal flaw” committed by petitioners when they immediately separation pay is granted where reinstatement is no longer
elevated their case via petition for certiorari before the Court of feasible because of strained relations between the employee
Appeals without first seeking recourse from the NLRC in and the employer. In effect, an illegally dismissed employee is
violation not only of the Rules of Procedure of said body but entitled to either reinstatement, if viable, or separation pay if
also of the doctrine of exhaustion of administrative remedies. reinstatement is no longer viable and backwages.
- Petitioners’ motion for reconsideration was denied by the - Backwages and separation pay are, therefore, distinct reliefs
Court of Appeals in a resolution dated 20 November 2003. granted to one who was illegally dismissed from employment.
ISSUES The award of one does not preclude that of the other as this
1. WON CA erred when it declared that the remedy adopted by court had, in proper cases, ordered the payment of both.
the petitioners is erroneous expenses and risks."
2. WON Petitioners should be held liable to the additional Disposition Court AFFIRMS the Decision of the Court of
amount as contained in the April 23, 2003 order considering Appeals dated 31 July 2003 and the Order dated 23 April 2003
that the February 28, 2000 decision has already been fully of the Labor Arbiter declaring petitioners liable for additional
satisfied accrued backwages. The amount of money claims due the
respondents is, however, MODIFIED.
HELD
1. NO
Ratio It is a basic tenet of procedural rules that for a special RATIONALE FOR REMEDIES
civil action for a petition for certiorari to prosper, the following
requisites must concur: (1) the writ is directed against a
tribunal, a board or an officer exercising judicial or quasi-judicial GLOBE MACKAY V
functions; (2) such tribunal, board or officer has acted without [PAGE 252]
or in excess of jurisdiction, or with grave abuse of discretion
Labor Law 1 A2010 - 53 - Disini
nature as the one previously occupied by the employee.
Here, in the case, there was no closure of shop notwithstanding
that the respondent Republic Bank was almost at the brink of
financial ruin. Despite the widespread restructuring and
14.08 REINSTATEMENT reorganization following the substantial change in the corporate
structure of the former Republic Bank into the present Republic
Planters Bank, to offset the impending financial collapse, the
position previously held by the complainant Norberto Luna was
DEFINED not abolished, but is now held by the incumbent manager who
replaced Luna. Although the position formerly held by the
herein complainant is now held by another, there is every
UNION OF SUPERVISORS V SEC OF LABOR
reason for the Republic Planters Bank to reinstate him because
128 SCRA 442 there is an "unfilled position more or less of a similar nature as
MAKASIAR; March 29, 1984 the one previously occupied by the employee" (Philippine
Engineering Corporation v. CIR, supra). And, Section 4, Rule 1,
FACTS Book VI of the implementing Rules and Regulations of the Labor
- On November 12, 1981, the Supreme Court rendered a Code states, to wit:
decision in this case finding that "Luna's discharge was "An employee who is separated from work without just cause
discriminatory and constituted unfair labor practice . . . He is should be reinstated to his former position, unless such
therefore entitled to reinstatement with back wages ." and position no longer exists, at the time of his reinstatement, in
accordingly ordered respondent Republic Bank (now Republic which case he shall be given a substantially equivalent
Planters Bank.) ". . . TO IMMEDIATELY REINSTATE COMPLAINANT position in the same establishment without loss of seniority
NORBERTO LUNA TO HIS FORMER POSITION WITHOUT LOSS OF rights"
SENIORITY RIGHTS AND OTHER BENEFITS AND INCREASES - It must be remembered that the respondent Bank reached the
RECOGNIZED BY LAW OR GRANTED BY PRIVATE RESPONDENT point of almost complete financial ruin were it not for the
DURING THE PERIOD OF HIS ILLEGAL DISMISSAL, WITH BACK rehabilitation progress initiated by the government
WAGES EQUIVALENT TO THREE (3) YEARS WITHOUT necessitating widespread restructuring and reorganization of
QUALIFICATION . . ." the Bank. At that time of economic crisis of the respondent
- SC even ordered that: "THIS DECISION IS HEREBY MADE Bank, the herein petitioner was the manager of the San Juan
IMMEDIATELY EXECUTORY." Branch. It cannot be said that he did not contribute, directly or
- On November 17, 1981, upon receipt of a copy of the said indirectly, to the downhill economy of the respondent Bank.
decision, complainant Luna presented himself to the Republic - Clearly, the respondent Bank, after surviving said crisis, and
Planters Bank for reinstatement to his former position as San emerging therefrom as Republic Planters Bank, should be given
Juan Branch Manager. The Republic Planters Bank refused to the best managers. Managers who can contribute to its struggle
take him back, claiming that the decision was still under study to survive. Managers who have not only the capacity and
by the counsel of the said bank. efficiency but likewise they must also have the "proven" skill
- On December 1, 1981, the Republic Planters Bank sought that is essential for the respondent Republic Planters Bank to go
leave to file a motion for reconsideration and/or clarification. on and weather these times of economic difficulties.
- On January 15, 1982, the Republic Planters Bank begged leave - The Labor Code provision on reinstatement, to wit:
to forego the filing of a motion for reconsideration and/or "Art. 280. An employee who is unjustly dismissed from
clarification, and in lieu thereof, submit manifestation and work shall be entitled to reinstatement without loss of
motion. seniority rights and to his backwages computed from the time
- On May 25, 1982, the Solicitor General, in behalf of the his compensation was withheld from him up to the time of his
respondent Secretary of Labor filed a manifestation and motion reinstatement."
wherein it was prayed that public respondent be excused from - Reinstatement is aimed to restore the situation as nearly as
filing the corresponding comment referred to in the resolution possible to status quo ante the unfair labor practice. This
of this Court dated May 10, 1982 on the ground that "the issues requires that those deprived of a recognized and protected
being raised therein only affect the private interest of said bank interest by violations of the law should be made whole so as to
and hence it may not be proper for public respondent to make a prevent the violator from profiting from his misdeeds Yet the
comment" reinstatement remedy must always be adapted to economic-
- On July 8, 1982, the respondent Republic Planters Bank business conditions.
submitted its sur-rejoinder to petitioner's rejoinder to private - There is no question that the Republic Planters Bank is the
respondent's reply to petitioner's comment. The Republic successor of the Republic Bank. But, in order to keep the
Planters Bank in its sur-rejoinder has shown that it has already respondent Republic Planters Bank on its feet once again, it had
paid the complainant Norberto Luna his backwages equivalent to undergo innovations to ensure recovery. The respondent
to three (3) years without qualification. Republic Planters Bank actually changed its methods of
operation and this change was motivated by economic factors.
ISSUE - Considering these "economic-business conditions" together
WON Luna is entitled to reinstatement in Republic Planters Bank with the economic crisis WE are in now, it is inevitable that
(or WON Republic Planters Bank should be made to suffer the these be reflected in the desire for efficient and productive
consequences of the Unfair Labor Practice committed by management. This honest intention can only be effectuated if
Republic Bank) the complainant Norberto Luna is reinstated to a substantially
equivalent position without loss of seniority rights and the
HELD incumbent manager who is now holding the position formerly
YES held by herein complainant be allowed to continue with his
- In its generally accepted sense, reinstatement is a "tested" competence and integrity in the management of the
restoration to a state from which one has been removed or San Juan Branch of the Republic Planters Bank.
separated. It is the return to the position from which he was Disposition immediately reinstate the complainant norberto
removed (San Miguel Brewery, Inc. v. Santos and CIR, 112 Phil. luna to an equivalent position without loss of seniority rights
986) and assuming again the functions of the office already from the time of his illegal dismissal up to actual reinstatement;
held (Abeto v. Rodas, 82 Phil. 67). and Not to make any deductions from the three years
- Reinstatement pre-supposes that the previous position backwages already paid to norberto luna. This resolution is
from which one had been removed still exists, or that hereby made immediately executory.
there is an unfilled position more or less of a similar
Labor Law 1 A2010 - 54 - Disini
PHESCHEM INDUSTRIAL CORP V MOLDEZ 25, 1991, or about 7 months earlier. The next day, a Special
Investigating Committee, found him guilty not only of
[PAGE 293]
challenging his superior to a fistfight and issuing death threats
to the manager, but also guilty of the 4 charges of misbehavior
EMPLOYEE RIGHT earlier hurled against him. On November 19, 1991, Mercury
Drug sent him a notice of termination of employment. The
dismissal was to take effect the next day, November 20, 1991.
QUIJANO V MERCURY DRUG - The labor arbiter ruled that Quijano was illegally dismissed
292 SCRA 109 from service for lack of just cause. The NLRC affirmed. However,
PUNO; July 8, 1998 it modified the labor arbiter's decision by: (1) limiting the award
of backwages to three years; (2) deleting the award of moral
and exemplary damages; and (3) ordering respondent to pay
FACTS petitioner separation pay in lieu of reinstatement. Acting on the
- Petitioner DANDY QUIJANO was a warehouseman at the central MFR, the NLRC modified but only as to the period of
warehouse of MERCURY DRUG CORPORATION in Libis, Quezon computation of back wages. It refused to reinstate petitioner in
City, since 1983. During his 8-year stay in the company, he view of the brewing antagonism between him and his
received high performance ratings and a corresponding 15% supervisor and awarded him separation pay instead.
increase in salary per annum. Through the years, the company
has also recognized and commanded him for his dedication to ISSUE
his work. He has actively articulated the employees' concerns WON the NLRC committed grave abuse of discretion when it
and, since 1990, has written to the management about the awarded separation pay in lieu of reinstatement
malpractices committed by some officers of the company. He
exposed the existence of a "five-six" loan system in their HELD
workplace operated by some of its officers. He incurred the ire YES
of the manager, Antonio Altavano, who operated the usurious Ratio The doctrine of "strained relations" should be strictly
transactions. applied so as not to deprive an illegally dismissed employee of
- Then followed the harassment of Quijano. In April 1991, his right to reinstatement. Every labor dispute almost always
Mercury Drug charged him with 4 violations of company results in "strained relations", and the phrase cannot be given
policies, all allegedly committed on March 19, 1991. It started an overarching interpretation, otherwise, an unjustly dismissed
at about 11 am when he allegedly left his workplace without employee can never be reinstated.
permission. He was charged with loafing and abandonment of Reasoning
work. Then, between 11:30 am to 12:30 pm, he allegedly - An illegally dismissed employee is entitled to reinstatement as
entered the warehouse employees' locker room and angrily a matter of right. Where reinstatement is not feasible,
uttered in a loud voice: "Niloloko tayo ng kalbong yan.", expedient or practical, as where reinstatement would only
referring to the warehouse manager, Altavano. He was charged exacerbate the tension and strained relations between the
with disrespect to his superiors. Thirty minutes later, at about parties, or where the relationship between the employer and
1:00 pm, he allegedly grabbed the public address system at the employee has been unduly strained by reason of their
central warehouse without permission and angrily announced: irreconcilable differences, particularly where the illegally
"Wala kay Mrs. Azcona ang incentive natin, na kay Mr. dismissed employee held a managerial or key position in the
Concepcion. Niloloko lang tayo (ng superiors natin)." He was company, it would be more prudent to order payment of
charged with disrupting the work of his co-employees. Finally, separation pay instead of reinstatement. Unscrupulous
after an hour and a half, at about 2:30 pm, he allegedly saw Mr. employers, however, have taken advantage of the overgrowth
Simon peeping through a rack divider, and shouted: "Anong of this doctrine of "strained relations" by using it as a cover to
tinitingin-tingin mo?" He was charged with using abusive get rid of its employees and thus defeat their right to job
language in company premises. security. - Mercury Drug’s charges of misbehavior against
- Consequently, in April 1991, 4 notices of Quijano cannot serve as basis to justify his dismissal, let alone
corrective/disciplinary action were served on him. These were his non-reinstatement. These charges had been found to be
the very first disciplinary sanctions imposed on petitioner in his baseless and both the labor arbiter and the NLRC agreed that
8 years of service and all were allegedly committed on the there was no just cause for petitioner's dismissal. It can even be
same day, March 19, 1991. granted in arguendo that a certain antagonism may
- Quijano gave a different version of the incidents. He alleged characterize the relationship of petitioner and the respondents.
that on said date, he had been following-up the payment of However, the antagonism was caused substantially if not solely
incentives due to his co-employees. Altavano, informed him by the misdeeds of respondent's superiors. The arbiter found as
that the incentives were already in the office of Mrs. Vivian a fact that the false charges were filed against Quijano by two
Azcona. However, when he inquired from Azcona about their of his superiors to punish him for exposing their usurious loan
incentives, she referred him to the office of Mr. Concepcion and operations. Hence, to deny his reinstatement due to the
asked him to inform his co-employees. Petitioner did as he was "strained relations" with his accusers whose charges were found
told. He used the microphone for a few minutes and informed to be false would result in rewarding the accusers and
his co-employees about the status of their incentives. His co- penalizing the victim. This would set a bad precedent for no
employees submitted a joint written statement confirming his employer should be allowed to profit from his own misdeed. In
allegations. They further declared that his brief use of the addition, it is most inequitable to rule that the antagonism
microphone did not distract them in the performance of their engendered by Quijano’s performance of his legal right to
work. Quijano also denied uttering rude or insulting language in expose the usurious lending operations of some warehouse
referring to or communicating with his superiors. Again his co- officers will cause him to lose the security of his job. The expose
employees submitted statements to corroborate his denial. is work related and is intended to protect the economic welfare
Finally, he claimed that the charges against him were merely of employees, and hence its exercise cannot be visited by any
concocted by the warehouse manager and the supervisor in punishment especially by the supreme penalty of separation
retaliation to his exposure of the latter's usurious loan scheme from service. Again, it bears emphasis that the State
in the warehouse, thereby taking undue advantage of the plight guarantees a worker security of tenure which can well be his
of his co-employees. Quijano was cleared of the four charges. most precious economic right. Thus, all efforts must be exerted
- However, his employment woes did not end there. He was to protect him from unjust deprivation of his job.
served another notice of corrective action for serious - The alleged antagonism is a mere conclusion bereft of
misconduct for allegedly challenging his superior to a fistfight evidentiary support. Mercury Drug did not raise the defense of
and uttering death threats to the manager, Altavano, on April strained relationship before the labor arbiter. Consequently, this
Labor Law 1 A2010 - 55 - Disini
issue which is factual in nature was not the subject of evidence
on the part of both the petitioner and the respondent. There is HELD
thus no competent evidence upon which to base the conclusion 1. YES
that the relationship between the petitioner and the respondent - Petitioner’s actuations clearly constituted willful disobedience
has reached the point where it is now best to sever their and serious misconduct justifying his dismissal under Article
employment relationship. The NLRC's ruling on the alleged 282(a) of the Labor Code which provides:
brewing antagonism between the petitioner and the respondent Art. 282. Termination by employer. – An employer may
is a mere guesswork and cannot justify the non-reinstatement terminate an employment for any of the following causes:
of petitioner to his job. (a) Serious misconduct or willful disobedience by the
Disposition Petition is GRANTED. MERCURY DRUG is ordered: employee of the lawful orders of his employer or
(1) to reinstate QUIJANO to his former or substantially representative in connection with his work;
equivalent position; (2) to pay back wages from the time of his - Willful disobedience of the employer’s lawful orders, as a just
illegal dismissal until his reinstatement (3) to pay moral and cause for the dismissal of an employee, envisages the
exemplary damages in the amount of P50,000 and P25,000, concurrence of at least two requisites: (1) the employee’s
respectively, and; (4) to pay 10% of the total amount due as assailed conduct must have been willful or intentional, the
attorney's fees. willfulness being characterized by a "wrongful and perverse
attitude;" and (2) the order violated must have been
reasonable, lawful, made known to the employee and must
ROSARIO V VICTORY RICEMILL
pertain to the duties which he had been engaged to discharge.
397 SCRA 760
CALLEJO; February 19, 2003
2. NO
NATURE - To effect the dismissal of an employee the law requires not
Petition for review on certiorari seeking to reverse CA decision only that there be just and valid cause as provided under Article
282. It likewise enjoins the employer to afford the employee the
FACTS opportunity to be heard and to defend himself. The employer is
- Emilio Uy owned Victory Ricemill. He employed Rosario as mandated to furnish the employee with two written notices: (a)
truck driver. Petitioner was tasked to, among others, haul palay a written notice containing a statement of the cause for the
from various points and bring them to respondent’s ricemill. In termination to afford the employee ample opportunity to be
addition, petitioner acted as personal driver to the family of Mr. heard and defend himself with the assistance of his
Uy during their trips to Manila. representative, if he so desires; (b) if the employer decides to
- Uy dismissed Rosario. According to respondent, petitioner was terminate the services of the employee, the employer must
guilty of insubordination when he refused to serve as driver of notify him in writing of the decision to dismiss him, stating
Mr. Uy’s son when the latter needed a driver. Also, petitioner clearly the reason therefore
was instructed to deliver 600 bags of cement to Felix Hardware. - While respondent furnished petitioner the written notice
Instead, petitioner delivered the same to one Eduardo Interior, informing him of his dismissal, respondent failed to furnish
who had not since then paid for P60k. Because of petitioner’s petitioner the written notice apprising him of the charge or
tendency to disobey the orders to him, Uy was constrained to charges against him. Consequently, petitioner was deprived of
engage the services of another driver. Petitioner resented the the opportunity to respond thereto
new driver and became uncooperative, disrespectful and - When the dismissal is effected for a just and valid cause, the
quarrelsome. Petitioner, armed with a dagger, fought with the failure to observe procedural requirements does not invalidate
other driver and inflicted an injury on the latter. Petitioner nor nullify the dismissal of an employee. The consequence of
likewise inflicted injuries on the head of a co-employee, when the failure either of the employer or the employee to live up to
he intervened in the fight and tried to pacify petitioner. this precept is to make him liable in damages, not to render his
- A complaint for illegal dismissal with money claims was filed act void. The measure of damages is the amount of wages the
by petitioner employee should have received were it not for the termination
- Labor arbiter found that there were valid causes for the of his employment without prior notice. If warranted, nominal
termination of petitioner’s employment. and moral damages may also be awarded.
- The NLRC found that petitioner was denied due process during 3. YES
the proceedings with the regional labor arbiter as petitioner was - Under the Labor Code, only the absence of a just cause for the
not given the opportunity to present his additional rebuttal termination of employment can make the dismissal of an
evidence. On the other hand, respondent was allowed to submit employee illegal.
in evidence various exhibits to discredit the rebuttal testimony Art. 279. Security of Tenure. – In cases of regular
of petitioner. Case was remanded. employment, the employer shall not terminate the services of
- Petitioner submitted the affidavit of Roque, who averred that an employee except for a just cause or when authorized by
the 600 bags of cement delivered to Eduardo Interior had been this Title. An employee who is unjustly dismissed from work
paid as evidenced by in the sum of P58,950.00 payable to shall be entitled to reinstatement without loss of seniority
respondent. rights and other privileges and to his full backwages,
- Regional labor arbiter promulgated his decision stating that he inclusive of allowances, and to his other benefits or their
found no reason to deviate from his previous decision. monetary equivalent computed from the time his
- NLRC affirmed the ruling of the regional labor arbiter compensation was withheld from him up to the time of his
- CA found that respondent had justifiable cause to dismiss actual reinstatement.
petitioner. CA also observed that although there was no strict - Thus, only if the termination of employment is not for any of
compliance with the two-notice rule, it could be gleaned from the causes provided by law is it illegal and, therefore, the
the records that petitioner was given ample opportunity to employee should be reinstated and paid backwages.
explain his side. Moreover, even granting that respondent fell - On the other hand, if it is shown that the employee was
short of the two-notice requirement, such irregularity, according dismissed for any of the just causes mentioned in said Art. 282,
to the CA, does not militate against the legality of the dismissal. then, in accordance with that article, he should not be
reinstated. However, he must be paid backwages from the time
ISSUES his employment was terminated until it is determined that the
1. WON petitioner’s termination was for a just and lawful cause termination of employment is for a just cause because the
2. WON petitioner’s dismissal from his employment was in failure to hear him before he is dismissed renders the
accordance with the due process requirement of the law termination of his employment without legal effect. .
3. WON petitioner is entitled to backwages
Labor Law 1 A2010 - 56 - Disini
Disposition CA decision AFFIRMED with MODIFICATION. Uy is NATURE
ordered to pay petitioner full backwages from the time his CERTIORARI
employment was terminated up to the time the herein decision
becomes final FACTS
- Roquero, along with Rene Pabayo, were ground equipment
mechanics of PAL.
EFFECT OF FAILURE TO ASK RELIEF - From the evidence on record, it appears that Roquero and
Pabayo were caught red-handed possessing and using shabu in
a raid conducted by PAL security officers and NARCOM
GENERAL BAPTIST BIBLE COLLEGE V NLRC (BASA) personnel.
219 SCRA 549 - The two alleged that they did not voluntarily indulge in the
CAMPOS JR; March 5, 1993 said act but were instigated by a certain Jojie Alipato who was
introduced to them by Joseph Ocul, Manager of the Airport
Maintenance Division of PAL.
NATURE
- Alipato was unsuccessful, until one day, he was able to
Petition for review of a resolution of the NLRC
persuade Pabayo to join him in taking the drugs and who in turn
persuaded Roquero.
FACTS
- Inside the company premises, they locked the door and
- Basa was hired by the College as the Academic Dean. He was
Alipato lost no time in preparing the drugs to be used. When
also appointed President by the Board of Trustees.
they started the procedure of taking the drugs, armed men
- In a regular meeting, the BoT voted to terminate services of
entered the room, arrested Roquero and Pabayo and seized the
Basa as President. Basa, without aid of counsel, filed complaint
drugs and the paraphernalia used.
for illegal dismissal not only as President but as Dean.
- Roquero and Pabayo were subjected to a physical examination
- Arbiter found dismissal as President meritorious and claim for
where the results showed that they were positive of drugs.
separation pay without basis. He ordered the College and the
- They were also brought to the security office of PAL where
General Baptist Church to pay complainant.
they executed written confessions without the benefit of
- NLRC said reinstatement as Dean and payment of unpaid
counsel.
salaries is in order.
- Roquero and Pabayo received a “notice of administrative
charge” for violating the PAL Code of Discipline. They were
ISSUES
required to answer the charges and were placed under
1. WON Basa has right to be reinstated
preventive suspension.
2. WON Basa may be reinstated notwithstanding fact that
- Roquero and Pabayo asserted that they were instigated by
prayer is for payment of unpaid salaries and separation pay
PAL to take the drugs and that Alipato was not really a trainee
only
of PAL but was placed in the premises to instigate the
commission of the crime because Alipato was not arrested and
HELD
that Alipato has no record of employment with PAL.
1. YES
- Roquero and Pabayo were dismissed by PAL. Thus, they filed a
- Records are bereft of indication that Basa’s termination as
case for illegal dismissal.
Dean was proven. College must inform Basa when, why and
- LA: the dismissal of Roquero and Pabayo was upheld. The
how his term as Dean expired, since it was understood to be
Labor Arbiter found both parties at fault – PAL for applying
indefinite.
means to entice the complainants into committing the infraction
- If the intention was to terminate Basa’s services both as
and the complainants for giving in to the temptation and
President and Dean, Basa must be heard. The College failed
eventually indulging in the prohibited activity. Nonetheless, the
here. The letter terminated his services as President.
Labor Arbiter awarded separation pay and attorney’s fees to the
- That nobody was appointed as Dean when Basa was appointed
complainants.
President means that Basa acted concurrently as President and
- RTC: acquitted the 2 of the criminal case of conspiracy for
Dean. These are different positions, and there is no prohibition
possession and use of a regulated drug in violation of Section
against holding these positions concurrently.
16, Article III of Republic Act 6425 on the ground of instigation.
- Basa should have continued as Dean even after his
- NLRC: ruled in favor of complainants as it likewise found PAL
termination as President. His having been considered
guilty of instigation; ordered reinstatement to their former
terminated as Dean has no legal basis, though his dismissal as
positions but without backwages.
President may have been legal.
- Complainants did not appeal from the decision but filed a
2. YES
motion for a writ of execution of the order of reinstatement.
- Basa’s failure to specifically pray for reinstatement is a
- LA granted the motion but PAL refused to execute the said
procedural lapse which cannot put to naught a right which he is
order on the ground that they have this petition pending which
entitled under a substantive law.
was eventually referred to the CA.
- But due to animosity and antagonism, College must not be
- CA: reversed the decision of the NLRC and reinstated the
compelled to reinstate Basa but it must be given option to give
decision of the LA insofar as it upheld the dismissal of Roquero.
separation pay in lieu thereof.
ISSUES
PHESCHEM INDUSTRIAL V MOLDEZ 1. WON the instigated employee shall be solely responsible for
[PAGE 293] an action arising from the instigation perpetrated by the
employer
2. WON the executory nature of the decision, more so the
RULES ON REINSTATEMENT reinstatement aspect of a labor tribunal’s order can be halted
by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered
RATIONALE in the meantime
3. WON the employer who refused to reinstate an employee
despite a writ duly issued can be held liable to pay the salary of
ROQUERO V PHILIPPINE AIRLINES INC the subject employee from the time that he was ordered
401 SCRA 424 reinstated up to the time that the reversed decision was handed
PUNO; April 22, 2003 down
Labor Law 1 A2010 - 57 - Disini
HELD xxx xxx xxx
1. YES x x x Then, by and pursuant to the same power (police
- Instigation is only a defense against criminal liability. It power), the State may authorize an immediate
cannot be used as a shield against dismissal from employment implementation, pending appeal, of a decision reinstating a
especially when the position involves the safety of human lives. dismissed or separated employee since that saving act is
- It is of public knowledge that drugs can damage the mental designed to stop, although temporarily since the appeal may
faculties of the user. Roquero was tasked with the repair and be decided in favor of the appellant, a continuing threat or
maintenance of PAL’s airplanes. He cannot discharge that duty danger to the survival or even the life of the dismissed or
if he is a drug user. His failure to do his job can mean great loss separated employee and his family.”
of lives and properties. Hence, even if he was instigated to take 3. YES.
drugs he has no right to be reinstated to his position. He took - Even if the order of reinstatement of the LA is reversed on
the drugs fully knowing that he was on duty and more so that it appeal, it is obligatory on the part of the employer to reinstate
is prohibited by company rules and pay the wages of the dismissed employee during the period
- There is no question that petitioner Roquero is guilty of serious of appeal until reversal by the higher court.
misconduct for possessing and using shabu. He violated - If the employee has been reinstated during the appeal period
Chapter 2, Article VII, section 4 of the PAL Code of Discipline and such reinstatement order is reversed with finality, the
which states: employee is not required to reimburse whatever salary he
“Any employee who, while on company premises or on duty, received for he is entitled to such, more so if he actually
takes or is under the influence of prohibited or controlled rendered services during the period.
drugs, or hallucinogenic substances or narcotics shall be Disposition The dismissal of petitioner Roquero is AFFIRMED,
dismissed.” but PAL is ordered to pay the wages to which Roquero is
- Philippine Aeolus Automotive United Corporation vs. NLRC entitled from the time the reinstatement order was issued until
(2000): Serious misconduct is defined as “the transgression of the finality of this decision.
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful
PNOC-EDP V ABELLA
intent and not mere error in judgment.” For serious misconduct
to warrant the dismissal of an employee, it (1) must be serious; 448 SCRA 549
(2) must relate to the performance of the employee’s duty; and CHICO-NAZARIO; January 17, 2005
(3) must show that the employee has become unfit to continue
working for the employer NATURE
- PAL complied with the twin-notice requirement before Petition for review on certiorari
dismissing the petitioner. The twin-notice rule requires (1) the
notice which apprises the employee of the particular acts or FACTS
omissions for which his dismissal is being sought along with the - Private respondent Frederick V. Abella started working with
opportunity for the employee to air his side, and (2) the herein petitioner Philippine National Oil Company - Energy
subsequent notice of the employer’s decision to dismiss him. Development Corporation (PNOC-EDC) as a probationary
2. NO Security Assistant at its SNGP in Ticala, Valencia, Negros
- The order of reinstatement is immediately executory Oriental. Subsequently, he became a regular employee.
- Philippine Rabbit Bus Lines, Inc. vs. NLRC, (1999): The - Less than one year later, Abella was informed that his
unjustified refusal of the employer to reinstate a dismissed employment with PNOC-EDC would be terminated effective 21
employee entitles him to payment of his salaries effective from May 1990, allegedly due to a company-wide reorganization
the time the employer failed to reinstate him despite the pursuant to its Manpower Reduction Program, wherein the
issuance of a writ of execution. Unless there is a restraining position of Security Assistant at PNOC-EDC SNGP had been
order issued, it is ministerial upon the Labor Arbiter to abolished.
implement the order of reinstatement. In the case at bar, no - Aggrieved, Abella filed a case of illegal dismissal, and for
restraining order was granted. Thus, it was mandatory on PAL to actual, moral, and exemplary damages with the NLRC, Regional
actually reinstate Roquero or reinstate him in the payroll. Arbitration Branch No. VII at Dumaguete City, against the PNOC-
Having failed to do so, PAL must pay Roquero the salary he is EDC and its officers. After hearing the parties, Labor Arbiter
entitled to, as if he was reinstated, from the time of the decision Villahermosa rendered a Decision, holding that Abella was
of the NLRC until the finality of the decision of this Court. illegally dismissed as the company and its officers failed to
- Article 223 (3rd paragraph) of the Labor Code, as amended by show a “clear scheme and convincing proof of reorganization.
Section 12 of RA No. 6715, and Sec 2 of the NLRC Interim Rules - An appeal was timely filed with the NLRC. Meanwhile, with
on Appeals under RA No. 6715, Amending the Labor Code, said appeal still pending in the NLRC, the labor arbiter issued an
provide that an order of reinstatement by the Labor Arbiter is order, directing the company to “admit back to work or
immediately executory even pending appeal. reinstate the complainant under the same terms and conditions
- The rationale of the law has been explained in Aris (Phil.) prevailing prior to his dismissal or separation or, at the option of
Inc. vs. NLRC: the employer, merely reinstated in the payroll.”
“In authorizing execution pending appeal of the - Pursuant to the above order, Abella was reinstated in the
reinstatement aspect of a decision of the Labor Arbiter payroll as a General Services Assistant (PAL II), his original
reinstating a dismissed or separated employee, the law itself position of Security Assistant having been abolished by virtue of
has laid down a compassionate policy which, once more, the company-wide reorganization. According to the company,
vivifies and enhances the provisions of the 1987 Constitution “the position is of the same level as Assistant Security and had
on labor and the working man. the same salary rate and benefits.”
xxx xxx xxx - Abella, through counsel, wrote Quevenco, Resident Manager
These duties and responsibilities of the State are imposed not at the SNGP, to protest his assignment in the payroll as General
so much to express sympathy for the workingman as to Services Assistant (PAL II). Subsequently, he was again re-
forcefully and meaningfully underscore labor as a primary slotted in the payroll as a Pipeline Maintenance Foreman, which,
social and economic force, which the Constitution also according to the petitioners, is another “position with the same
expressly affirms with equal intensity. Labor is an salary and benefits” as another Security Assistant. This
indispensable partner for the nation’s progress and stability. “change” of position was classified as a lateral transfer.
xxx xxx xxx - Abella wrote petitioner Quevenco, to request that he (Abella)
x x x In short, with respect to decisions reinstating be physically reinstated and allowed to perform security
employees, the law itself has determined a sufficiently functions. Said request was granted. Abella was temporarily
overwhelming reason for its execution pending appeal. detailed as Security Assistant at SNGP’s PAL II Development
Labor Law 1 A2010 - 58 - Disini
Project, Northern Cotabato. However, he was also - Claiming unfair and prejudicial treatment, Abella filed a
concomitantly designated as Acting Security Officer for the complaint before the NLRC, Sub-Regional Arbitration Branch No.
entire SNGP due to the reassignment of the incumbent Security VII, Dumaguete City, for unfair labor practice, illegal suspension,
Officer to the Northern Negros Geothermal Project of the nonpayment of mid-year bonus and 13th month pay for 1990
company. Abella wrote a letter, this time addressed to and 1991, claim for hazard pay, and annual salary increase
Vasquez, then Vice-President of the company, to confirm that against the company and its officers.
he had assumed his security functions; that he was open for - Several months later, Abella received a notice of disciplinary
negotiations regarding his case; and, that he hoped that his action of Grave Suspension with Final Warning against him.
appointment/work status would be normalized. Abella filed another complaint with the NLRC, against the
- In a telegraphic message, Tongco informed Abella to company and its officers, for unfair labor practice, illegal
immediately report to Mindanao I Geothermal Plant (MIGP), suspension, and nonpayment of wages with damages.
Kidapawan, North Cotabato. Tongco defined private Nevertheless, Abella continued working at SNGP, Ticala,
respondent’s duties and functions and delimited the duration of Valencia, Negros Oriental, until he was accordingly notified of
his stay at MIGP as temporary, or for about 3 months only. his termination for cause. Thereafter, he filed a third complaint
- Shortly thereafter, Abella and the company agreed to with the NLRC against the company and its officers, this time
settle. Abella consequently received the amount of P124,824.31 for unfair labor practice, illegal dismissal, and nonpayment of
as settlement of the said case and by virtue of the said wages, with prayer for reinstatement and payment of moral and
agreement, both parties filed a Joint Motion to Dismiss before exemplary damages as well as attorney’s fees docketed.
the NLRC. - After hearing the parties, Labor Arbiter Villahermosa
- Acting on the Joint Motion to Dismiss, the NLRC issued a rendered a consolidated Decision. In maintaining that Abella
Resolution, granting the above motion dismissing the appeal was not illegally dismissed, the labor arbiter opined that the
earlier filed before it. At this time, while carrying out security records of the case show that Abella was “reassigned from his
functions at MIGP, Kidapawan, North Cotabato, Abella’s official position in Ticala, Valencia, Negros Oriental, to that in
item or position in the payroll was Maintenance Foreman, SNGP, Cotabato province by virtue of a memorandum issued by
Valencia, Negros Oriental. Said state of affairs prompted the Tongco which Abella readily accepted and agreed to said
late Susas to write Tongco about it and to recommend that transfer,” therefore there is no valid basis for the claim that
“proper action be made in order to harmonize security-related he was not validly reinstated. Thus, the charges of
support services at MIGP.” insubordination and AWOL committed by Abella fall squarely
- Abella filed a motion for the issuance of a writ of execution of within the provision of Rule 26 of the petitioner company’s
the decision of the labor arbiter. Corollary to the said motion, rules and regulations as contained in the “PNOC Rules and
he informed Quevenco of his intention to report back to SNGP, Regulations on Discipline.” Said rules provide for a penalty
Ticala, Valencia, Negros Oriental, his original assignment prior ranging up to dismissal even for the first offense.
to the filing of the 1991 case or illegal dismissal. Abella received - On appeal, the NLRC reversed and set aside the Decision of
a show cause memorandum for his alleged absence without the labor arbiter and entered a new one. The NLRC found that
official leave (AWOL) and insubordination. Responding to the Abella was illegally dismissed “considering that at bar, the
above, Abella explained in a letter that his position as SGS parties had reached a settlement without vacating the decision
Maintenance is in complete contravention of the decision of the (of the labor arbiter dated 27 August 1991), then the decision
labor arbiter. should be given its full force and effect,” and as the “[r]ecords
- Despite the above response, Abella was nevertheless show that he was never reinstated to his former position as
transferred to PNOC-EDC Leyte-A Geothermal Project, as a admitted by the correspondence of J.T. Susas dated 25 March
Security Assistant, a position that was vacant at that time. Said 1993, memorandum of complainant dated 17 September 1993
transfer was accompanied by a Transfer or Change of Position and letter of complainant’s counsel to Engr. Quevenco, dated 03
Form showing Abella’s change of official position from Pipeline January 1994.” “The assignments of the complainants (sic) to
Maintenance Foreman to Security Assistant to be a lateral the various positions could not equate to full enforcement of the
transfer. decision of 27 August 1991 considering that these positions
- Tongco sent Abella a radiogram message instructing him to were not his former position and his assumption to these
present himself, this time at the Mt. Labo Geothermal Project, positions were under protest.”
Camarines Norte, as a Security Assistant. A second message - There being a timely motion for reconsideration, the
followed emphasizing the need for Abella to report at the said Honorable Commission, in a Resolution, reversed itself insofar
site not later than 25 May 1994. On 01 June 1994, Abella was as the order for reinstatement and computation of backwages
once more instructed to report to the petitioner company’s Mt. were concerned. Instead, the Commission held that since Abella
Labo Geothermal Project. Said order was again accompanied had already reached the retirement age of 60 years,
by a Transfer or Change of Position Form stating the transfer of reinstatement would no longer be possible. Abella should be
Abella as a Security Assistant from Leyte to Mt. Labo to be a given all the benefits due him under the retirement provision of
lateral transfer. the collective bargaining agreement of the company.
- All the above-mentioned directives were disregarded or - With the denial of their motion for reconsideration, the
ignored. company and its officers came to the Court of Appeals via a
- In the intervening time, the labor arbiter ruled on the motion petition for certiorari under Rule 65 of the Revised Rules of
for execution filed by the complainant by issuing a Writ of Court and sought to nullify the above-stated NLRC Decision and
Execution directing the Sheriff, NLRC, Cebu City, to proceed to Resolution.
the premises of the company at Ticala, Valencia, Negros - The appellate court dismissed the petition for lack of merit.
Oriental, to effect and to cause the reinstatement of Abella The company and its officers’ motion for reconsideration having
either by physical or by payroll reinstatement. Sheriff Cornelio been denied, the instant petition was filed.
issued a certification that per attached pay slip, private
respondent had been reinstated in the payroll with PNOC-EDC. ISSUE
- For failing to heed the directives of his supervisors, Abella WON the reinstatement of private respondent was valid
received another “show cause” memorandum from Tongco, HELD
ordering him to explain in writing why no disciplinary action YES
should be taken against him for insubordination and for being - The issue of reinstatement is addressed by paragraph three of
AWOL. Article 223 of the Labor Code, to wit:
- Abella, in his reply countered that “he is not guilty of ART. 223. Appeal . . . .
insubordination since he was not reinstated to his former In any event, the decision of the Labor Arbiter reinstating a
position as Security Assistant at Ticala, Valencia, Negros dismissed or separated employee, insofar as the
Oriental, per Writ of Execution issued by the labor arbiter.” reinstatement aspect is concerned, shall immediately be
Labor Law 1 A2010 - 59 - Disini
executory, even pending appeal. The employee shall either be law and administrative tribunals. Generally favored in law, such
admitted back to work under the same terms and conditions agreement is a bilateral act or transaction that is binding on the
prevailing prior to his dismissal or separation or, at the option contracting parties and is expressly acknowledged by the Civil
of the employer, merely reinstated in the payroll. The posting Code as a juridical agreement between them.
of a bond by the employer shall not stay the execution for - Prevailing case law provides that “a compromise once
reinstatement provided herein. approved by final orders of the court has the force of res
- The above-stated provision of the Labor Code, however, must judicata between the parties and should not be disturbed
be read in conjunction with the implementing rules and except for vices of consent or forgery. Hence, ‘a decision on a
regulations of the said law. Sec. 4(a) of Rule 1, Book VI of the compromise agreement is final and executory.’ Such agreement
Rules and Regulations Implementing the Labor Code, provides has the force of law and is conclusive on the parties. It
that: transcends its identity as a mere contract binding only upon the
SEC. 4. Reinstatement to former position. – (a) An employee parties thereto, as it becomes a judgment that is subject to
who is separated from work without just cause shall be execution in accordance with the Rules. Judges therefore have
reinstated to his former position, unless such position no the ministerial and mandatory duty to implement and enforce
longer exists at the time of his reinstatement, in which case it.” (Underlining supplied.) Hence, compromise agreements
he shall be given a substantially equivalent position in the duly approved by the courts are considered the decisions in the
same establishment without loss of seniority rights. particular cases they involve.
[Emphasis supplied.] - In the case at bar, when both parties agreed to waive “all
- Reinstatement presupposes that the previous position from other claims, damages and causes of action,” a compromise
which one had been removed still exists, or that there is an they entered into in good faith absent any allegation otherwise,
unfilled position more or less of a similar nature as this they did not only agree to dismiss the appeal pending before
previously occupied by the employee. the NLRC. Particularly, the private respondent also agreed to
- Accordingly, an employee who is separated from his receive P124,824.31, thus, relinquishing his claim to the
employment on a false or nonexistent cause is entitled to be Decision dated 27 August 1991, rendered by the labor arbiter in
reinstated to his former position because the separation is his favor. In return, the petitioner company, to put an end to
illegal. If the position is no longer available for any other valid the labor dispute, acquiesced to have its appeal before the
and justifiable reason, however, the reinstatement of the NLRC dismissed.
illegally dismissed employee to his former position would - The waiver was approved and considered by the NLRC when it
neither be fair nor just. The law itself can not exact compliance promulgated its Order dated 22 February 1993, dismissing the
with what is impossible. Ad imposible tenetur. The employer’s appeal of the petitioners. Conformably, to cite jurisprudence,
remedy is to reinstate the employee to a substantially the Compromise Agreement approved by the proper authority
equivalent position without loss of seniority rights as provided became the decision in this particular case. Settlements of this
for above. kind not only are recognized to be proper agreements but so
- In the case at bar, strictly applying the rules provided above, encouraged as well.
private respondent Abella should have been reinstated back to - Undoubtedly, the allegations of invalid reinstatement on the
his old position as a Security Assistant at the SNGP, Ticala, part of the petitioners are a mere afterthought on private
Valencia, Negros Oriental. Or, at the very least, since the respondent’s part in a fascinating attempt to extricate himself
position of Security Assistant at Ticala, Valencia, Negros from an assignment that brought him to a far away place and
Oriental, had been abolished as claimed by the petitioners, he caused him to be separated from his family.
should have been reinstated to another position that is Disposition Petition granted
substantially equivalent to his former one. In reality, private
respondent Abella was first reinstated in the payroll, as a
General Services Assistant and subsequently, as a Pipeline EXCEPTIONS
Foreman, while he was actually discharging the functions of a
Security Assistant. As insisted by the petitioners, this situation
was due to the fact that the original position of the private BUSINESS CONDITIONS
respondent had already been abolished in the previous
company-wide reorganization in 1991.
- But then, the private respondent was reslotted as Security UNION OF SUPERVISORS V SEC OF LABOR
Assistant when he was transferred to the Leyte Geothermal [PAGE]
Project. He was, thus, performing the functions of a Security
Assistant and at the same time occupying the official position of
ESPEJO V NLRC (COOP INSURANCE SYSTEM OF
a Security Assistant though in a geographically different
location, when said position became vacant. THE PHILS)
- Be that as it may, notwithstanding the above disquisitions, the 255 SCRA 430
atypical circumstances in this case capitulate against the BELLOSILLO; March 29, 1996
outright application of the said rules. Whether or not the private
respondent was validly reinstated per Order of the Labor Arbiter FACTS
dated 27 August 1991, is beside the point in view of the fact - Espejo was GM of Cooperative Insurance System of the
that the Joint Motion to Dismiss filed by the parties in the earlier Philippines (CISP). Aside from salary, he had certain privileges
case contained a clause whereby the parties agreed that “[a]ll such as company car with driver.
other claims, damages and causes of action arising out of the - They had to raise capital so to satisfy the requirement of the
instant case are waived.” Insurance Commission. The CISP Board of Directors resolved to
- Regrettably, the Court of Appeals and the NLRC have sell the company car that Espejo was using to help raise the
overlooked this very important fact. money. Espejo didn’t like this idea and tendered his resignation.
- The clause agreed to by the parties in the Joint Motion to He even said that if the Board really sells his car, his resignation
Dismiss filed before the NLRC was in the nature of a would be irrevocable.
compromise agreement, i.e., “an agreement between two or - The Board did resolve to sell his car; but Espejo said he won’t
more persons, who for preventing or putting an end to a resign anymore. But they dismissed him anyway.
lawsuit, adjust their difficulties by mutual consent in the - He filed with the LA for illegal dismissal. LA ordered
manner which they agree on, and which everyone of them reinstatement and payment of backwages. NLRC ordered
prefers to the hope of gaining, balanced by the danger of payment of backwages, without reinstatement. This was
losing.” Settlement of disputes by way of compromise, is an because by the time the case reached the NLRC, Espejo was
accepted, nay desirable and encouraged practice in courts of
Labor Law 1 A2010 - 60 - Disini
already 60 years old, so the NLRC said he can’t be reinstated - It would seem, however, that the circumstances of this case
anymore. render inapproriate Umlas' reinstatement to his former position,
as an item of relief. A more equitable disposition is that which
ISSUE this Court has more than once made in other cases of the same
WON (60+ yr old) Espejo can be reinstated nature: the award, in lieu of reinstatement, of separation pay at
the rate of one month's salary for every year of service, "so that
HELD . . . (the employee) can be spared the agony of having to work
NO anew with . . . (the employer) under an atmosphere of antipathy
- The law recognizes as valid any retirement plan, agreement or and antagonism, and the . . . (latter) does not have to endure
management policy regarding retirement at an earlier or older the continued service of . . . (the former) in whom it has lost
age. confidence."
- In the case of petitioner, CISP did not have any retirement plan Disposition NLRC decision AFFIRMED.
for its employees. In such situation, Sec. 13, Book IV, of the
Omnibus Rules Implementing the Labor Code provides that in
SENTINEL SECURITY AGENCY INC V NLRC
the absence of a retirement plan, agreement or policy an
employee may be retired upon reaching the age of sixty (60) [PAGE 140]
years. Construing this provision, an employee may retire, or
may be retired by his employer, upon reaching sixty (60). Thus, SIBAL V NOTRE DAME OF GREATER MANILA
an employee held to be illegally dismissed cannot be reinstated 182 SCRA 538
if he had already reached the age of sixty (60) years at the time
of his complaint. NLRC therefore did not err in denying the PARAS; February 23, 1990
reinstatement of petitioner.
- Generally, an illegally dismissed employee who cannot be NATURE
reinstated is granted separation pay and back wages. However Petition for certiorari seeking to reverse a decision of the NLRC
considering that petitioner has already reached the statutory
retirement age of sixty (60), NLRC is correct that petitioner is FACTS
entitled only to back wages. The payment of back wages is a - Petitioner Delia R. Sibal was employed as school nurse by
form of relief that restores the income lost by reason of the private respondent Notre Dame of Greater Manila starting
unlawful dismissal; separation pay, in contrast, is oriented January 1973.
towards the immediate future, the transitional period the - She was compensated on a 12-month basis, although she
dismissed employee must undergo before locating a worked only during the ten-month period of classes.
replacement job. - On March 10, 1976, respondent's director, Fr. Gonzales,
Disposition Petition denied. Pay backwages from termination requested her to shorten her summer vacation, from two weeks
until he turned 60 yrs old. after the last day of classes to two weeks before the first day of
classes of the next school year. Petitioner acceded to the
request
- In April 1980, Fr. Gonzales required petitioner to report during
that summer to help in the library.
- Petitioner contested the order, stating that it will necessitate a
change in the terms and conditions of her employment and that
library work is alien to her profession as nurse. Fr. Gonzales
STRAINED RELATIONS relented.
- Fr. Gonzales was replaced by Fr. Pablo Garcia, an American, as
PEARL S. BUCK FOUNDATION INC V NLRC new director.
[PAGE 235] - Fr. Garcia required petitioner to report for work during the
summer before the beginning of school year 1981-1982.
- Petitioner informed him that her contract does not require her
COMMERCIAL MOTORS CORP V NLRC (UMLAS) to report for work during the summer vacation.
192 SCRA 191 - Fr. Garcia promised to verify her allegation. However, he failed
NARVASA; December 10, 1990 to inform petitioner of his findings. Thus, in order that her
failure to report for work may not be misinterpreted, petitioner
filed leaves of absence extending from April 1, 1981 to June 14,
FACTS
1981. Petitioner failed to receive her vacation pay.
- CMC is engaged in the sale, marketing and distribution of
- During school year 1981-1982, petitioner was assigned to
Mercedes Benz vehicles and spare parts, as well as in the
teach health subjects to 900 students (19 sections), without
servicing, repair and maintenance of said vehicles. It has
being compensated
branches in various parts of the country, including one in
- In December 1981, petitioner received her 13th month pay
Davao. Pedro Umlas had been working with CMC, first as Spare
computed on the basis of a 10-month period only.
Parts Checker at the Manila Office; later, as Warehouse-in-
- On April 5, 1982, Fr. Garcia again required petitioner to work
Charge in the Davao Branch; and still later, Spare Parts
during that summer to update all the clinical records of the
Supervisor in the same Branch. Then there was the discovery
students.
of the missing parts valued at around 200,000. Umanlas was
- Petitioner objected and reiterated that her contract does not
thereafter dismissed. The LA ruled against Umanlas but the
require her to report for work during summer. She also
NLRC reversed.
reminded Fr. Garcia that she had not received any
compensation for teaching health subjects
ISSUES
- Fr. Garcia replied that it was imperative for her to report for
1. WON NLRC committed grave abuse of discretion
work during the summer because it is the best time to update
2. WON reinstatement is the appropriate relief
the clinical records, and that petitioner was not entitled to extra
compensation for teaching because teaching was allegedly part
HELD
of her regular working program as a school nurse.
1. NO
- Petitioner, apart from reiterating her objection to the order,
- The dismissal was not based on substantial facts. There wasn’t
called the attention of Fr. Garcia to the school's failure to pay
even due process in terminating petitioner
her salary for the summer of 1981 and of the deficiency in her
2. NO
13th month pay for that year.
Labor Law 1 A2010 - 61 - Disini
- Fr. Garcia adamantly refused to consider petitioner's demands "strained relations" or "irritant factors" which the Labor Arbiter
and threatened to take drastic measures against her if she capitalized on had been totally eliminated. Respondent NLRC
remains obstinate in her refusal to follow his order to report for obviously failed to consider this and thus perpetuated the error
work that summer committed by the Labor Arbiter in her prior decision.
- Petitioner, for the fourth time, informed Fr. Garcia that her - The dissenting NLRC Commissioner aptly observed thus:
contract does not require her to report for work during summer, - Moreover, it should be emphasized, that no strained relations
and she does not intend to do so that summer of 1982. should arise from a valid and legal act of asserting ones right,
- Petitioner filed a complaint for non-payment of the following; such as in the instant case, for otherwise, an employee who
(1) vacation pay for four (4) summer months; (2) compensation shall assert his/ her right could be easily separated from the
for teaching health subjects; and (3) deficiency in the 13th service by merely paying his/her separation pay on the pretext
month pay for 1981. that his/her relationship with his/her employer had already
- Summons was served on respondent on the opening day of become strained.
classes. That very day, respondent school served petitioner her - To Our mind, strained relations in order that it may justify the
letter of termination effective immediately and it also submitted award of separation pay in lieu of reinstatement with
a copy of the termination paper to the Ministry of Labor and backwages, should be such, that they are so compelling and so
Employment. serious in character, that the continued employment of an
- The following day, petitioner filed an amended complaint, employee is so obnoxious to the person or business of the
adding two more charges: illegal dismissal and unfair labor employer, and that the continuation of such employment has
practice become inconsistent with peace and tranquility which is an
- For the next four to five weeks, more than 20 teachers and Ideal atmosphere in every workplace.
personnel, backed up by the Faculty Association of respondent 2. YES
school, pressed for the ouster of Fr. Garcia with the Ministry of - Petitioner is entitled to compensation for teaching health
Education, Culture, and Sports (MECS) by virtue of PD 176 and subjects. Although the subject taught is Health and allied to her
the following charges: oppressive behavior, arrogance, profession, and is taught during regular working hours,
contempt for Filipinos in general and Filipino teachers in petitioner's teaching the subject in the classroom and her
particular; unfairness in dealing with personnel; dictatorial administering to the health needs of students in the clinic
conduct; and use of abusive Fr. Garcia was eventually replaced involve two different and distinct jobs
on September 8, 1983. - It must be noted that petitioner has established that in
- The Labor Arbiter rendered a decision awarding to petitioner several precedents, non-teaching personnel of respondent
separation pay but denying her claim (1) for compensation for school who were made to handle teaching jobs were actually
teaching Health subject to 19 sections; (2) for moral damages; paid actual compensation. Besides, justice and equity demand
and (3) negating the existence of unfair labor practice that since the principle of equal work has long been observed in
- Petitioner filed a memorandum of partial appeal this jurisdiction, then it should follow that an extra pay for extra
- Petitioner informed the NLRC that Fr. Pablo Garcia had been work should also be applied.
replaced by Fr. Jose Arong, a Filipino, as new director effective 3. YES
September 8, 1983. - The records show that when summons with attached
- On April 11, 1986, public respondent NLRC rendered the complaint of petitioner for money claims was served on
questioned decision which affirmed the decision of the Labor respondent school on June 14, 1982, said respondent, on the
Arbiter very day, gave petitioner her walking papers. Respondent did
not waste any time in dismissing her in brazen violation of
ISSUES these provisions of the Labor Code
1. WON the award of separation pay instead of reinstatement is - The series of discriminatory and oppressive acts of respondent
the proper remedy under the circumstances school against petitioner invariably makes respondent liable for
2. WON petitioner is entitled to compensation for teaching moral damages under Art. 1701, which prohibits acts of capital
health subjects or labor against each other, and Art. 21 on human relations in
3. WON unfair labor practice existed which would entitle relation to Art. 2219 No. 10 and Art. 2220, all of the Civil Code
petitioner to moral damages Disposition The appealed decision of respondent NLRC is set
aside. Private respondent is ordered to REINSTATE petitioner to
HELD her former position without loss of seniority rights and with
1. NO backwages for three (3) years from the time of her illegal
- The LA had found that the termination of petitioner was not dismissal; to pay her the regular extra compensation relative to
supported by any just cause or reason. Yet, she erroneously her teaching health subjects; and to pay her moral damages.
ordered separation pay instead of reinstatement with
backwages based on the alleged reason that petitioner's
NAGA COLLEGE FOUNDATION EDUCATION
working relations with the former director, Father Garcia, had
become so strained and deteriorated that it became impossible WORKERS ORG V BOSE
for them to work harmoniously again. And the NLRC affirmed 289 SCRA 274
such finding which is untrue and merely speculative. MENDOZA; April 20, 1998
- It should be noted that the alleged conflict between the
petitioner and the director was strictly official in nature, the NATURE
cause of which was the violation of the terms of employment by Special civil action of certiorari
the latter. Petitioner's assertion of her right to unpaid salaries
and bonus differential was not motivated by any personal FACTS
consideration. Rather, she simply claimed benefits which, under - Petitioners were employees of the Naga College Foundation.
the law, she was entitled to and legally due her. In her act of They filed a complaint with the Regional Arbitration Branch of
asserting these money claims, petitioner observed utmost tact, the NLRC in Naga City for unfair labor practice, reinstatement,
courtesy and civility. back wages, and damages against private respondents, alleging
- Significantly, about a month after petitioner's termination on illegal dismissal. On the other hand, private respondents filed a
June 14, 1982, more than twenty teachers and personnel of complaint against petitioners for conducting an illegal strike.
respondent school, backed by the Faculty Association, - Executive Labor Arbiter ordered the reinstatement of
petitioned for the ouster of Director Fr. Garcia for serious petitioners and the payment of back wages to them
charges under P.D. 176. Consequently, Fr. Garcia was replaced - Private respondents appealed. While the appeal was pending,
on September 8, 1983. Clearly, therefore, when the assailed petitioners moved for the execution of the portion of the
NLRC decision was rendered on April 11, 1986, the alleged
Labor Law 1 A2010 - 62 - Disini
decision insofar as it granted reinstatement. loss of seniority and to pay them full backwages, subject
- The parties then entered into a compromise agreement however to any agreement the parties may have entered into.
whereby private respondents agreed to reinstate petitioners in
the payroll effective Sept 21, 1992, the date of receipt by them
BASCON V CA
of the ELA’s decision. The agreement was approved by the ELA.
- However, after paying three installments of the accrued [PAGE 215]
salaries, private respondents failed to make further payments
to petitioners. Petitioners asked the ELA for assistance and, as CABATULAN V BUAT
no action was taken on their request, they filed a motion for [PAGE 294]
execution directly with the NLRC in Manila.
- Petitioners again moved for the execution of the decision
before ELA. Petitioners insisted on execution according to the ACESITE CORP V NLRC
tenor of the original decision, without need of determining how CARPIO-MORALES; January 26, 2005
much they might have earned during the period of their
dismissal. NATURE
- ELA denied execution on the ground that by filing a motion for Two consolidated petitions for review on certiorari challenging
execution in the NLRC in Manila, petitioners had abandoned CA decision
their motions in the Legaspi office.
- Petitioners contended that the reinstatement portion of the FACTS
decision had already been the subject of a compromise - Leo Gonzales was hired as Chief of Security of Holiday Inn
agreement and, therefore, the order deleting the order of Manila. On March 25, 1998, Gonzales took a 4-day sick leave
reinstatement and awarding separation pay in lieu thereof in and took emergency leave on March 30, 1998. On April 16-29,
effect amended a final and executory order. Petitioners 1998, he again took a 12-day vacation leave. Before the
claimed that they had been forced to file a motion directly in expiration of his 12-day vacation leave, Gonzales filed an
the NLRC because of the ELA’s failure to act upon their motions, application for emergency leave for 10 days. The application
but that they had no intention at all of abandoning their motion was not approved. He received a telegram from Acesite
in the ELA’s office. advising him that he was on unauthorized leave and asking him
to provide a written explanation within the next 24 hours why
ISSUE he was not reporting for work and was required to report for
WON petitioners abandoned the agreement when they moved work the following day. On May 2, 1998, Gonzales’ father
for the execution of the decision (WON the Executive Labor Anacleto sent a telegram to Acesite stating that he was still
Arbiter could freely consider supervening events) recovering from severe stomach disorder and would report back
for work on May 4, 1998, attaching a medical certificate.
HELD - On May 4, 1998, Gonzales reported for work and presented
NO himself to Johann Angerbauer, then Resident Manager of the
Reasoning hotel. He requested for leave without pay from May 5-9, 1998
- The Solicitor General contends that by asking for the which was provisionally approved on condition that he
execution of the decision of the NLRC, petitioner in effect (Gonzales) would be sending his explanation re his absences
abandoned or rescinded the compromise agreement, leaving that same day through e-mail, which he did. In the evening
the ELA free to consider supervening events, such as the strain Gonzales left for Abra.
in relations of the parties, in the resolution of the motion for - Also on May 4, 1998 Angerbauer sent an inter-office memo to
execution. There is no basis in the record for supposing that Gonzales, stating that his presence was needed at a meeting
petitioners gave up their claim for reinstatement. The subject scheduled on the following day. Gonzales claims that he got
of the compromise agreement was their reinstatement as hold of a copy of the above-quoted memo only on May 8, 1998.
ordered in the decision of the ELA. The subject of the NLRC - Not having reported for work, Angerbauer sent Gozales a
decision, which they sought to enforce in the motion for telegram on May 5, 1998 stating that Gozales should report for
execution, was also their reinstatement. Whichever one it is, no work upon receipt of notice due to very urgent matters.
supervening event rendering execution unjust can be Gonzales, who claims to have received the telegram only in the
considered: afternoon of May 7, 1998, immediately went back to Manila on
1) Petitioners did not occupy any managerial or confidential May 8, 1998 only to be “humiliatingly and ignominiously barred
position in the Naga College Foundation which might be by the guard from entering the premises.” It appears that on
affected by any bad feeling which might have been May 7, 1998, Angerbauer issued a Notice of Termination
engendered as a result of the execution of the decision. through an inter-office memo.
2) It was private respondents who appear to have caused a - Gonzales thus filed a complaint against Acesite, Angerbauer
strain in the relation of the parties. Any bad feeling was and Kennedy for illegal dismissal with prayer for reinstatement
caused by its failure to comply in good faith with their and payment of full backwages, service incentive leave, 13th
undertaking under the compromise agreement. month pay, moral and exemplary damages and attorney’s fees.
- Principle of Strained Relations: This cannot be applied Gonzales, however, failed to appear in 2 consecutive hearings
indiscriminately. Otherwise, reinstatement can never be despite notice, meriting the dismissal by the Labor Arbiter of his
possible simply because some hostility is invariably engendered complaint.
between the parties as a result of litigation. That is human - Gonzales refiled his complaint for illegal dismissal. The Labor
nature. Besides, no strained relations should arise from a valid Arbiter dismissed the complaint for lack of merit. The NLRC
and legal act of asserting one’s right; otherwise an employee reversed the decision. The CA affirmed the NLRC decision.
who shall assert his right could be easily separated from the
service, by merely paying his separation pay on the pretext that ISSUES
his relationship with his employer had already become strained. 1. WON Gonzales was illegally dismissed
(Globe-Mackay Cable and Radio Corp. v. NLRC) 2. WON Gonzales should be reinstated
3) Petitioners were frustrated at the undue delay in the
resolution of their motions by the ELA and they thought of HELD
turning to the NLRC in Manila in the hope of obtaining 1. YES
assistance. Abandonment was far from their intention. - There appears to have been no just cause to dismiss Gonzales
Disposition Petition is granted, and the orders of ELA are from employment. As correctly ruled by the Court of Appeals,
hereby annulled and set aside. Private respondents are hereby Gonzales cannot be considered to have willfully disobeyed his
ordered to reinstate petitioners to their former positions without employer. Willful disobedience entails the concurrence of at
Labor Law 1 A2010 - 63 - Disini
least 2 requisites: the employee’s assailed conduct has been management advised Union and Uy that they would terminate
willful or intentional, the willfulness being characterized by a Uy, which they later did.
“wrongful and perverse attitude;” and the order violated must - Uy filed case for illegal transfer and termination.
have been reasonable, lawful, made known to the employee - LA: Uy was illegally dismissed, reinstatement with full
and must pertain to the duties which he had been engaged to backwages and 10% attorney’s fees – BPI appealed to NLRC
discharge. - NLRC: set aside LA’s Decision for lack of jurisdiction, case
- In Gonzales’ case, his assailed conduct has not been shown to under Voluntary Arbitrator (VA)
have been characterized by a perverse attitude, hence, the first - VA: Uy illegally dismissed, reinstatement without loss of
requisite is wanting. His receipt of the telegram disapproving seniority rights and with full backwages from time she was
his application for emergency leave starting April 30, 1998 has dismissed until she is actually reinstated, including other
not been shown. And it cannot be said that he disobeyed the benefits under CBA, plus 10% attorney’s fees – MFR of BPI
May 5, 1998 telegram since he received it only on May 7, 1998. denied, filed petition for review in CA
On the contrary, that he immediately went back to Manila upon - CA: affirmed deci with modification – NO REINSTATEMENT
receipt thereof negates a perverse attitude. because of strained relations, instead pay back salaries not
2. NO exceeding 3 years and separation pay of one month for every
- In illegal dismissal cases, reinstatement to an illegally year of service.
dismissed employee’s former position may be excused on the - so here, partial reconsideration on both side, but BPI’s petition
ground of “strained relations.” This may be invoked against denied because of technicality so only entertain BPI Union’s
employees whose positions demand trust and confidence, or Petition for review.
whose differences with their employer are of such nature or
degree as to preclude reinstatement. In the case at bar, ISSUES
Gonzales was Chief of Security, whose duty was to “manage 1. WON decision to limit award of backwages to 3 years
the operation of the security areas of the hotel to provide and contrary to law and jurisprudence
ensure the safety and security of the hotel guests, visitors, 2. WON UY should be reinstated
management, staff and their properties according to company
policies and local laws.” It cannot be gainsaid that Gonzales’ HELD
position is one of trust and confidence, he being in charge of 1. YES
the over-all security of said hotel. Thus, reinstatement is no - The Mercury Drug Rule used by CA already abandoned with
longer possible. In lieu thereof, Acesite is liable to pay the promulgation of RA 6715 in 1989, amending Article 279, LC
separation pay of 1 month for every year of service. Ratio. Absent any exceptional circumstance, it is now settled
that an employee who is unjustly dismissed from work shall be
entitled to full backwages, inclusive of allowances, and to his
BPI EMPLOYEES UNION V BPI
other benefits or their monetary equivalent from the time his
454 SCRA 357 compensation was withheld from him up to the time of his
CHICO-NAZARIO; March 31, 2005 actual reinstatement.
Reasoning
NATURE - Mercury Drug Rule [Mercury Drug, Co., Inc. vs. CIR]: an
Petition for review on certiorari under Rule 45, ROC, seeks to employee whose illegal termination had lasted some years was
partially reverse the Decision and Resolution of the Court of entitled to backwages for a fixed period “without further
Appeals which affirmed with modification the Decision rendered qualifications,” i.e., without need of taking account of whatever
by the Accredited Voluntary Arbitrator dated 31 December he might have earned during such period, and deducting it from
1997, in VA Case No. 08-001-97. the amount of recovery, by providing a base period of three
years.
FACTS - In the case, the illegal dismissal of Uy took effect on 1995
- October 1995: Because Zenaida Uy shouted at her Senior when RA 6715 already was in effect.
Manager Delfin Santos (Santos), she was told to report to AVP - Verily, the evident legislative intent as expressed in Rep. Act
Carlos Fragante (AVP), who later told her to transfer from the No. 6715 is that the backwages to be awarded to an illegally
Escolta Branch to Plaza Cervantes Branch to defuse the tense dismissed employee, should not, as a general rule, be
situation in their branch. The next day, AVP received the report diminished or reduced by the earnings derived by him
of Santos regarding the incident and so he ordered Uy to elsewhere during the period of his illegal dismissal. The
transfer. Uy resisted, awaiting the result of the grievance underlying reason for this ruling is that the employee, while
meeting initiated by the BPI Union against BPI, where no litigating the legality (illegality) of his dismissal, must still earn
agreement was reached. a living to support himself and his family. Corollary thereto, full
- BPI initially sent 2 letters (before and after the grievance backwages have to be paid by the employer as part of the price
meeting) to Uy ordering her to explain why no disciplinary or penalty he has to pay for illegally dismissing his employee.
action should be taken against her for insubordination, then Thus, a closer adherence to the legislative policy behind Rep.
later for uttering disrespectful, discourteous, insulting and Act. No. 6715 points to “full backwages” as meaning exactly
unbecoming language to her superior, Santos. In her first reply, that, i.e., without deducting from backwages the earnings
she explained that there was no proper turnover of her derived elsewhere by the concerned employee during the
accountabilities and she could not enter the bank premises to period of his illegal dismissal. In other words, the provision
do so. On the second reply, Uy reiterated her first reply and she calling for “full backwages” to illegally dismissed employees is
requested to be considered on leave starting November. BPI clear, plain and free from ambiguity and, therefore, must be
wrote another letter directing her to show cause, now also for applied without attempted or strained interpretation
going AWOL. Now Uy asked for particulars regarding the alleged - Consequently, in accordance with Section 34, Rep. Act No.
“highly disrespectful, discourteous, insulting, threatening, and 6715, employees illegally dismissed after 21 March 1989 are
unbecoming language and behavior” towards her manager and entitled to their “full backwages,” inclusive of other benefits or
her alleged past quarrels with her co-employees, and alleged their monetary equivalent, from the time their actual
that she was sexually harassed by Santos6. Union asked for compensation was withheld from them up to the time of their
investigation on the “sexual harassment charge”. actual reinstatement.
- Late November, 2 meetings were held between the union and 2. YES
the management where no agreement was reached, and the - Mere allegation of strained relations to bar reinstatement is
frowned upon. Besides, the members of the management
6 Santos allegedly told Uy “Dito ka na lang, marami and [ang] lalaki dito”, and when she answered “Hindi ako mahilig sa lalaki”, he retorted, “Maski
involved in the case are no longer in the Escolta branch so no
dito ka na lang sa kuwarto ko”
more reason for strained relations.
Labor Law 1 A2010 - 64 - Disini
Ratio. The strained relations doctrine should be strictly applied seeking reinstatement. NLRC reversed the decision upon appeal
so as not to deprive an illegally dismissed employee of his right by respondents. Her MFR denied, petitioner filed a petition for
to reinstatement. review with the CA which again reversed the decision but still
- Well-entrenched is the rule that an illegally dismissed denying reinstatement due to strained relations.
employee is entitled to reinstatement as a matter of right. Over
the years, however, the case law developed that where ISSUE
reinstatement is not feasible, expedient or practical, as where WON the CA erred in its factual finding of strained relations
reinstatement would only exacerbate the tension and strained without citing specific evidence and denying reinstatement thus
relations between the parties, or where the relationship contradicting Article 279
between the employer and employee has been unduly strained
by reason of their irreconcilable differences, particularly where HELD
the illegally dismissed employee held a managerial or key YES
position in the company, it would be more prudent to order - Article 279 and Sec. 2 of the Omnibus Rules Implementing the
payment of separation pay instead of reinstatement. Some Labor Code both provide that a regular employee may not be
unscrupulous employers, however, have taken advantage of the terminated without just cause. Article 279 and Sec. 3 of the
overgrowth of this doctrine of “strained relations” by using it as Omnibus further that an employee unjustly dismissed is entitled
a cover to get rid of its employees and thus defeat their right to to reinstatement. However, it has been held that where
job security. reinstatement would only exacerbate tension and strained
-To protect labor’s security of tenure, we emphasize that the relations between the parties by reason of irreconcilable
doctrine of “strained relations” should be strictly applied so as differences, especially where the employee held a managerial
not to deprive an illegally dismissed employee of his right to or key position, it would be more prudent to order payment of
reinstatement. Every labor dispute almost always results in separation pay instead of reinstatement.
“strained relations” and the phrase cannot be given an - Some employers have abused the doctrine of “strained
overarching interpretation, otherwise, an unjustly dismissed relations” to defeat their employees security of tenure. To
employee can never be reinstated. protect the latter, the doctrine must be strictly applied and
- This Court is cognizant of management’s right to select the cannot be given an overarching interpretation. Since almost
people who will manage its business as well as its right to every labor dispute results in some strain, a liberal
dismiss them. However, this right cannot be abused. Its interpretation of the doctrine would mean an unjustly dismissed
exercise must always be tempered with compassion and employee could never be reinstated.
understanding. - The existence of strained relations is a factual finding and
-Where penalty less severe would suffice, whatever missteps should be initially raised, argued and proven before the Labor
may be committed by labor ought not to be visited with Arbiter. In the instant case, the defense was not raised by
consequence so severe. It is not only because of the law’s respondents before the Labor Arbiter and was not subject of the
concern for the workingmen. There is, in addition, his family to evidence raised by either party. There is thus no evidentiary
consider. Unemployment brings untold hardships and sorrows support to the parties’ strained relations and NLRC’s ruling on
on those dependent on the wage-earner. The misery and pain the alleged antagonism between them was mere guesswork.
attendant on the loss of jobs then could be avoided if there be There is no hard evidence to prove that the parties’ relationship
acceptance of the view that under all the circumstances of a has reached the point where it is best to sever their
case, the workers should not be deprived of their means of employment relationship.
livelihood. Nor is this to condone what has been done by them. Disposition the assailed Decision of the CA is AFFIRMED, with
Disposition the instant petition is GRANTED. The assailed 28 the MODIFICATION that petitioner is entitled to REINSTATEMENT
October 1998 Decision and 8 March 1999 Resolution of the
Court of Appeals are hereby MODIFIED as follows: 1) respondent
BPI is DIRECTED to pay petitioner Uy backwages from the time
of her illegal dismissal until her actual reinstatement; and 2)
respondent BPI is ORDERED to reinstate petitioner Uy to her IMPLEMENTATION – OPTIONS AND
former position, or to a substantially equivalent one, without
loss of seniority right and other benefits attendant to the RATIONALE
position.

SAGUM V CA (INST OF INTEGRATED ELECTRICAL


OPTIONS AND RATIONALE
ENGINEERS)
459 SCRA 223 JARDINE DAVIES V NLRC (SALUTIN)
PUNO; May 26, 2005 225 SCRA 757
VITUG; August 31, 1983
FACTS
- petitioner Sagum was appointed as Officer Manager and OIC NATURE
for the Executive Director in concurrent capacity as Executive Petition for review on certiorari resolution of NLRC (declaring
Secretary of respondent institute. She was a member of the Salutin not having abandoned his work)
permanent staff for 16 years and, as executive secretary,
served 11 National Presidents. FACTS
- Private respondents allege that Sagum abused her power in - Salutin was employed by Jardine Davies as a demonstrator/
consistently awarding printing jobs to DBR Prints, despite agronomist to provide services WRT to the promotion and use
having the lowest bids. Petitioner was preventively suspended of JD’s pesticides and other products.
for 30 days and served 2 written notices demanding - This case involves 2 special civil actions for certiorari (instant
explanations for the imputed offenses to which she denied the case is the latter one). The issue began when Salutin filed a
charges. She was later dismissed for gross negligence and loss complaint fro illegal dismissal, which the LA ruled in his favor,
of trust and confidence. ordering JD to reinstate him and pay backwages. JD appealed to
- The Labor Arbiter ruled the dismissal was illegal, ordering the the NLRC, and reinstated Salutin “on payroll only”, in
payment of backwages and separation pay. Petitioner argued compliance with the write of execution issued by the LA. Appeal
that the decision did not show a case of irretrievable to NLRC was dismissed.
estrangement between her and private respondents, thus
Labor Law 1 A2010 - 65 - Disini
- JD then filed with the SC the 1st petition for certiorari, assailing FRANCISCO; October 16, 1997
the NLRC denial of its appeal. This was dismissed for failure to
comply with the SC Circular on forum shopping.
FACTS
However, while the appeal to the NLRC was still pending, and
- Lourdes A. de Jesus is Pioneer’s reviser/trimmer since 1980
shortly after the reinstatement of Salutin “on payroll only”, JD
and as such she based her assigned work on a paper note
directed Salutin to report for work to their Bacolod Branch
posted by petitioners. The posted paper which contains the
Manager. He in fact reported to work, but did not stay long, and
corresponding price for the work to be accomplished by a
was reported never to have returned to work. JD stopped
worker is identified by its P.O. Number. On August 15, 1992, de
further payment of wages.
Jesus worked on P.O. No. 3853 by trimming the cloths' ribs. She
- JD then filed with the NLRC a “Manifestation and Motion”,
thereafter submitted tickets corresponding to the work done to
stating that Salutin should be considered as having abandoned
her supervisor. Three days later, de Jesus received from
his work considering his continuous absence of more than 3
petitioners' personnel manager a memorandum requiring her to
weeks. JD also contended that Salutin has been gainfully
explain why no disciplinary action should be taken against her
employed in another company already. Salutin opposed motion,
for dishonesty and tampering of official records and documents
claiming that he was forced to leave because he was then
with the intention of cheating as P.O. No. 3853 allegedly
suffering from a serious ailment (peptic ulcer), and presented a
required no trimming. The memorandum also placed her under
medical certificate to support his claim. He in turn filed his own
preventive suspension for thirty days starting from August 19,
motion (that JD be ordered to release his withheld salary), which
1992, In her handwritten explanation, de Jesus maintained that
the NLRC granted. From this decision the instant petition for
she merely committed a mistake in trimming P.O. No. 3853 as it
certiorari was filed.
has the same style and design as P.O. No. 3824 which has an
attached price list for trimming the ribs and admitted that she
ISSUE
may have been negligent in presuming that the same work was
WON Salutin should be considered as having abandoned his
to be done with P.O. No. 3853, but not for dishonesty or
work when he failed to report for work pending JD’s appeal,
tampering. Petitioners' personnel department, nonetheless,
considering that at the time he was on reinstatement on payroll
terminated her from employment and sent her a notice of
termination dated September 18, 1992.
HELD
- De Jesus filed a complaint for illegal dismissal against
NO
petitioners. The Labor Arbiter who heard the case noted that de
Ratio For abandonment to constitute a valid cause for
Jesus was amply accorded procedural due process in her
termination of employment there must be a deliberate
termination from service. Nevertheless, after observing that de
unjustified refusal of the employee to resume his employment.
Jesus made some further trimming on P.O. No. 3853 and that
Reasoning
her dismissal was not Justified, the Labor Arbiter held
- When JD filed its first petition for certiorari, it also raised, as an
petitioners guilty of illegal dismissal and ordered her
added argument on the alleged abandonment of work by
reinstatement without loss of seniority rights and with full
Salutin, the fact that he was gainfully employed elsewhere.
backwages from the time of her suspension.
Considering that this matter was thus already taken up by JD in
- Petitioners appealed to the public respondent National Labor
its first petition for certiorari, which this Court dismissed with
Relations Commission (NLRC). The NLRC declared that the
finality, JD should really now be barred from invoking anew that
status quo between them Should be maintained and affirmed
issue in this present (second) petition.
the Labor Arbiter's order of reinstatement, but without
- JD’s basis for the declaration of abandonment of work is the
backwages.
unauthorized absences of Salutin.
- The NLRC further "directed petitioner to pay de Jesus her back
- For abandonment to constitute a valid cause for termination of
salaries from the date she filed her motion for execution on
employment, there must be a deliberate unjustified refusal of
September 21, 1993 up to the date of the promulgation of [the]
the employee to resume his employment. This refusal must be
decision."
clearly shown. Mere absence is not sufficient; it must be
- Petitioners filed their motion for reconsideration which the
accompanied by overt acts pointing to the fact that the
NLRC denied, hence this petition anchored substantially on the
employee does not want to work anymore.
alleged NLRC's error in holding that de Jesus is entitled to
- Abandonment of position is a matter of intention expressed in
reinstatement and back salaries.
dearly certain and unequivocal acts. In this instance, however,
- Petitioners' theory is that an order for reinstatement is not
uncontroverted facts show just exactly the opposite. Hence,
self-executory and that there must be a writ of execution which
Salutin did report, as directed, on 24 September 1991, but that
may be issued by the NLRC or by the Labor Arbiter motu proprio
he could not stay long because he was ailing at that time; he,
or on motion of an interested party. And that even if a writ of
although perhaps belatedly made, did seek medical
execution was issued, their timely appeal coupled by the
consultation for "peptic ulcer”; and later on, he did, in fact,
posting of appropriate supersedes a bond, effectively
manifest his desire to assume his work with JD.
forestalled and stayed execution of the reinstatement order of
- The order of immediate reinstatement pending appeal, in
the Labor Arbiter.
cases of illegal dismissal is an ancillary relief under R.A. 67157
granted to a dismissed employee to cushion him and his family
ISSUE
against the impact of economic dislocation or abrupt loss of
WON an order for reinstatement needs a writ of execution
earnings. If the employee chooses not to report for work
pending resolution of the case on appeal, he foregoes such a
HELD
temporary relief and is not paid of his salary.
NO. An award or order for reinstatement is selfexecutory.
** underlined portion really obiter, but most relevant to our
- Article 223 of the Labor Code, as amended by R.A. No. 67 15
topic.
which took effect on March 2 1, 1989, pertinently provides:
Disposition Petition dismissed. NLRC resolutions AFFIRMED.
223. Appeal. - Decisions, awards. or orders of the Labor
Arbiter are final and executory unless appealed to the
PIONEER TEXTURIZING CORP V NLRC (PTWU & DE Commission by any or both parties within ten (10) calendar
JESUS) days from receipt of such decisions, awards, or orders. Such
appeal maybe entertained only on any of' the following
280 SCRA 806
grounds:
"In any event, the decision of' the Labor Arbiter reinstating a
7
No mention as to what this RA does, but it amends certain articles of the LC to
dismissed or separated employee insofar as the
“extend protection to labor, strengthen constitutional rights of workers, foster reinstatement aspect v. concerned. shall Immediately be
inductrial peace and harmony, xxx and reorganize the NLRC.”
Labor Law 1 A2010 - 66 - Disini
executory, even pending appeal. The employee shall either the Labor Arbiter or the NLRC could easily delay the issuance of
he admitted back to work under the same terms and the writ thereby setting at naught the strict mandate and noble
conditions prevailing prior to his dismissal or separation or at put-pose envisioned by Article 223. In other words, if the
the option of' the employer, merely reinstated in the payroll. requirements of Article 224 were to govern, as we so declared
The posting of a bond by the employer shall not stay the in Maranaw, then the executory nature of a reinstatement order
execution for reinstatement provided herein. or award contemplated by Article 223 will be unduly
- In Zamboanga City Water District v. Buat, the Court circumscribed and rendered ineffectual.
construed Article 223 to mean exactly what it says. We said:
"Under the said provision of law, the decision of the Labor
INTERNATIONAL CONTAINER SERVICES V NLRC
Arbiter reinstating a dismissed or separated employee insofar
as the reinstatement aspect is concerned, shall be (TANPEINGCO)
immediately executory, even pending appeal. The employer 300 SCRA 335
shall reinstate the employee concerned either by: (a) actually BELLOSILLO; December 21, 1998
admitting him back to work under the same terms and
conditions prevailing prior to his dismissal or separation; or NATURE
(b) at the option of the employer, merely reinstating him in Special civil action for certiorari for the modification of the
the payroll. Immediate reinstatement is mandated and is not decision of the NLRC deleting therefrom the portion which
stayed by the fact that the employer has appealed, or has orders to pay the private respondent Tanpiengco backwages
posted a cash or surety bond pending appeal." despite valid dismissal.
- We note that prior to the enactment of R.A. No. 67 15, Article
223 24 of the Labor Code contains no provision dealing with the FACTS
reinstatement of' an illegally dismissed employee. The - Petitioner ICTSI is a corporation engaged in stevedoring,
amendment introduced by R.A. No. 67 15 is an innovation and a operating the Manila International Container Terminal (MICT). It
far departure from the old law indicating thereby the employed private respondent Tanpiengco as a CFS Priority
legislature's unequivocal intent to insert a new rule that will pursuant to a CBA with private respondent's labor union, the
govern the reinstatement aspect of a decision or resolution in Associated Ports Checkers Services and Workers Union
any given labor dispute, In fact, the law as now worded employs (APCSWU). Tanpiengco has since then become a regular
the phrase "shall immediately be executory" without employee assigned either to a shipping line or bodega to strip
qualification emphasizing the need for prompt compliance. As a and examine cargoes from abroad with usual working schedule
rule, "shall" in a statute commonly denotes an imperative from 8:00 a.m. to 5:00 p.m. although in actual practice cleaning
obligation and is inconsistent with the idea of discretion and time would start at 4:30 p.m.
that the presumption is that the word "shall," when used in a - On 7 March 1990 Tanpiengco was assigned at Bodega I. When
statute, is mandatory. An appeal or posting of bond, by plain it was time for him to clean himself he took his T-shirt which
mandate of the law, could not even forestall nor stay the was hanging from a post, tucked it at his waist and proceeded
executory nature of an order of reinstatement. The law, to the washroom. He was accosted by a security guard
moreover, is unambiguous and clear, Thus, it must be applied allegedly for behaving suspiciously. Tanpiengco was haled to
according to its plain and obvious meaning, according to its the comfort room and frisked but nothing of value was found in
express terms. his person. Nonetheless he was taken to the security office for
- And in conformity with the executory nature of the further questioning; he was accused of taking a T-shirt marked
reinstatement order, Rule V, Section 16 (3) of the New Rules "Gesim Corp." from one of the balikbayan boxes inside the
of Procedure of the NLRC strictly requires the Labor Arbiter to container yard.
direct the employer to immediately reinstate the dismissed - Tanpiengco was referred to petitioner's personnel department
employee. for investigation. According to petitioner, he admitted to the
- Thus:"In case the decision includes an order of' reinstatement investigating officer that he took the "Gesim Corp." T-shirt
the Labor Arbiter shall direct the employer to immediately valued at P100.00, but Tanpiengco insisted on his innocence
reinstate the dismissed or separated employee even pending claiming that he was coerced at knifepoint into admitting the
appeal. The order of reinstatement shall indicate that the theft. After a brief suspension, Tanpiengco was dismissed for
employee shall either be admitted back to work under the same pilferage which petitioner considered as breach of trust,
terms and conditions prevailing prior to his dismissal or dishonesty and theft of property.
separation or, at the option of the employer, merely reinstated - Tanpiengco sued the stevedoring firm for illegal dismissal,
in the payroll. reinstatement and backwages. The Labor Arbiter found the
- A closer examination, however, shows that the necessity for a dismissal to be totally unjustified as neither theft nor pilferage
writ of execution under Article 224 applies only to final and was committed by Tanpiengco. Accordingly, petitioner was
executory decisions which are not within the coverage of Article ordered to reinstate Tanpiengco with full back wages with
223. temporary adjustments as the need would arise until his actual
- Article 224 states that the need for a writ of execution applies reinstatement.
only within five (5)years from the date a decision, an order or - On appeal, the NLRC reversed the decision of the Labor Arbiter
award becomes final and executory. It can not relate to an and dismissed the complaint of Tanpiengco, in effect holding
award or order of reinstatement still to be appealed or pending that his termination was legal, but ordered petitioner to pay him
appeal which Article 223 contemplates. The provision of Article his wages from (date of filing of appeal with the NLRC) up to
223 is clear that an award for reinstatement shall be (promulgation of NLRC decision) pursuant to Art. 223 of the
immediately executory even pending appeal and the posting of Labor Code. Both parties moved for reconsideration but were
a bond by the employer shall not stay the execution for denied.
reinstatement.
- The legislative intent is quite obvious, i.e., to make an award ISSUE
of reinstatement immediately enforceable, even pending WON NLRC committed grave abuse of discretion when awarding
appeal. To require the application for and issuance of a writ of backwages in spite of valid dismissal
execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object HELD
and intent of Article 223, i. e., the immediate execution of a NO
reinstatement order. The reason is simple. An application for a - Art. 224 states that the need for a writ of execution applies
writ of execution and its issuance Could be delayed for only within (5) years from the date a decision, an order or
numerous reasons. A mere continuance or postponement of a award becomes final and executory. It cannot relate to an
scheduled hearing, for instance, or an inaction on the part of
Labor Law 1 A2010 - 67 - Disini
award or order of reinstatement still to be appealed or pending
appeal which Art. 223 contemplates. The provision is clear that 14.09 BACKWAGES
an award for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement. The legislative DEFINITION
intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for an issuance of a writ of execution as EQUITABLE BANKING CORP V SADAC
prerequisites for the execution of a reinstatement award would [PAGE 149]
certainly betray and run counter to the very object and intent of
Art. 223, i.e., the immediate execution of a reinstatement order.
ST. THERESA’S SCHOOL OF NOVALICHES
An application for a writ of execution and its issuance could be
delayed for numerous reasons. In other words, if the FOUNDATION V NLRC (ESTHER REYES)
requirements of Art. 224 were to govern, then the executory 289 SCRA 110
nature of a reinstatement order or order contemplated by Art. PURISIMA; April 15, 1998
223 will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have ordained NATURE
a valid and sensible law, one which operates no further than Petition to modify the Resolution issued by the NLRC
may be necessary to achieve a specific purpose x x x x In
introducing a new rule on the reinstatement aspect of a labor FACTS
decision under R. A. No. 6715, Congress should not be - Adoracion Roxas is the president of St. Theresa’s School of
considered to be indulging in mere semantic exercise. On Novaliches Foundation. She hired Esther Reyes on a contract
appeal, however, the appellate tribunal concerned may enjoin basis, for the period from June 1, 1991- March 31, 1992. But
or suspend the reinstatement order in the exercise of its sound she commenced work on May 2, 1991, during which period of
discretion. employment, she became ill. She went on leave (Feb. 17-21 NS
- Furthermore, the rule is that all doubts in the interpretation 24-28) which were approved y Roxas. She went back to work
and implementation of labor laws should be resolved in favor of on March 2, 1992 but only stayed from 6:48-9:38am and never
labor. In ruling that an order or award for reinstatement does returned.
not require a writ of execution the Court is simply adhering and - St. Theresa claims that Reyes abandoned her work, while
giving meaning to this rule. Henceforth, we rule that an award Reyes maintains that she was replaced by Annie Roxas,
or order for reinstatement is self-executory. After receipt of the daughter of Adoracion Roxas. She tried to contact her
decision or resolution ordering the employee's reinstatement, employer but the latter could not be found within the school
the employer has the right to choose whether to re-admit the premises. St. Theresa then sent her a mail, telling her that her
employee to work under the same terms and conditions contract will not be renewed anymore. But a few weeks before
prevailing prior to his dismissal or to reinstate the employee in this, Reyes has filed a case against St. Theresa’s for, unfair
the payroll. In either instance, the employer has to inform the labor practice based on harassment, illegal dismissal, 13th
employee of his choice. The notification is based on practical month pay, allowances, removal of desk and chair form place of
considerations for without notice, the employee has no way of work, and refusal to communicate, moral and exemplary
knowing if he has to report for work or not. damages. The Labor arbiter ruled in favour of Reyes, ordering
- Thus, in the light of the Pioneer ruling, we hold that the NLRC St. Theresa’s to reinstate her and to pay for full backwages
did not commit grave abuse of discretion in ordering petitioner from the time of dismissal to her actual reinstatement in the
to pay Tanpiengco his wages from 25 January 1991 when he amount of P76,701.00. NLRC reversed the decision, declaring
appealed to the NLRC, up to 23 September 1993 when the the separation of Esther Reyes from service legal and valid.
NLRC decision finding his dismissal valid was promulgated. However, it directed to pay backwages from Nov. 12, 1993 up
That portion of the decision, which is the sole issue in this to the date of the resolution. St. Theresa’s now questions the
petition, should stand. Under Art. 223 as presently construed, award of backwages for Reyes.
the reinstatement aspect of the Labor Arbiter's decision, albeit
under appeal, was immediately enforceable as a consequence ISSUE
of which, petitioner, as the employer, was duty-bound to choose WON NLRC erred in awarding backwages to Reyes in the light of
forthwith whether to re-admit Tanpiengco or to reinstate him in the finding that her dismissal was valid
the payroll and to inform Tanpiengco of its choice to enable the
latter to act accordingly. Failing to exercise the options in the HELD
alternative, petitioner must pay the salary of Tanpiengco which NO
automatically accrued from notice of the Labor Arbiter's order - The term “backwages” has been defined as that for earnings
of reinstatement until its ultimate reversal by the NLRC. lost by a worker due to his illegal dismissal. Backwages are
- In the instant case, the NLRC failed to act on Tanpiengco's generally granted on grounds of equity. Payment thereof is a
motion for the issuance of a writ to execute the Labor Arbiter's form of relief that restores the income lost by reason of such
reinstatement order. It did not even mention the fact of its filing unlawful dismissal. It is not private compensation or damages,
in its assailed Decision. The Commission's inaction is a serious but is awarded in furtherance and effectuation of the public
oversight for which it should be admonished. While it is objectives of the Labor Code. Nor is it a redress of a private
incumbent upon the party to take an active role in his case and right but, rather, in the nature of a command to the employer to
not adopt a wait-and-see attitude, the adjudicating body has make public reparation for dismissing an employee, either due
the corresponding obligation to act promptly on all incidents to the former’s unlawful act or bad faith.
brought before it. - Jurisprudence is filled to the brim with cases wherein
Disposition the instant petition is DENIED. The Decision of backwages were awarded to an employee illegally dismissed.
the NLRC directing petitioner to pay private respondent Gabriel But where, as in this case of a pitiful employee rendered
Tanpiengco his wages from 25 January 1991 to 23 September hapless by her lawyer’s inaction or ignorance, the dismissal has
1993 is SUSTAINED. been adjudged valid and lawful, the challenged award of
backwages is decidedly improper and contrary to law and
KIAMCO V NLRC jurisprudence.
[PAGE 85] Disposition Petition is GRANTED; the Decision of the
respondent NLRC rendered on November 29, 1995 in NLRC NCR
is hereby MODIFIED by deleting therefrom the award of
backwages in question.
Labor Law 1 A2010 - 68 - Disini
grant of backwages allows the same employee to recover from
the employer that which he had lost by way of wages as a result
GENERAL BAPTIST BIBLE COLLEGE V NLRC
of his dismissal. These twin remedies-reinstatement and
[PAGE 298] payment of backwages – make the dismissed employee whole
who can then look forward to continued employment. Thus do
VIERNES V NLRC these two remedies give meaning and substance to the
[PAGE 94] constitutional right of labor to security of tenure. The two forms
of relief are distinct and separate, one from the other. Though
the grant of reinstatement commonly carries with it an award of
backwages, the inappropriateness or non-availability of one
does not carry with it the inappropriateness or non-availability
of the other. . . .
NATURE-PURPOSE - The payment of backwages is generally granted on the ground
of equity. It is a form of relief that restores the income that was
CLAUDIO V CA (NATIVIDAD) lost by reason of the unlawful dismissal; the grant thereof is
intended to restore the earnings that would have accrued to the
423 SCRA 122 dismissed employee during the period of dismissal until it is
CALLEJO; February 16, 2004 determined that the termination of employment is for a just
cause. It is not private compensation or damages but is
NATURE awarded in furtherance and effectuation of the public objective
Petition for review on certiorari under Rule 45 of the Rules of of the Labor Code. Nor is it a redress of a private right but
Court rather in the nature of a command to the employer to make
public reparation for dismissing an employee either due to the
FACTS former’s unlawful act or bad faith.
- Natividad worked with petitioner Tomas Claudio Memorial - The award of backwages is not conditioned on the employee’s
College (TCMC) in Morong, Rizal. In time, he was promoted as ability or inability to, in the interim, earn any income. While it
“Liason Officer” of the school with the Department of Education, may be true that on June 11, 1996, Natividad was detained in
Culture and Sports (DECS) and with the Commission on Higher Criminal Case, the State Prosecutor found no probable cause for
Education (CHED) with the rank of Assistant Registrar. the detention of him and resolved to dismiss the case.
- Natividad was arrested by the Morong police authorities, Natividad has not yet been convicted by final judgment.
without any warrant therefore, for violation of the Dangerous Indeed, he is presumed innocent until his guilt is proved beyond
Drugs Act (Republic Act NO. 6425). A criminal complaint was reasonable doubt.
later filed against him. A preliminary investigation was Disposition Petition is DISMISSED.
conducted by the Municipal Court of Morong, Rizal which found
probable cause to hold him for trial. The court, on the said EFFECT FAILURE TO CLAIM
date, issued a warrant for the private respondent’s arrest. The
records were elevated to the Office of the Provincial Prosecutor
of Rizal. DELA CRUZ V NLRC (LO)
- TCMC sent a Memorandum to Natividad informing him 290 SCRA 1
that his employment was already terminated. He was DAVIDE JR; November 20, 1998
thenceforth barred from entering the school.
- Natividad posted a bail bond in Criminal Case No. 5137 NATURE
and was released from his detention cell. He did not, Special Civil Action.Certiorari
however, file any complaint against the petitioner with the
NLRC on account of his dismissal. FACTS
- State Prosecutor issued a Resolution dismissing the - Petitioner started working for Emmanuel Lo as a crew hand in
criminal complaint filed against the Natividad for lack of the latter’s fishing boat. He was over several years promoted to
merit. be the Patron of the boat until he was dismissed. From the case,
- Natividad was arrested anew by police authorities. The it was shown that respondent was the one who hired, paid
Morong Chief of Police filed a criminal complaint against him for salary to, and eventually fired dela Cruz.
violation of Section 27, Article III of Rep. Act No. 6425, as - Respondent claims that he was in joint venture with the
amended. An Information therefore was filed with the Regional petitioner and hence there was no employer-employee
Trial Court of Morong. On said date, Natividad posted a bail relationship between them. As pointed out by the Labor Arbiter,
bond and was released from detention. however, Lo exercised the control in the activities and that
- Natividad filed a complaint with the NLRC against the therefore there was in fact an employer-employee relationship.
petitioner for illegal dismissal. - The Labor arbiter found the dismissal not to be justified and
ordered Lo to pay separation pay bu not back wages as the
ISSUE same, he opines ws not prayed for. Petitioner was however
WON CA committed a grave abuse of discretion amounting to found to be a managerial employee and hence was hence
excess or lack of jurisdiction when it modified the decision of excluded from the coverage of the law as regards conditions of
the NLRC and ordered the petitioner to pay backwages to the employment.
private respondent - Both parties appealed the decision.
HELD ISSUE
NO WON NLRC committed rave abuse of discretion amounting to
- The normal consequences of a finding that an employee has lack or excess of jurisdiction in dismissing petitioner’s claim for
been illegally dismissed are, firstly, that the employee becomes separation pay, back wages, allowances, and damages
entitled to reinstatement to his former position without loss of
seniority rights and secondly, the payment of backwages HELD
corresponding to the period from his illegal dismissal up to YES
actual reinstatement. The statutory intent on this matter is - Article 279 of the Labor Code mandates that petitioner who
clearly discernible. Reinstatement restores the employee who was unjustly dismissed from work is entitled to reinstatement
was unjustly dismissed to the position from which he was without loss of seniority rights and other privileges and to full
removed, that is, to his status quo ante dismissal, while the
Labor Law 1 A2010 - 69 - Disini
back pay, inclusive of allowances, and to other benefits or their (2) the contractor has substantial capital or investment in the
monetary equivalent computed from the time compensation form of tools, equipment machinries work premises, and
was withheld up to time of actual reinstatement. The grant of other materials which are necessary in the condcut of his
back wages allows the unjustly and illegally dismissed business."
employee to recover from the employer that which the former - Honorio Dagui erns a measly sum of P180.00 a day (latest
lost by way of wages as a result of his dismissal from salary).7 Ostensibly, and no stretch of the imagination can
employment. Dagui qualify as a job contractor. No proof was adduced by the
Reasoning petitioners to show that Dagui was merely a job contractor, and
- Apparently, the form used in filing the case did not include a it is absurd to expect that private respondent, with such humble
box for back wages and hence the petitioner had to particular resources, would have substantial capital or investment in the
item to tick off. The court ruled that award of back wages form of tools, equipment, and machineries, with which to
resulting from the illegal dismissal of an employee is a conduct the business of supplying Aurora Plaza with manpower
substantial right. Thus, the failure to claim back wages in a and services for the exclusive purpose of maintaining the
complaint is a mere procedural lapse which cannot defeat a apartment houses owned by the petitioners herein.
right granted under substantive law. - Dagui was not compensated in terms of profits for his labor or
Disposition Petition granted with modification as to back service like an independent contactor. Rather, he was paid on a
wages. daily wage basis at the rate of P180.00. Employees are those
who are compensated for their labor or services by wage rather
than by profits.
EFFECT FAILURE TO ORDER - Finally, the records unmistakably show that the most
important requisites of control is likewise extant in this case. It
should be bone in mind that the power of control referees
AURORA LAND PROJECTS CORP V NLRC (DAGUL) merely to the existence of the power and not to the actual
266 SCRA 48 exercise thereof. It is not essential for the employer to actually
HERMOSISIMA; January 2, 1997 supervise the performance of duties of the employee. it is
enough that the former has a right wield the power.
- Dagui shoulld be considered a regular employee by the mere
NATURE
fact he rendered service for the Tanjancos for more one year,
petition for certiorari for reversal of NLRC Resolution dated
that is, beginning 1953 until 1982, under Doña Aurora; and then
March 16, 1994 affirming the modification the Labor Arbiter
from 1982 up to June 8, 1991 under the petitioners, for a total
decision, dated May 25, 1992, finding petitioners liable to pay
of twenty-nine (29) and nine (9) years respectively.
private respondent the total amount P195, 624.00 as separation
2. YES
pay and attorney's fees.
Ratio Jurisprudence abound as to the twin requirements of
due process, substantive and procedural, must be complied
FACTS
with, before a valid dismissal exists. Without which the
- Private respondent Honorio Dagui was hired by Doña Aurora
dismissal become void.
Suntay Tanjangco in 1953 to take charge of the maintenance
Reasoning
and repair of the Tanjangco apartments and residential
- The twin requirements of notice and hearing constitute the
building. He was to perform carpentry, plumbing electrical and
essential elements of due process. This simply that the
masonry work. Upon the death of Doña Aurora Tan\jangco in
employer shall afford the worker ample opportunity to be heard
1982, her daughter, petitioner Teresita Tanjangco Quazon, took
and to defend himself with the assistance of his representative,
over the administration of all Tanjangco properties.
if he so desires.
- June 8, 1991 - Dagui received the shock of his life Mrs. Quazon
- Pepsi Cola Bottling Co. v. NLRC
suddenly told him: "Wala nang trabaho mula ngayon." on the
"The law requires that the employer must furnish the worker
alleged ground that his work was unsatisfactory.
sought to be dismissed with two written notice before
- August 29, 1991,- Dagui, who was then already sixty-two (62)
termination of employee can be legally effected: (1) notice
years old, filed a complainant for illegal dismissal with the Labor
which apprise the employee of the particular acts or
Arbiter.
omissions for which his dismissal is sought; and (2) the
- May 25, 1992, - Labor Arbiter Nora ordered Aurora/Teresita
subsequent notice which informs the employee of the
Tanjanco Quazon to pay P195,624.00 as separation pay and
employers decision to dismiss him (section 13, BP 130;
10% attorneys fees
Sections 2-6, Rule XIV, Book V Rules and Regulations
- NLRC > affirmed, with modification (P88, 920.00 instead of
Implementing the Labor code as amended). failure to comply
P177, 840.00), the Labor arbiter’s decision
with the requirements taints the dismissal with illegality. This
procedure is mandatory, in the absence of which, any
ISSUES
judgment by judgment by management is void and
1. WON Honorio Dagui was an employee of petitioner
inexistent.“
2. If he were, WON he was illegally dismissed
- These mandatory requirements were undeniably absent.
Quazon dismissed Dagui on June 8, 1991, without giving him
HELD
any written notice informing the worker herein of the cause for
1. YES
his termination. Neither was there any hearing conducted i
- Aurora insisted that Daqui had never been their employee.
order to give Dagui the opportunity to be heard and defend
Since the establishment of Aurora Plaza, Dagui served therein
himself he was simply told: "Wala ka nang trabaho mula
as a job contractor. Dagui had control and supervision of
ngayon" allegedly because pf poor workmanship on a previous
whatever task he would perform. On occasion, Dagui was hired
job. The undignified manner by which private respondent's
only as a 'tubero" or plumber as the need arises in order to
services were terminated smacks of absolute denial of the
unclog sewerage pipe. Every time his services were needed, he
employee's right to due process and betrays petitioner
was paid accordingly. It was understood that his job was limited
Quazon's utter lack of respect for labor. Such an attitude indeed
to the specific undertaking of unclogging the pipes. BUT SC IS
deserves condemnation.
NOT PERSUADED
- It must be remembered that backwages and reinstatement are
- Section 8, Rule VIII, Book III of the Implementing Rules
two reliefs should be given to an illegally dismissed employee.
Regulations of the Labor Code provides in part:
They are separate and distinct from each other. In the event
"There is job contracting permissible under the Code if the
that reinstatement is no longer possible, as in this case,
following conditions are met:
separation pay is awarded to the employee. The award
separation pay is lieu of reinstatement and not of backwages. In
Labor Law 1 A2010 - 70 - Disini
other words, an illegally dismissed employee is entitled to (1) conducive to lack of initiative on the part of a laborer. Both bear
either reinstatement, if viable, or separation pay if the stamp of undesirability.
reinstatement is no longer viable, and (2) backwages. Payment **note: the real issue in this case is really WON there was
of backwages is specifically designed to restore an employee's unfair labor practice. The SC found that there was, and just
that was lost because of his unjust dismissal. On the other affirmed the judgment of the CIR. The topic of determination of
hand, payment of separation pay is intended to provide the back wages was just obiter, with neither party raising such
employee money during the period in which he will be looking issue. The court just wanted to say it.
for another employment Disposition Judgment AFFIRMED.
Disposition instant petition is partly GRANTED and the
Resolution of NLRC dated march 16, 1994 is hereby MODIFIED
FEATI UNIVERSITY FACULTY CLUB V FEATI
in that the award of separation pay against the petitioners shall
be reckoned from the date Dagui’s was re-employment by the UNIVERSITY
petitioners in 1982, until June 8, 1991. In additional to 85 SCRA 395
separation pay, full backwages are likewise awarded to Dagui, TEEHANKEE; August 15, 1974
inclusive of allowances, and other benefits of their monetary FACTS
equivalent - Jan 14 1963 – Pres of Faculty Club wrote a letter to the
president of the university informing her that the Faculty club
has been registered as a labor union
PERIOD – COMPUTATION - Jan 22 1963 – Pres of Faculty Club in another letter to the
university president gave 26 demands regarding the
employment of members of the club and giving the president
ITOGON-SUYOC MINES INC V 10 days to act
SAÑGILOITOGON WORKERS’ UNION - University President replied and asked for at least 30 days to
24 SCRA 873 study their demands
SANCHEZ; August 30, 1968 - Counsel for the University demanded that that the faculty club
submit proof of their majority status and designation as
bargaining unit
NATURE
- President of Faculty club denied university’s presidents
petition for review by certiorari decision of CIR (directing the
request for extension of time
reinstatement of 15 individual respondents “to their former
- Feb 18 1963 – Feati club declared a strike for bec of unfair
positions with backwages from time of dismissal to actual
labor practice due to the university’s refusal to recognize their
reinstatement”)
union and to bargain collectively
- President of the Philippines certified the dispute to the CIR
FACTS
- Several cases were filed as a result of the dispute and the
- Itogon-Suyoc Mines, Inc., through its superintendent Fertig,
orders of CIR were elevated to the SC in three cases.
had been dismissing from its employ members of the Sañgilo-
- SC upheld all challenged orders and held among others that
Itogon Worker’s Union. On May 28, 1958, sensing that its
1.CIR had jurisdiction over the parties and subject matter
members were being eased out of employment one by one,
2.SC recognized employee status of the Faculty club
Sañgilo called a strike, accompanied by picketing carried out at
members as ‘employees and declared RA 875 applicable to
or near petitioner's mine premises in Itogon. Work was
them in their employment relations with their school’
paralyzed.
3.SC repudiated all contentions of the university questioning
- Cases were filed with the CIR for unfair labor practice, for the
the legality of the industrial court’s return to work order
arbitrary dismissal of employees allegedly because of affiliation
- In 1969 – 2nd case of Feati University v Feati University Faculty
with the union and for testifying against the company in a
Club
certification case. CIR then ruled that the 15 employees who
- Faculty club filed motions and petitions to execute and to
pushed through with the case be reinstated, with full
implement the decision as well as to hear the dispute on its
backwages. After denial of its MFR, the company appealed to
merits
the SC.
- motion to execute the march 30 1963 return to work order
directing the university management to permit and effect the
ISSUE
return to work of the strikers plus the back salaries that accrued
How should the amount of total back wages be determined?
- the university opposed
- the CIR issued a writ of execution for the enforcement of the
HELD
return to work order
- The court restated the guidelines to be observed in
- the CIR further ordered that the accrued backwages from july
ascertainment of back wages, considering that 10 years had
12 1963 to the date of readmission be paid to the Faculty club
passed since the terminations.
members
Ratio - First. To be deducted from the back wages accruing to
- CIR denied reconsideration. SC denied as well (twice).
each of the laborers to be reinstated is the total amount of
- Nov 24 1969 – CIR made a complete turnabout and issued a
earnings obtained by him from other employment(s) from the
decision repudiationg and turning its back on its former decision
date of dismissal to the date of reinstatement. Should the
declaring the strike as illegal and that the members are
laborer decide that it is preferable not to return to work, the
terminated. Holding that the university is not chargeable with
deduction should be made up to the time judgment becomes
unfair labor practice. It sought to nullify the faculty member’s
final. And these, for the reason that employees should not be
finally adjudicated right to reinstatement and backwages
permitted to enrich themselves at the expense of their
upheld by the SC in two judgments
employer.
- Thus the final case of certiorari
- Second. Likewise, in mitigation of the damages that the
dismissed respondents are entitled to, account should be taken
ISSUE
of whether in the exercise of due diligence respondents might
WON the Faculty Club members are entitled to reinstatement
have obtained income from suitable remunerative employment.
and payment of backwages (and how will it be computed)
We are prompted to give out this last reminder because it is
really unjust that a discharged employee should, with folded
HELD
arms, remain inactive in the expectation that a windfall would
YES
come to him. A contrary view would breed idleness; it is
- The strike was valid as the petitioners has a valid cause to go
on strike because of the unfair labor practice and discriminatory
Labor Law 1 A2010 - 71 - Disini
acts aimed at aborting its union even without a notice of strike. of the decision, MERCURY is to pay DAYAO backwages
Thus the implementation of the return to work order with equivalent to 1 year, 11 months, and 15 days without further
accrued backwages should proceed without delay disqualifications.8
- As to the amount of backwages: Disposition Petition DISMISSED.
Apply the ruling in Mercury Drug Co. V CIR
fixing the amount of backwages to a just and reasonable level PINES CITY EDUCATIONAL CENTER V NLRC
without qualification or deduction so as to avoid protracted
delay in the execution of the award due to extended hearings (BENTREZ, PICART, ET AL)
and unavoidable delays and difficulties encountered in 227 SCRA 655
determining the earnings of the laid off employees ordered to NOCON; November 10, 1993
be reinstated with backwages during the pendency of the case
for purposes of deducting the same from the gross backwages NATURE
awarded. PETITION for certiorari to reverse a resolution of NLRC
this formula relieves the employees from proving or
disproving their earnings during their lay off and the employees FACTS
from submitting counter proofs and obviates win evil s of - Private respondents were all employed as teachers on
idleness on the part of the employee who would with folded probationary basis by petitioner Pines City Educational Center
arms remain inactive in the that a windfall would come to him - With the exception of Bentrez who was hired as a grade school
and attrition and protracted delay in satisfying such award on teacher, the remaining private respondents were hired as
the part of the unscrupulous employers who have seized upon college instructors. All the private respondents, except Poland
the further proceedings which would practically render nugatory Picart and Lucia Chan, signed contracts of employment with
such award and compel the employees to agree to petitioner for a fixed duration.
unconscionable settlements of backwages in order to satisfy - due to the explanation of private respondents' contracts and
their dire needs. their poor performance as teacher they were notified of
- In this case-3 school years without qualification and deduction petitioners' decision not to renew their contracts anymore.
- private respondents filed complaint for illegal dismissal before
MERCURY DRUG CO INC V CIR (DAYAO) the Labor Arbiter, alleging that their dismissals were without
cause and in violation of due process.
56 SCRA 694
- Except for private respondent Leila Dominguez who worked
MAKASIAR; April 30, 1974 with petitioners for one semester, all the other private
respondents were employed for one to two years. They were
NATURE never informed in writing by petitioners regarding the standards
Petition for review on certiorari of a decision of CIR. or criteria of evaluation so as to enable them to meet the
requirements for appointment as regular employees. They were
FACTS merely notified in writing by petitioners.
- DAYAO was an assistant chief checker of MERCURY. After - Petitioners contended that private respondent separation from
criticizing their existing labor union for failing to secure employment, apart from their poor performance, was due to the
additional pay for overtime, and campaigning among his co- expiration of the periods stipulated in their respective contracts.
employees to organize another union, MERCURY gave DAYAO a These stipulations were the laws that governed their
termination pay after the latter signed a quitclaim. relationships, and there was nothing in said contracts which
- 2 years and 15 days from his separation, DAYAO filed a was contrary to law, morals, good customs and public policy.
complaint for unfair labor practice (ULP) against MERCURY. SC They argued further that they cannot be impelled to enter into
held that the finding of fact of CIR that DAYAO was dismissed new contracts with private respondents.
because of his union activities and that, consequently, - Labor Arbiter rendered judgment in favor of private
MERCURY were guilty of ULP is amply substantiated by credible respondents, the dispositive portion of which reads:
evidence. SC also held that DAYAO’s complaint has been “...BACKWAGES NOTE: Computation covers only the period
seasonably filed. It explained that in the absence of specific complainants were terminated up to January 31, 1990 or 10
legal provision, the statute of limitations prescribed by the Civil months and does not include backwages from January 31, 1990
Code should apply. ART.1146 directs that the action upon an up to their actual reinstatement.
injury to the rights of the plaintiff must be instituted within 4 1)ROLAND PICART a) Latest salary per monthP2,136.00
years. All other actions whose periods are not fixed in the Civil b) Multiplied by the period covered (March 31, 1989 to January
Code or in other laws must be brought within 5 years from the 31, 1990)x 10 months c) Equals backwages dueP21,360.00
time the right of action accrues (ART.1149). SC finally 2) LUCIA CHAN a) Latest salary per monthP1,600.00
concluded that, whether the ULP charge is based on an injury to b) Multiplied by period coveredx 10 months c) Equals
the rights of DAYAO or placed under the category of all other backwages dueP16,000.00
actions for which no law prescribes the time limit for their 3) LEILA DOMINGUEZ a) Latest salary per monthP1,648.24
institution, the filing DAYAO of the ULP charge was well within b) Multiplied by period coveredx 10 months c) Equals
either the prescriptive period. The question remains on the backwages dueP16,482.40
computation of DAYAO’s backwages. 4) RUPERTA RIBAYA a) Latest salary per monthP1,856.00
ISSUE
How should the backwages to be awarded to DAYAO be
8
computed? Mathematically speaking,
Prescribed period to file ULP complaint = 4 years 00 months 00 days
Less: Delay in filing DAYAO complaint = 2 years 00 months 15 days
HELD Basis for DAYAO’s backwage claim = 1 year11 months 15 days
- As stated, the shortest prescriptive period for the filing of all
other actions for which the statute of limitations does not fix a Note that the award is “without further disqualifications”. As Teehankee, J. explained
in his separate opinion, such phrase means “without having to determine and deduct
period, is four years. The period of delay in instituting this ULP earnings from the general award of back wages from date of unlawful dismissal until
charge with claim for reinstatement and back wages, although actual reinstatement heretofore customarily made in such ULP and reinstatement
within the prescriptive period, should be deducted from the cases, [which determination] led to long delays in the execution of the decision for
back wages. [By relieving] the employees from proving their earnings during their
liability of MERCURY to DAYAO for backwages. In order that the lay-offs and the employer from submitting counter-proofs, [the formula in the
employee, however, should be relieved from proving his income ponencia] obviate the twin evils of idleness… of the employees [who may remain
during the period he was out of the service and the employer inactive during layoff in the expectation of a windfall backwages award] and… undue
delay in satisfying the award on the part of the employer[, the new formula] is… a
from submitting counter-proofs, which may delay the execution realistic, reasonable and mutually beneficial solution.”
Labor Law 1 A2010 - 72 - Disini
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP18,560.00
SEPARATE OPINION
5) CECILIA EMOCLING a) Latest salary per monthP1,648.00
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP16,480.00 PADILLA
6) ROSE ANN BERMUDEZ a) Latest salary per monthP2,600.00 - I concur in the Court's decision penned by Mr. Justice Nocon
b) Multiplied by period coveredx 10 month c) Equals backwages except that I cannot see my way clear to allowing deductions
dueP26,000.00 from the full backwages prescribed by law, given the language
7) DANGWA BENTREZ a) Latest salary per monthP1,700.00 and evident intention of RA 6715.
Multiplied by period coveredx 10 months - Art. 279 of the Labor Code as amended by Rep. Act No. 6715
c) Equals backwages dueP17,000.00 states: "...An employee who is unjustly dismissed from work
8) JANE BENTREZ a)Latest salary per monthP1,315.44 shall be entitled to reinstatement without loss of seniority rights
b)Multiplied by period coveredx 10 months c)Equals backwages and other privileges and to his full backwages inclusive of
dueP13, 154.40 allowances, and to his other benefits or the monetary
9) APOLLO RIBAYA a)Latest salary per monthP1,875.00 equivalent computed from the time his compensation was
b)Multiplied by period coveredx 10 months c)Equals backwages withheld from him up to the time of his actual reinstatement."
dueP18,750.00 The amendment to Art. 279 of the Labor Code introduced by
10)VIRGINIA BOADO a)Latest salary per monthP1,648.24 Rep. Act No. 6715 inserted the qualification "full" to the word
b)Multiplied by period coveredx 10 months c)Equals backwages "backwage". The intent of the law seems to be clear. The plain
dueP16,482.40...” words, of the statute provide that an employee who is unjustly
- NLRC affirmed the decision in toto dismissed is entitled to FULL backwages from the time of his
dismissal to actual reinstatement. The law provides no
ISSUE qualification nor does it state that income earned by the
WON private respondents were lawfully terminated employee during the period between his unjust dismissal and
reinstatement should be deducted from such backwages. When
HELD the law does not provide, the Court should not improvise.
We have to make a distinction: - It is further my view that the principle of unjust enrichment (if
1. YES no deduction is allowed from backwages) does not apply in this
Ratio Insofar as the private respondent who knowingly and case.
voluntarily agreed upon fixed periods of employment are
concerned, their services were lawfully terminated by reason of BUSTAMANTE V NLRC (EVERGREEN FARMS)
the expiration of the periods of their respective contracts.
These are Dangwa Bentrez, Apollo Ribaya, 265 SCRA 1
- Sr., Ruperta Ribaya, Virginia Boado, Cecilia Emocling, Jose PADILLA; March 15, 1996
Bentrez,
- Leila Dominguez and Rose Ann Bermudez. Thus, public NATURE
respondent committed grave abuse of discretion in affirming Petition for certiorari
the decision of the Labor Arbiter ordering their reinstatement
and payment of full backwages and other benefits and FACTS
privileges. - Petitioners Bustamante, Bantayan, Sumunod and Lamaran
2. NO were employed as laborers, harvesters and sprayers in private
Ratio With respect to private respondents Roland Picart and respondent company’s banana plantation in Davao del Norte.
Lucia Chan, both of whom did not sign any contract fixing the They all signed contracts of employment for 6 months from
periods of their employment nor to have knowingly and Jan.2, 1990 to July 2, 1990 but they had started working in Sept.
voluntarily agreed upon fixed periods of employment, 1989. They were previously hired to do the same work for
petitioners had the burden of proving that the termination of periods lasting a month or more, from 1985 to 1989. Before the
their services was legal. As probationary employees, they are employment contracts expired on July 2, 1990, petitioners’
likewise protected by the security of tenure provision of the employments were terminated on the ground of poor
Constitution. Consequently, they cannot be remooved from performance due to age, as none of them was allegedly below
their positions unless for cause. 40 years old.
- There is absolutely nothing in the record which will show that - Petitioners then filed a complaint for illegal dismissal which
the complainants were afforded even an iota of chance to the Labor Arbiter decided in their favor. The judgment declared
refute respondents' allegations that the complainants did not the dismissal illegal, and ordered Evergreen Farms to reinstate
meet the reasonable standards and criteria set by the school. them immediately with 6 months backwages. Private
- Thus, the order for their reinstatement and payment of full respondent company appealed to the NLRC but the appeal was
backwages and other benefits and privileges from the time they dismissed for lack of merit. A subsequent MFR filed by
were dismissed up to their actual reinstatement is proper. respondent company was similarly disposed of with the
- On Backwages However, in ascertaining the total amount of modification that the award for backwages was deleted, as
backwages payable to them, we go back to the rule prior to the there was no bad faith on the part of Evergreen Farms.
Mercury Drug rule that the total amount derived from - The removal of the award of backwages prompted petitioners
employment elsewhere by the employee from the date of to file this case, alleging that public respondent NLRC gravely
dismissal up to the date of reinstatement, if any, should be abused its discretion.
deducted therefrom. We restate the underlying reason that
employees should not be permitted to enrich themselves at the ISSUE
expense of their employer. In addition, the law abhors double WON petitioners are entitled to backwages
compensation.
Disposition resolution of NLRC is MODIFIED. Private HELD
respondents Roland Picart and Lucia Chan ordered reinstated YES, because petitioners are regular employees.
without loss of seniority rights and other privileges and then, Ratio Regular employees dismissed for no valid cause are
backwages paid in full inclusive of allowances, and to their entitled to full backwages and other benefits from the time their
other benefits or their monetary equivalent subject to deduction compensation was withheld from them up to the time of their
of income earned elsewhere during the period of dismissal, if actual reinstatement.
any, to be computed from the time they were dismissed up to Reasoning
the time of their actual reinstatement.
Labor Law 1 A2010 - 73 - Disini
- Petitioners were employed at various periods from 1985-1989 - On Nov 8, 1991, Torres asked the Labor Arbiter to issue an
for the same work they were hired to perform. They were alias writ of execution based on the completed computation of
engaged to perform activities which are necessary in the usual back wages of P104,396.00 worked out by NLRC's Research and
business of the employer. The contract for probationary Information Unit.
employment was utilized by respondent company as a - NLRC Sheriff issued a Notice of Garnishment which was served
chicanery to deny petitioners their status as regular employees the agency’s deposit account with PNB, in the amount of
and to evade paying them the benefits attached to such status. P105,296.00 inclusive of the execution fee of P1,000.00.
They were hired and re-hired in a span of from 2-4 years to do - On Nov 27, 1991, Labor Arbiter directed PNB to release the
the same type of work which conclusively shows the necessity garnished amount and to make it payable to NLRC cashier for
of petitioners’ services to the respondent. the account of Torres pending ultimate release to her. PNB
- The act of hiring and re-hiring the petitioners over a period of issued a Manager's Check dated Dec 6, 1991.
time without considering them as regular employees evidences - Meantime, on Dec 3, 1991, the agency filed with the Labor
bad faith on the part of private respondent. The public Arbiter an Urgent Ex-Parte Motion to Quash the Alias Writ of
respondent made a finding to this effect when it stated that the Execution on the ground that there has been a change in the
subsequent rehiring of petitioners on a probationary status situation of the parties which makes the execution inequitable.
“clearly appears to be a convenient subterfuge on the part of Respondent contended that Torres accepted employment from
management to prevent complainants (petitioners) from another security agency without previously resigning from it.
becoming regular employees.” - On Feb 2, 1992, Labor Arbiter issued an order for partial
Disposition Resolution of NLRC is modified, the deletion of the execution directing the release of the uncontested salary
award for backwages is set aside. LA decision is AFFIRMED, with differential amounting to P15,523.48, to be deducted from the
modification that backwages shall be paid to petitioners from amount of P105,396.00, and to withhold the balance, pending
the time of their illegal dismissal up to the date of their resolution of the Motion to Quash the alias Writ of Execution.
reinstatement. - On March 19, 1992, petitioner filed with NLRC a petition for
mandamus and injunction to compel the Labor Arbiter to issue
an order directing the NLRC Cashier to release the entire
TORRES V NLRC (E&R SECURITY AGENCY)
amount deposited with the latter to petitioner.
330 SCRA 311 - On Aug 11, 1992, NLRC issued a resolution denying the
PARDO; April 12, 2000 petition for mandamus and injunction and ordered Labor Arbiter
to immediately resolve respondent’s Urgent Motion to Quash
NATURE Writ of Execution.
Petition for certiorari - Petitioner contends that the release of the judgment award is
purely a ministerial duty of the Labor Arbiter.
FACTS
- Jan 5, 1989, E & R security agency hired Chona Torres as a ISSUE
security guard. WON NLRC committed grave abuse of discretion in ordering the
- On Oct 27, 1989, during a routinary meeting of the security Labor Arbiter to resolve the motion to quash alias writ of
guards of the agency assigned to the Philippine Aerospace execution
Development Corporation, the issue of granting a P25.00 pay
increase pursuant to RA 6727 was taken up and questions were HELD
raised as to the date of implementation of the increase. YES
Petitioner Torres stood up and uttered aloud at the presiding - Execution is the final stage of litigation, the end of the suit. It
officer: "BAKIT ANG SASABIHIN NINYO SA OPISINA AT DITO AY can not be frustrated except for serious reasons demanded by
MAGKAIBA!" to which remark the presiding officer replied: justice and equity. When a judgment becomes final and
"WALA NAMAN PAGKAKAIBA, DI BA?". The presiding officer also executory, it is the ministerial duty of the court to issue a writ of
asked: "BAKIT AYAW MO DOON SA OPISINA?" Then petitioner execution to enforce the judgment.
shouted: "WALA NA AKONG TIWALA SA INYO AT SA AGENCY - A writ of execution may however be refused on equitable
KASI SINUNGALING KAYO. EH, KUNG LALAKI LANG AKO, BAKA grounds as when there was a change in the situation of the
KUNG ANO PA ANG NAGAWA KO SA INYO NGAYON!" parties that would make execution inequitable or when certain
- On the same day, the agency sent Torres a letter saying circumstances, which transpired after judgment became final,
effective immediately, she is suspended from duty as Security rendered execution of judgment unjust. The fact that the
Guard for fifteen days for discourtesy, disloyalty and decision has become final does not preclude a modification or
insubordination while in the performance of duty. an alteration thereof because even with the finality of
- Torres filed with the Labor Arbiter a complaint for illegal judgment, when its execution becomes impossible or unjust, it
suspension and violation of R.A. 6727, and for having been may be modified or altered to harmonize the same with justice
required to sign on a blank payroll. and the facts.
- On Nov 10, 1989, Torres received a letter from the agency - The respondent agency's contention that there has been a
informing her that she was re-assigned and required to report change in the situation of the parties making execution
at the respondent's Manila office for further instructions. On inequitable because petitioner accepted employment from
Nov 27, the agency terminated her services for abandonment another agency without resigning from it is patently without
when she failed to report for work in her new assignment. merit. The rule now is that back wages awarded to an illegally
- Torres filed with the Labor Arbiter an amended complaint dismissed employee shall not be diminished or reduced by the
charging respondent with underpayment of wages under R.A. earnings derived by him elsewhere during the period of his
No. 6640 and harassment. illegal dismissal.
- Labor Arbiter ordered agency to reinstate Torres to her former - In this particular case, the decision is final and, in fact, the
position, pay her salary for Oct 1989, and salary differentials amount of the salary differentials and back wages awarded to
under RA 6640 and RA 6727 Torres has been garnished from the account of respondent
Agency appealed to NLRC. The NLRC denied the appeal on the agency with PNB with no opposition or resistance and it is the
ground of non-perfection due to lack of appeal bond and that ministerial duty of the Labor Arbiter to release the money to
there was no reason to disturb the decision. petitioner.
- The decision having become final, the Labor Arbiter issued a Disposition Petition granted. Labor Arbiter directed to release
writ of execution on the reinstatement aspect, but it was not the money award to petitioner
implemented because the monetary aspect of the decision
remained to be determined.
Labor Law 1 A2010 - 74 - Disini
KAY PRODUCTS INC V CA (KAY PRODUCTS choice but to disassociate himself from his employment.” In the
context of Section II, Rule XIV, Book V of the Revised Rules
EMPLOYEES UNION, ABILA)
Implementing the Labor Code, resignation is a formal
464 SCRA 544 pronouncement or relinquishment of an office. It must be made
CALLEJO; July 28, 1995 with the deliberate animus or intention of relinquishing the
office accompanied by an act of relinquishment. In the same
FACTS case, it was also held that the voluntariness of a resignation is
- Abila, Morante, Regidor, Escuadro and del Valle were negated by the filing of a complaint for illegal dismissal
employed by Kay Products Inc (KPI) as factory sewers. They - We are inclined to agree with the petitioners that they were
joined other employees in planning to form a union. When KPI coerced, threatened or intimidated into signing blank sheets of
learned about the plan, it transferred the employees to an paper which materialized into resignation letters, the contents
employment agency with which it had a manpower contract, of which were dictated by the Director and Personnel Manager
the Gerrico Resources & Manpower Services, Inc. (GRMSI). KPI of the respondent company. For to us, it is inconceivable that a
promised that the employees would receive bigger and better worker who has already attained a regular status in his
benefits as regular employees of GRMSI. employment would opt to be transferred to another
- KPI directed all employees concerned to sign resignation employment agency, there to start work anew – work that
letters preparatory to their employment with GRMSI. Thus, the would relegate him to a mere casual laborer or employee.
employees submitted handwritten letters of resignation, and KPI Obviously, petitioners were not given any other choice by
took custody of their identification cards. management, but to agree to their transfer to Gerrico
- The employees continued to report for work in the KPI but Resources, lest they lose their only means of livelihood.
received less wages/salaries. Then, KPI announced that GRMSI Considering that petitioners are ordinary sewers of respondent
had been dissolved and that there was a need for them to sign company, the fear of losing their jobs cannot but be a serious,
separate contracts with RCVJ, another corporation with which legitimate concern.
KPI had a manpower contract. 2. YES
- This time, Abila, Morante, Regidor, Escuadro and Del Valle, - Undeniably, petitioners were regular employees at the time
refused to sign any contract with RCVJ. they allegedly voluntarily resigned on July 14, 2000. As such
- Meanwhile, the employees of KPI were able to organize their regular employees, the Labor Code grants petitioners security
union, the Kay Products Employees Union. of tenure, which essentially means that their employer can not
- On Aug 25, 2000, 73 employees, together with the Kay terminate their services except for just and authorized causes,
Products Employees Union-PTGWO, filed a Complaint with as provided for under the Labor Code. Viewed in this light,
Regional Arbitration Branch No. IV of the DOLE against KPI. The private respondents’ act or action in transferring petitioners to
employees claimed that the petitioners were guilty of unfair a manpower agency (Gerrico Resources then later on to RCVJ)
labor practice (ULP), underpayment of salaries and service with the promise that they would receive the same benefits as
incentive leave pay, and failure to classify them as regular regular employees, puts in question private respondents’ real
employees. motive. If anything, it gives currency to the belief that
- On Sept 4, 2000, the employees were ordered to take a two- petitioners had been illegally terminated or dismissed from
week leave from work without pay. The employees complained. employment.
When they tried to report for work after the two-week period, 3. YES
they were refused entry and were told that they had ceased to - As regular employees, the private respondents are entitled to
be KPI employees since they had resigned upon agreeing to be security of tenure provided under the labor laws and may only
employed by GRMSI. be validly terminated from service upon compliance with the
- The employees and their union amended their complaint to legal requisites for dismissal and considering that they were
illegal dismissal. The complainants (respondents) alleged: 1) illegally dismissed, the private respondents should be
that they were illegally dismissed; their dismissal was not reinstated, in accordance with the provision of the Labor Code,
grounded on any just and authorized cause under the law, and as amended, particularly Article 279, to wit:
they were deprived of their right to due process; 2) that in Article 279. Security of Tenure. – In cases of regular
interfering with their right to self-organization by deceitfully employment, the employer shall not terminate the services of
transferring them to an employment agency, KPI thereby an employee except for a just cause or when authorized by
engaged in ULP; 3) that they were coerced and intimidated into this Title. An employee who is unjustly dismissed from work
signing letters of resignation; 4) that they were entitled to shall be entitled to reinstatement without loss of seniority
money claims (13th month pay, service incentive leave pay, rights and other privileges and to his full backwages, inclusive
vacation and sick leave pay) from the time of their illegal of allowances, and to his other benefits or their monetary
dismissal until their reinstatement. equivalent computed from the time his compensation was
- KPI: 1) employees voluntarily resigned from their work… that withheld from him up to the time of his actual reinstatement
aside from the typewritten resignation letter, the complainants - Thus, the said provision provides that illegally dismissed
also wrote other letters in their own handwriting… that the employees are entitled to backwages plus other benefits
complainants voluntarily secured their clearances from KPI, computed from the time compensation was withheld up to the
transferred to RCVJ, and never went back to work; 2) that it time of actual reinstatement. An illegally dismissed employee
never interfered with its workers’ right to self-organization or who, in contemplation of the law, never left his office, should be
any of their plans to form any union; 3) that the complainants granted the compensation which rightfully belongs to him from
were not entitled to reinstatement, backwages, moral and the moment he was unduly deprived of it up to the time it was
exemplary damages, and attorney’s fees. restored to him; the backwages to be awarded should not be
diminished or reduced by earnings derived by the illegally
ISSUES dismissed employee elsewhere during the term of his illegal
1. WON the employees resigned voluntarily dismissal.
2. WON they were illegally dismissed
3. WON they were entitled to backwages STANDARD ELECTRIC MANUFACTURING CORP V
HELD
STANDARD ELECTRIC EMPLOYEES UNION
1. NO [PAGE 227]
- In Molave Tours v. NLRC, resignation has been defined as “the
voluntary act of an employee who finds himself in a situation BPI EMPLOYEES UNION V BPI
where he believes that personal reasons cannot be sacrificed in
[PAGE 303]
favor of the exigency of the service, then he has no other
Labor Law 1 A2010 - 75 - Disini
1. Because Benedicto was entitled to backwages only from
October 11 to December 1, 1994 when he turned 65 years
FILIPINO PRE-FABRICATED BUILDING SYSTEMS INC
old, petitioner should pay his commission only for this period.
V PUENTE 2. By nature, commissions are given to employees only if the
[PAGE 92] employer receives income. Employees, as a reward, receive a
percentage of the earnings of the employer, which they,
INTERCONTINENTAL BROADCASTING CORP V through their efforts, helped produce. Commissions are also
given in the form of incentives or encouragement so that
BENEDICTO employees will be inspired to put a little more industry into
495 SCRA 561 their tasks. Commissions can also be considered as direct
CORONA; July 20, 2006 remunerations for services rendered. All these different
concepts of commissions are incongruent with the claim that
NATURE an employee can continue to receive them indefinitely after
Petition for review on certiorari reaching his mandatory retirement age.
- Benedicto’s right to the commissions was coterminous with
FACTS his employment with petitioner and this ended when he
- Intercontinental Broadcasting Corporation is a government- reached the compulsory retirement age.
owned and controlled corporation. It is engaged in the business 3. Lastly, the stipulation providing for commissions (which did
of mass media communications including, among others, the not specify the period of entitlement) would be too
operation of television IBC 13. burdensome if interpreted to mean that Benedicto had a right
- In 1993, Reynaldo Benedicto was appointed by Ceferino to it even after his employment with petitioner. Doubts in
Basilio, the general manager of IBC 13, as marketing manager. contracts should be settled in favor of the greatest reciprocity
He received P20,000 with commission of 1% from advertising of interests. A lopsided and open-minded construction could
collections. not have been the parties’ contemplation. Had that been their
- An October 11, 1994 letter terminated Benedicto. Benedicto intent, then they should have spelled it out in no uncertain
then filed a complaint for illegal termination on December 3, terms
1996. The Labor Arbiter ruled in his favor and ordered for Disposition The assailed decision of the Court of Appeals is
reinstatement with payment of backwages from the time of his set aside.
dismissal up to his actual reinstatement (amounting to
P920,000 at the time of promulgation of the decision). TPI PHIL CEMENT CORP V CAJUCOM VII
Petitioners’ Claim 483 SCRA 494
- IBC 13 complained that the award of backwages was
excessive and asked for reconsideration from NLRC. The NLRC
SANDOVAL-GUTIERREZ; February 28, 2006
did not grant the motion because non-payment of appeal bond
within the reglementary period. NATURE
- Petitioner insists that the award should be limited to what Review on certiorari
Benedicto was entitled to as of the compulsory retirement age
of 65 years. When the labor arbiter promulgated his decision FACTS
(wherein he awarded the amount of P920,000 as backwages), - Petitioners TP Cement and TP Vinyl employed Atty. Benedicto
Benedicto was already 68 years old. In an order dated August A. Cajucom VII, respondent, as Vice-President for Legal Affairs.
10, 1999, he further increased the backwages by P180,000. - As a result of the economic slowdown then experienced in this
Respondents’ Comments country, petitioner TP Cement, having no viable projects,
- Benedicto alleged that after his appointment, he was able to shortened its corporate term from 50 years to 2 years and 7
increase the televiewing, listening and audience ratings of months. It was dissolved on January 27, 1998. With respect to
petitioner which resulted in its improved competitive financial petitioner TP Vinyl, it shifted its business from production to
strength. marketing and trading of Thai Petrochemical products.
- He claimed that he successfully initiated, pursued and - Thus, petitioners implemented cost-cutting measures resulting
consummated an advertising contract with VTV Corporation for in the termination from the service of their employees,
a period of five years involving the amount of P600 million including respondent.
- Petitioners sent respondent a notice terminating his services
ISSUE effective December 30, 1998. Simultaneously, petitioners, on
WON the computation of the backwages was correct the same day, filed with the Department of Labor and
Employment (DOLE) an “Establishment Termination Report” of
HELD respondent’s separation from the service.
NO - Respondent contested petitioners’ action, claiming that the
Reasoning termination of his services was based erroneously on
- The Labor Arbiter found that Benedicto’s termination was petitioners’ probable losses, instead of their actual, substantial
illegal because of absence of just cause. The reinstatement of and imminent losses.
Benedicto has been rendered moot and academic because of is - Respondent further claimed that petitioners were motivated
death in 2002. by revenge in terminating his services.
- Benedicto was entitled to backwages only up to the time he - The Labor Arbiter rendered a Decision holding that petitioners
reached 65 years old, the compulsory retirement age under the failed to adduce sufficient evidence to show that their alleged
law. When Benedicto was illegally dismissed on October 11, losses are substantial and imminent, and concluded that
1994, he was already 64 years old. He turned 65 years old on respondent was illegally dismissed from employment.
December 1, 1994 at which age he was deemed to have retired. - Upon appeal, the National Labor Relations Commission (NLRC)
Since backwages are granted on grounds of equity for earnings reversed the Labor Arbiter’s Decision.
lost by an employee due to his illegal dismissal, Benedicto was - The Court of Appeals rendered the assailed Decision affirming
entitled to backwages only for the period he could have worked with modification the NLRC Decision in the sense that aside
had he not been illegally dismissed, i.e. from October 11, 1994 from paying respondent separation pay, petitioners are also
to December 1, 1994. ordered to pay him his backwages.
- As for the issue of Benedicto’s 1% commission, the court held
that there should be a recomputation with the following in ISSUES
mind: 1. WON petitioner was validly terminated (i.e. there was valid
retrenchment)
Labor Law 1 A2010 - 76 - Disini
2. WON the termination followed due process
3. WON respondent is entitled to backwages FACTS
- Filomeno Lantion, Clarita C. Lantion, and Juana C. Fuentes
HELD were Acting Vice President and Executive Officer, Dean of the
1. YES Institute of Business and Agricultural Administration and
- Retrenchment, under Article 2839 of the Labor Code, as concurrently Head and Professor of the Department of Business
amended, is recognized as an authorized cause for the and Finance, and Secretary of the Chief Legal Officer
dismissal of an employee from the service. respectively when Gregorio Araneta University Foundation
- For a valid retrenchment, three requisites must concur, as dismissed them in line with the university’s retrenchment and
provided in Article 283 of the Labor Code, as amended, namely: reorganization program.
(1) The retrenchment is necessary to prevent losses and the - Petitioners, who had served respondent university from 16 to
same is proven; (2) Written notice to the employees and to 32 years, claim to have been terminated from service
the DOLE at least one month prior to the intended date discriminatorily, arbitrarily and illegally and had not been
thereof; and (3) Payment of separation pay equivalent to rehired by private respondents contrary to their own guidelines
one month pay or at least ½ month pay for every year of and those set forth by MOLE in the implementation of GAUF
service, whichever is higher. RRR program.
- We observe that the Court of Appeals, in finding that - The labor arbiter and the nlrc found that retrenchment was
petitioners suffered from financial losses and justifying the not illegal but ordered payment of retirement and other
separation of respondent from the service, relied on the audited benefits.
reports prepared by Sycip Gorres Velayo & Co. Such reliance is
in order. ISSUE
- But respondent insists that actual, not probable losses, justify WON petitioners were illegally dismissed
retrenchment. Article 283 entails, among others, only a
situation where there is “retrenchment to prevent HELD
losses.” The phrase “to prevent losses” means that YES
retrenchment or termination from the service of some - That retrenchment was proper, therefore, there can be no
employees is authorized to be undertaken by the employer question. The conditions laid down, however, were not
sometime before the losses anticipated are actually religiously followed. Petitioners were not rehired although they
sustained or realized. This is the situation in the case at bar. fall outside the exception provided. Their positions were not
Evidently, actual losses need not set in prior to retrenchment. affected by the re-organizational changes envisioned in the
2. NO retrenchment program. The position of Vice-President continued
- Records show that on December 3, 1998, petitioners sent to exist. And as far as Filomeno and Clarita Lantion are
respondent and the DOLE separate notices of retrenchment concerned, their temporary appointment to other positions
effective December 30, 1998. Following the provision of Article could not have affected their permanent status pursuant to the
283, these notices should have been served one month ruling in the First GAUF Case. Clarita's position was neither
before, or on November 30, 1998. Clearly, petitioners abolished. She was replaced by another faculty member.
failed to comply with the one-month notice requirement - It may be that petitioners Filomeno and Clarita Lantion had
- Due process was not observed as the required notices were expressed their conformity to their termination, while Fuentes
not sent to respondent and the DOLE one month prior to the had tendered her courtesy resignation. As is obvious, however,
effectivity of his termination. Thus, petitioners should be liable those steps were but in administrative compliance with the
for violation of his right to due process and should pay him Memorandum Circular of 14 October 1983 of the University,
indemnity in the form of nominal damages, pursuant to our ante. As a matter of fact, courtesy resignations could have been
ruling in Agabon, which we fix at P20,000.00. dispensed with as all personnel were deemed resigned.
3. YES Besides, such compliance had placed them in a better position
Reasoning than the Complainants in the First GAUF Case considering the
- It bears reiterating that under Article 283, in case of proviso in the Memo-Circular of the University that "those who
retrenchment to prevent losses, respondent is entitled to an submit courtesy resignations may be re-appointed while those
award of separation pay equivalent to one-half (1/2) month’s who would fail to submit may be retrenched."
pay for every year of service. ON INFLATION…
Disposition AFFIRMED. - In respect of the argument that the inflation that has
supervened justifies the imposition of interest, this Court has
held that the effects of extraordinary inflation are not to be
applied without an agreement between the parties and without
an official declaration thereof by competent authorities
EFFECT INFLATION Disposition Decision of respondent National Labor Relations
Commission is REVERSED in so far as it holds that the dismissal
of petitioners was not illegal and hereby ORDERS respondent
LANTION V NLRC (MENESES) Gregorio Araneta University Foundation to REINSTATE
petitioners to their former positions with three (3) years
181 SCRA 513 backwages under the new terms and conditions of employment
MELENCIO-HERRERA; January 29, 1990 in the University as reorganized.

NATURE
Petition for certiorari
14.10 FINANCIAL ASSISTANCE
9
Art. 283. Closure of Establishment and Reduction of Personnel. – The employer may
also terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or ALLOWED FINANCIAL ASSISTANCE
cessation of operations 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. x x x. In case of retrenchment to prevent PHIL LONG DISTANCE TELEPHONE CO V NLRC
losses and in cases of closure or cessation of operations of the establishment or
undertaking not due to serious business losses or financial reverses, the separation
[PAGE 18]
pay shall be equivalent to 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.
Labor Law 1 A2010 - 77 - Disini
intoxication or an offense involving moral turpitude, like theft
or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other
name it is called, on the ground of social justice.”
SALAVARRIA V LETRAN COLLEGE - As applied to the case at bar, we find that petitioner’s
296 SCRA 184 infraction of the school policy neither amounted to serious
misconduct nor reflected that of a morally depraved person as
ROMERO; September 25, 1998 may warrant the denial of separation pay to her. While the
Court is not oblivious of the fact that petitioner was already
NATURE warned in a previous offense, certain circumstances, however,
Appeal from the decision of the NLRC reversing the decision of impel us to award her separation pay equivalent to one month
the labor arbiter and dismissing the complaint for illegal salary for every year of service in respondent school.
dismissal.

FACTS
GUSTILO V WYETH PHILIPPINES INC
- Petitioner Anita Y. Salavarria was employed by respondent [PAGE 10]
Colegio de San Juan de Letran as a teacher in its High School
Department. She was dismissed from her employment because
she allegedly collected money from her student which is in
violation of the school’s rules and regulations. The students of
the petitioner explained that the project consisted in collecting
contributions from each of them, which amount shall be used to
purchase religious articles such as bibles, chalice, crucifix and
similar items to be distributed among the several churches in
Metro Manila and nearby rural areas. Furthermore, they
claimed that in doing so, it would involve them in charity work PINERO V NLRC
in connection with their lesson on “Love of God and Neighbor” 437 SCRA 112
and that such activity would entail a much lesser expense than YNARES-SANTIAGO; August 20, 2004
the completion of the term papers. After continuous prodding,
petitioner was finally prevailed upon to accede to her students’ NATURE
proposal. This fact was later on discovered by the Petition for review on certiorari
Administration.
- She filed a complaint for illegal dismissal. The labor arbiter FACTS
ruled in her favor but upon appeal by Letran the said decision of - Private respondent Dumaguete Cathedral College, Inc., an
the labor arbiter was reversed by the respondent NLRC. educational institution, is the employer of the faculty and staff
Although the complaint for illegal termination was dismissed, members comprising the labor union DUCACOFSA-NAFTEU. On
NLRC ordered respondent school to pay the complainant December 19, 1986, DUCACOFSA (then affiliated with the
severance compensation in the amount of Forty Five Thousand National Alliance of Teachers and Allied Workers – NATAW) and
Pesos (P45,000.00), equivalent to her salary for one month for private respondent entered into a Collective Bargaining
every year of her nine (9) years service in consideration of the Agreement (CBA) effective for 3 years. Upon the expiration of
equities of the case. their CBA in 1989, the parties failed to conclude another CBA
which led DUCACOFSA (now affiliated with NAFTEU) to file a
ISSUE notice of strike with the Department of Labor and Employment
WON the award of financial assistance or severance (DOLE) on the ground of refusal to bargain.
compensation was proper - On November 4, 1991, DUCACOFSA-NAFTEU conducted a
strike in the premises of private respondent without submitting
HELD to the DOLE the required results of the strike vote obtained
YES from the members of the union. Consequently, on November
- The award is proper based on equity and on the provisions of 21, 1991, private respondent filed with the DOLE a complaint to
the Constitution regarding the promotion of social justice and declare the strike illegal and to dismiss some of its officers. On
protection of the rights of the workers. October 28, 1994, the Labor Arbiter rendered a decision
Ratio We rule that the NLRC correctly awarded to petitioner declaring the strike as illegal and declaring the respondent
the amount of P45,000.00 as “severance pay” which is union officers to have lost their employment status effective on
synonymous with “separation pay.” As a general rule, an the date of this decision. The union officers appealed to the
employee who is dismissed for cause is not entitled to any NLRC. Meanwhile, on November 29, 1991, the said officers
financial assistance. However, equity considerations provide an returned to work by virtue of a Memorandum of Agreement
exception. In PLDT v. NLRC, equity has been defined as justice entered into by DUCACOFSA-NAFTEU and private respondent
outside law, being ethical rather than jural and belonging to the allowing them to resume service without prejudice to the
sphere of morals than of law. It is grounded on the precepts of outcome of the instant case then pending appeal with the
conscience and not on any sanction of positive law, for equity NLRC.
finds no room for application where there is law. Further, it was - On December 19, 1995, the NLRC affirmed the decision of the
held that the grant of separation pay is not merely based on Labor Arbiter.In addition to the failure to comply with strike vote
equity but on the provisions of the Constitution regarding the requirements, the NLRC ratiocinated that the strike was illegal
promotion of social justice and protection of the rights of the because DUCACOFSA-NAFTEU, not being a legitimate labor
workers. organization, has no personality to hold a strike. The union
- As stressed in the recent cases of Santos v. NLRC and Camua officers filed a Motion for Reconsideration but the same was
v. NLRC, the Court therein laid down the guidelines in the grant denied.
of separation pay to lawfully dismissed employees, thus: - Petitioner Rosendo U. Piñero filed with this Court a petition for
"We hold that henceforth separation pay shall be allowed as a certiorari which was referred to the Court of Appeals. On March
measure of social justice only in those instances where the 25, 2001, the Court of Appeals affirmed the decision of the
employee is validly dismissed for causes other than serious NLRC dismissing the petition. On August 29, 2001, Piñero’s
misconduct or those reflecting on his moral character. Where Motion for Reconsideration was denied. Hence, the instant
the reason for the valid dismissal is, for example, habitual petition.
Labor Law 1 A2010 - 78 - Disini
for equity finds no room for application where there is law.
ISSUES Although meriting termination of employment, Piñero’s
1. WON the strike should be declared illegal infraction is not so reprehensible nor unscrupulous as to
2. WON Pinero is entitled to financial assistance warrant complete disregard of his long years of service.
Moreover, he has no previous derogatory records. Weighed on
HELD the scales of justice, conscience and reason tip in favor of
1. YES granting financial assistance to support him in the twilight of his
- the strike staged by DUCACOFSA-NAFTEU is illegal for non- life after long years of service.
compliance with the strike-vote requirements. The relevant Under the circumstances, social and compassionate justice
provisions of Article 263 of the Labor Code read: dictate that petitioner Piñero be awarded financial assistance
Article 263. equivalent to one-half (1/2) month’s pay for every year of
c.) the duly certified or recognized bargaining agent may file service computed from his date of employment up to October
a notice of strike or the employer may file a notice of lockout 28, 1994 when he was declared to have lost his employment
with the Department at least 30 days before the intended status. Indeed, equities of this case should be accorded due
date thereof. In cases of unfair labor practice, the period of weight because labor law determinations are not only
notice shall be 15 days and in the absence of a duly certified secundum rationem but also secundum caritatem.
or recognized bargaining agent, the notice of strike may be Disposition The petition is partially granted. As modified,
filed by any legitimate labor organization in behalf of its Rosendo U. Piñero is awarded financial assistance equivalent to
members. However, in case of dismissal from employment of one-half (1/2) month’s pay for every year of service computed
union officers duly elected in accordance with the union from his date of employment up to October 28, 1994.
constitution and by-laws, which may constitute union busting
where the existence of the union is threatened, the 15-day
EASTERN SHIPPING LINES INC V SEDAN
cooling-off period shall not apply and the union may take
action immediately. 486 SCRA 565
(f) A decision to declare a strike must be approved by a QUISUMBING; April 7, 2006
majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda NATURE
called for that purpose. A decision to declare a lockout must CERTIORARI
be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, FACTS
obtained by secret ballot in a meeting called for the purpose. - EASTERN hired on a per-voyage basis Sedan as 3rd marine
The decision shall be valid for the duration of the dispute engineer and oiler in one of the vessels it owned
based on substantially the same grounds considered when - IN 1997, Sedan sent a letter to EASTERN applying for optional
the strike or lockout vote was taken. The Department may, at retirement, citing as reason the death of his only daughter,
its own initiative or upon the request of any affected party, hence the retirement benefits he would receive would ease his
supervise the conduct of the secret balloting. In every case, financial burden.
the union or the employer shall furnish the Department the - However, EASTERN deferred action on his application for
results of the voting at least seven days before the intended optional retirement since his services on board ship were still
strike or lock-out, subject to the cooling-off period herein needed.
provided. - Nonetheless, the company expressed intention to extend him
- Under the aforequoted provisions, the requisites for a valid a loan in order to defray the costs incurred for the burial and
strike are as follows: (a) a notice of strike filed with the DOLE funeral expenses of his daughter.
thirty days before the intended date thereof or fifteen days in - But still Sedan insisted that he no longer wanted to continue
case of unfair labor practice; (b) strike vote approved by a working on board a vessel for reasons of health.
majority of the total union membership in the bargaining unit - Sedan sent another letter to petitioners threatening to file a
concerned obtained by secret ballot in a meeting called for that complaint if his application was not granted.
purpose; (c) notice given to the DOLE of the results of the - EASTERN ,in reply, sent a telegram on December 9, 1997
voting at least seven days before the intended strike. These informing Sedan that his services were needed on board a
requirements are mandatory and failure of a union to comply vessel and that he should report immediately for work as there
therewith renders the strike illegal. was no available replacement.
- Pursuant to Article 264 of the Labor Code, any union officer - Sedan claims he did not receive the telegram, nor was this
who knowingly participates in an illegal strike and any worker or fact proved by the company before the LA or the NLRC.
union officer who knowingly participates in the commission of - Sedan proceeded to file a complaint with the LA against
illegal acts during a strike may be declared to have lost his EASTERN, demanding payment of his retirement benefits, leave
employment status. In the case at bar, DUCACOFSA-NAFTEU pay, 13th month pay and attorney’s fees.
failed to prove that it obtained the required strike-vote among - LA ruled in favor of Sedan; NLRC affirmed and dismissed for
its members and that the results thereof were submitted to the lack of merit the MR.
DOLE. The strike was therefore correctly declared illegal, for - CA ruled that the retirement gratuity and attorney’s fees
non-compliance with the procedural requirements of Article 263 awarded by the LA and the NLRC had no basis in fact or law
of the Labor Code, and Piñero properly dismissed from service. since pursuant to the Agreement between the company and the
2. YES employees, the granting of optional retirement is the exclusive
- The Court notes that petitioner Piñero turned 60 years old and prerogative of the employer. Unless such prerogative was
retired on March 1, 1996 after 29 years of service, rendering his exercised arbitrarily or capriciously, private respondent cannot
dismissal from service moot and academic. However, in view of demand it as a right.
the propriety of his termination as a consequence of the illegal - CA ordered EASTERN to pay SEDAN P200,000 as financial
strike, he is no longer entitled to payment of retirement assistance. Denied E’s MR.
benefits because he lost his employment status effective as of
the date of the decision of the Labor Arbiter – October 28, 1994. ISSUE
An employee who is dismissed for cause is generally not WON the court of appeals erred in giving the respondent
entitled to any financial assistance. Equity considerations, php200,000.00 as financial assistance when in fact it was the
however, provide an exception. Equity has been defined as respondent who refused to report for work
justice outside law, being ethical rather than jural and belonging
to the sphere of morals than of law. It is grounded on the HELD
precepts of conscience and not on any sanction of positive law, NO
Labor Law 1 A2010 - 79 - Disini
- SEDAN IS NOT ENTITLED TO RETIREMENT BENEFITS but is that Sedan joined the company when he was a young man of
entitled to financial assistance as an equitable concession under 25 years and stayed on until he was 48 years old; that he had
the special circumstances of this case. given to the company the best years of his youth, working on
EASTERN’S CLAIM: board ship for almost 24 years; that in those years there was
- SEDAN’s refusing to report for work and insisting on applying not a single report of him transgressing any of the company
for optional retirement-> TANTAMOUNT TO VOLUNTARY rules and regulations; that he applied for optional retirement
RESIGNATION. Therefore, petitioners contend, the respondent under the company’s non-contributory plan when his
should not be entitled to any financial assistance. daughter died and for his own health reasons; and that it
- Granting arguendo that SEDAN was entitled to financial would appear that he had served the company well, since
assistance, they protest the amount of the financial assistance even the company said that the reason it refused his
awarded by the CA for being disproportionately excessive. application for optional retirement was that it still needed his
Reasoning services; that he denies receiving the telegram asking him to
- PERTINENT LAW IN LC: report back to work; but that considering his age and health,
ART. 287. Retirement. – Any employee may be retired upon he preferred to stay home rather than risk further working in
reaching the retirement age established in the collective a ship at sea.
bargaining agreement or other applicable employment - These circumstances indubitably merit equitable concessions,
contract. via the principle of “compassionate justice” for the working
In case of retirement, the employee shall be entitled to receive class.
such retirement benefits as he may have earned under existing - AS REGARDS WON the Php 200k granted him is
laws and any collective bargaining agreement and other “arbitrary and excessive”.
agreements: Provided, however, That an employee’s
retirement benefits under any collective bargaining and other - Philippine Long Distance Telephone Co. v. NLRC: separation
agreements shall not be less than those provided herein. pay shall be allowed as a measure of social justice only in the
In the absence of a retirement plan or agreement providing instances where the employee is validly dismissed for causes
for retirement benefits of employees in the establishment, an other than serious misconduct or those reflecting on his moral
employee upon reaching the age of sixty (60) years or more, character. A contrary rule, we said would have the effect of
but not beyond sixty-five (65) years which is hereby declared rewarding rather than punishing an erring employee.
the compulsory retirement age, who has served at least five - Cited doctrines in NLRC cases, the SC found that the grant of
(5) years in the said establishment may retire and shall be P200,000 was neither arbitrary nor excessive.
entitled to retirement pay equivalent to at least one half (1/2) - Sedan has no derogatory record in his 23 years of service
month salary for every year of service, a fraction of at least should be granted equitable assistance equal to one-half
six (6) months being considered as one whole year. month’s pay for each of his 23 years of service.
xxx Disposition PETITION is DENIED. CA’s DECISION is
The age of retirement is primarily determined by the existing AFFIRMED.
agreement between the employer and the employees.
However, in the absence of such agreement, the retirement
age shall be fixed by law. Under the aforecited article of the NOT ALLOWED
Labor Code, the legally mandated age for compulsory
retirement is 65 years, while the set minimum age for
optional retirement is 60 years. PHILIPPINE NATIONAL CONSTRUCTION CORP V
- In this case there was an agreement between EASTERN and its NLRC (MANREZA)
employees. 170 SCRA 207
- The agreement states the retirement under the LC and the
GRINO-AQUINO; February 9, 1989
optional retirement where the eligibility age for optional
retirement is set at 60 years. However, employees of herein
petitioners who are under the age of 60 years, but have NATURE
rendered at least 3650 days (10 years) on board ship or fifteen Petition for review on certiorari of the decision of NLRC
(15) years of service for land-based employees may also avail
of optional retirement, subject to the exclusive prerogative and FACTS
sole option of petitioner company. - Manreza was hired by CDCP. The North Luzon Expressway
- Records show that private respondent was only 48 years old Security Services Investigation and Intelligence Unit discovered
when he applied for optional retirement. Thus he cannot claim flexbeams in the house of Eusebio and Enriquez, who declared
optional retirement benefits as a matter of right. that Manreza deposited them there. Memo was sent to
- His application for optional retirement was subject to the Manreza asking him to explain within 48 hrs. Manreza said they
exclusive prerogative and sole option of the shipping company were just temporarily deposited there.
pursuant to the abovecited agreement between the workers - Case was referred to Union which concluded that Manreza was
and the company merely negligent, and recommended suspension. Another
AS REGARDS THE CA’S GRANT of FINANCIAL ASSISTANCE investigation was conducted. NLE administrative officer found
- Telefunken Semiconductors Employees Union-FFW v. Court of Manreza guilty of stealing or unauthorized taking of company
Appeals (2000): financial assistance is allowed only in instances property. Manreza was placed under preventive suspension
where the employee is validly dismissed for causes other than and later terminated. Manreza filed complaint.
serious misconduct or those reflecting on his moral character. - Labor Arbiter ordered reinstatement. Petitioner appealed to
- Arc-Men Food Industries Corporation v. NLRC, and Lemery NLRC, which said dismissal was valid, but ordered payment of 1
Savings and Loan Bank v. NLRC: when there is no dismissal to month pay for every year of service, in spirit of compassionate
speak of, an award of financial assistance is not in order. justice.
- Justice Sabino de Leon, Jr. IN TELEFUNKEN: financial assistance - Petition for certiorari was filed by PNCC, alleging abuse in
may be allowed as a measure of social justice and exceptional discretion in awarding separation pay despite finding of guilt of
circumstances, and as an equitable concession. Manreza and just cause in dismissal.
- The instant case equally calls for balancing the interests of the
employer with those of the worker, if only to approximate what ISSUES
Justice Laurel calls justice in its secular sense. WON award of separation pay is proper
- In this instance, our attention has been called to the following
circumstances: HELD
NO
Labor Law 1 A2010 - 80 - Disini
- While it is true that in earlier cases, We held that employees for cause other than serious misconduct or those reflecting on
dismissed for cause are nevertheless entitled to separation pay his moral character. Where the reason for the valid dismissal is,
on the ground of social and compassionate justice, that doctrine for example habitual intoxication or an offense involving moral
was abandoned in Philippine Long Distance Telephone Co. vs. turpitude, like theft or illicit sexual relations with a fellow
NLRC and Marilyn Bucay. worker, the employer may not be required to give the dismissed
- Separation pay shall be allowed as measure of social justice employee separation pay, or financial assistance, or whatever
only in instances where employee is validly dismissed for other name it is called, on the ground of social justice. x x x A
causes other than serious misconduct or those reflecting on his contrary rule would have the effect of rewarding rather than
moral character. Where reason for valid dismissal is, for punishing the erring employee for his offense."
example, habitual intoxication or offense involving moral - An award of separation pay to an employee who was
turpitude, employer may not be required to give separation pay dismissed for a valid cause is legally indefensible. It
or financial assistance, or whatever other name it is called, on contravenes Rule 1, Sec. 7, Book VI of the Omnibus Rules
the ground of social justice. Implementing the Labor Code:
- Social justice is not intended to countenance wrongdoing "Sec. 7. Termination of Employment by Employer.— The
simply because it is committed by the underprivileged. At best just causes for terminating the services of an employee
it may mitigate the penalty but it certainly will not condone the shall be those provided in Article 282 of this Code. The
offense. Social justice cannot be permitted to be the refuge of separation from work of an employee for a just cause does
scoundrels any more than can equity be an impediment to the not entitle him to the termination pay, provided in the
punishment of the guilty. Those who invoke social justice may Code, without prejudice, however, to whatever rights,
do so only if their hands are clean and their motives blameless benefits, and privileges he may have under the applicable
and not simply because they happen to be poor. individual or collective agreement with the employer or
- Since Manreza was found guilty of dishonesty for having stolen voluntary employer policy or practice."
company property and was dismissed for cause, he is not - The only cases when separation pay shall be paid, although
entitled to separation pay. the employee was lawfully dismissed, are when the cause of
termination was not attributable to the employee's fault but due
to: (1) the installation of labor-saving devices, (2) redundancy,
(3) retrenchment, (4) cessation of the employer's business, or
(5) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to
his health and to the health of his co-employees. (Articles 283
and 284, Labor Code.) Other than these cases, an employee
who is dismissed for a just and lawful cause is not entitled to
separation pay even if the award were to be called by another
name.
Disposition petition for certiorari is granted. NLRC decision
EASTERN PAPER MILLS INC V NLRC (MALABANAN) dismissing Malabanan’s complaint for illegal dismissal is
affirmed, but the award of separation pay or financial
170 SCRA 595 assistance is set aside for lack of legal basis.
GRINO-AQUINO; February 24, 1989
CHUA V NLRC
NATURE
Petition for certiorari [PAGE 242]

FACTS
- Eduardo Malabanan, an accounts payable clerk, was dismissed
on Jan 10, 1983 by Eastern Paper Mills Inc after due notice,
investigation, and hearing. He was dismissed for having
physically assaulted and verbally abused, within full view and
hearing of the other employees, Mariano Lopingco, who was
then the personnel and administrative manager of the
company.
- The reason for the assault was Malabanan's resentment at
being suspected of having stolen an ash tray from Lopingco's 14.11 SEPARATION PAY
office and being questioned about the matter by the security
office.
- Malabanan filed a complaint for illegal dismissal in the Ministry WHEN – ALTERNATIVE
of Labor and Employment. Labor Arbiter dismissed Malabanan's
complaint and found that his dismissal from employment was
for just and valid cause. However, the Labor Arbiter awarded COCA-COLA BOTTLERS PHILS V VITAL
him P10,000 as "financial assistance". 438 SCRA 278
- On appeal by petitioner, NLRC affirmed the Labor Arbiter's
decision with modification. It awarded Malabanan separation or
SANDOVAL-GUTIERREZ; September 13, 2004
termination pay amounting to P10,780, in lieu of financial
assistance. NATURE
Petition for review on certiorari
ISSUE
WON the lower court erred in granting separation pay to FACTS
Malabanan. - June 1, 1980 - Dominic Vital was employed by Coca-Cola
Bottlers Philippines, Inc. as route driver/helper at its Antipolo
HELD Plant, with a monthly salary of P12,860.00. He was also
YES assigned to perform the duties of a salesman.
- Philippine Long Distance Telephone Company vs. NLRC: - In October 1995 – Coca-Cola implemented a local marketing
"Separation pay shall be allowed as a measure of social justice campaign called “Operation Rurok.” This was a campaign that
only in those instances where the employee is validly dismissed allows its trusted wholesaler outlets to retrieve foreign empties
Labor Law 1 A2010 - 81 - Disini
and/or bottles of petitioner’s competitors, such as Pepsi Cola policy, more specifically separation pay equivalent to 1 month
and Cosmos, from regular customer outlets, in exchange for for every year of employment of the employees.
Coca-Cola containers and products. - Each of the petitioners received his separation pay equivalent
- February 6, 1996 – District Sales Supervisor Lagula authorized to ½ month pay for every year of service, and other benefits
Vital to deliver, in exchange for retrieved Pepsi-Cola and which were all lumped in one check. They simultaneously
Cosmos empties or bottles, 57 cases of 12 oz. Coca-Cola executed individual “Release and Quitclaim” following the
products to AMC Viray Store situated in Tambunting Street, explanation to them by the Labor Arbiter of the nature and legal
Blumentritt. The same went on in two other instances: to effects of the said quitclaims. The Labor Arbiter also assured
deliver to Cora’s Store in Quezon City and John Uy in La Loma. that each of the petitioners executed his respected deed of
- October 10, 1996, - Petitioner sent respondent a notice of an quitclaim voluntarily.
investigation of its complaint against him for forgery, fictitious - Petitioners filed a complaint for illegal dismissal, deficiency in
sales transactions, falsification of company documents, and separation pay, backwages, reinstatement, legal interest, moral
unauthorized retrieval of empties. He was then placed on damages, exemplary damages, attorney’s fees, and cost of
preventive suspension. He was eventually terminated for lack litigation before the NLRC. The Labor Arbiter dismissed the
of trust. complaints for lack of merit. The NLRC and CA subsequently
- Vital filed a complaint for illegal dismissal with the Labor affirmed.
Arbiter which was dismissed for being devoid of merit. An
appeal with the NLRC reversed the decision in Vital’s favor. ISSUE
WON petitioners are only entitled to separation pay equivalent
ISSUE to ½ month pay for every year of employment with the private
WON Vital is entitled to separation pay respondent

HELD HELD
YES YES
Ratio Respondent who was illegally dismissed from work is Ratio While it is true that quitclaims are frowned upon the in
entitled to reinstatement without loss of seniority rights, full labor claims, this holds true only when the consideration
backwages, inclusive of allowances, and other benefits or their therefor is unconscionably low. Where the consideration is
monetary equivalent computed from the time his compensation substantial, the efficacy and validity thereof has been upheld,
was withheld from him up to the time of his actual more so where the quitclaim was voluntarily and willingly
reinstatement executed.
Reasoning Reasoning
- The circumstances obtaining in this case do not warrant the - The parties did not incorporate in the CBA a specific provision
reinstatement of respondent. Antagonism caused a severe providing that employees terminated from employment due to
strain in the relationship between him and petitioner company. the closure of business operations would be entitled to
A more equitable disposition would be an award of separation separation pay equivalent to 1 month pay for every year of
pay equivalent to at least one month pay, or one month pay for service. The parties opted to be bound by the provisions of the
every year of service, whichever is higher, (with a fraction of at Labor Code and not by company policy. Had the rank-and-file
least six (6) months being considered as one (1) whole year), in employees deemed the same to be a diminution of their
addition to his full backwages, allowances and other benefits. benefits, they should have rejected the CBA. Art. 283 should
- Records show that respondent was employed from June 1, apply.
1980 to February 8, 1997, or for sixteen (16) years and eight (8) Obiter
months, with a monthly salary of P12,860.00. Hence, he is - In cases of closures or cessation of operations of
entitled to a separation pay of P218,620.00. establishment or undertaking not due to serious business losses
Disposition The decision of the Court of Appeals is affirmed or financial reverses, the separation pay of employees shall be
with modification. equivalent to 1 month pay or to at least ½ month pay for every
year of service, whichever is higher. In no case will an employee
get less than 1 month separation pay if the separation from the
GUSTILO V WYETH PHILIPPINES INC
service is due to the above stated causes, provided that he has
[PAGE 10] already served for at least 6 months. Thus, if an employee had
been in the service for at least 6 months, he is entitled to a full
NATIONAL FEDERATION OF LABOR V CA month’s pay as his termination pay if his separation from the
CALLEJO SR; October 19, 2004 job is due to any of the causes enumerated above. However, if
he has to his credit 10 years of service, he is entitled to 5
months pay, this being higher than one-month pay. Stated
NATURE differently, the computation of termination pay should be based
Petition for review of the Decision of the CA on either 1 month or ½ month pay, whichever will yield to the
employees’ higher separation pay, taking into consideration his
FACTS length of service.
- National Federation of Labor (NFL) was the duly registered Disposition The petition is DENIED. The decision and
bargaining agent of the daily-and-monthly-paid rank-and-file resolution of the CA are AFFIRMED.
employees of Sime Darby Pilipinas, Inc. (SDPI) in the Latuan
rubber plantation. SDPI and NFL executed a CBA in which they
agreed that in case of permanent or temporary lay-off, workers PHESCHEM INDUSTRIAL CORP V MOLDEZ
affected would be entitled to termination pay as provided by [PAGE 293]
the Labor Code.
- RA 6657, otherwise known as the Comprehensive Agrarian
Reform Law, took effect. SDPI decided to cease operation of the
ETCUBAN V SULPICIO LINES
rubber plantation, and served formal notices of termination to 448 SCRA 516
all the employees of the plantation. Separation pay for the CALLEJO; January 17, 2005
employees was computed pursuant to the provisions of the
CBA. The NFL informed SDPI that the union members would NATURE
refuse to receive the computed separation pay if less than that Petition for certiorari
previously given to employees whose employment had been
terminated by SDPI on prior dates pursuant to the company FACTS
Labor Law 1 A2010 - 82 - Disini
- Etcuban was the chief purser of M/V Surigao Princess. It was
his responsibility, among other things, to issue passage tickets
HANFORD PHIL INC V JOSEPH
and to receive payments from the customers of the respondent,
as well as to issue the corresponding official receipts therefore. 454 SCRA 773
- IN a surprise examination, it was discovered that several SANDOVAL-GUTIERREZ; March 31, 2005
yellow passenger’s duplicate original of yet to be sold or
unissued passage tickets already contained the amount of NATURE
P88.00 – the fare for adult passengers for the Cagayan de Oro Petition for review on certiorari
to Jagna, Bohol route. He noticed that three other original
copies which made up the full set did not bear the same FACTS
impression, although they were supposed to have been - Hanford Philippines, Inc. (Hanford - petitioner) hired Shirley
prepared at the same time. Acting on what appeared to be a Joseph as a sewer. Joseph voluntarily tendered her resignation
strong evidence of short-changing the company, the jefe de which petitioner accepted the day after. Petitioner then paid
viaje dug deeper on what he uncovered. As expected, he found respondent her last salary, 13th month pay and the cash
inordinate amount of ticket issuances for children at half the conversion of her unused vacation and sick leave.
fare of P44.00 in Voyage 434 of the vessel. - Respondent (Joseph) sent a letter to petitioner requesting
- A memorandum was issued to Etcuban, asking him to explain payment of her separation pay pursuant to Section 1, Article IV
the alleged anomalies. He refused to acknowledge the memo. of the Collective Bargaining Agreement (CBA) quoted as follows:
He was put under preventive suspension and an investigation SECTION 1. Regular employees or workers separated by the
was conducted. He also was replaced. COMPANY because of reduction of personnel and employees
- Etcuban filed a complaint for illegal dismissal and payment of or workers who may be separated without cause, or those
benefits before the NLRC. The latter ruled for the Etcuban. The whose services are terminated or are separated from work
CA reversed. due to suspension or cessation of operation shall be entitled
to a termination pay in accordance with law. The COMPANY
ISSUES shall give termination pay to those who voluntarily resign due
1. WON the petitioner was validly dismissed to the reasons heretofore stated subject to the following
2. WON he should be granted separation pay terms and conditions: a) 1 to 30 years of service shall be
paid 20 days for every year of service; b) 16 to 20 years of
HELD service to the COMPANY shall be paid 15 days pay for every
1. YES year of service; c) 11 to 15 years of service to the
- The degree of proof required in labor cases is not as stringent COMPANY shall be paid 10 days pay for every year of service;
as in other types of cases. It must be noted, however, that and d) 5 to 10 years of service to the COMPANY shall be
recent decisions of this Court have distinguished the treatment paid 5 days pay for every year of service.
of managerial employees from that of rank-and-file personnel, - Labor Arbiter granted respondent’s petition and ordering
insofar as the application of the doctrine of loss of trust and petitioners to pay her separation pay. NLRC affirmed. CA
confidence is concerned. Thus, with respect to rank-and-file affirmed.
personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in ISSUE
question, and that mere uncorroborated assertions and WON Joseph should be awarded separation pay
accusations by the employer will not be sufficient. But as
regards a managerial employee, the mere existence of a basis HELD
for believing that such employee has breached the trust of his YES
employer would suffice for his dismissal. Hence, in the case of - due to the stipulation of the CBA. As held in Hinatuan Mining
managerial employees, proof beyond reasonable doubt is not Corporation and/or the Manager versus National Labor Relations
required, it being sufficient that there is some basis for such and Margo Batister, we held that while it is true that under the
loss of confidence, such as when the employer has reasonable Labor Code, an employee who voluntarily resigns may not be
ground to believe that the employee concerned is responsible granted separation pay, as in fact, the general rule is that an
for the purported misconduct, and the nature of his employee who voluntarily resigns is not entitled to separation
participation therein renders him unworthy of the trust and pay, however, there is an exception, that is, when it is
confidence demanded by his position. stipulated in the employment contract or CBA or such payment
- In the case at bar, the petitioner is not a rank and file is authorized by the employer’s practice or policy, as in this
employee. While, indeed, it was not proved that he was the one case. As aptly held by the Labor Arbiter, the NLRC and the CA, it
who made the irregular entries on the tickets, the fact that he is very clear from the CBA that when an employee or worker
did not lift a finger at all to determine who it was is a sad voluntarily resigns due to, among others, “separation from the
reflection of his job. In fact, even if the petitioner had no actual company without cause,” such as voluntary resignation, then he
and direct participation in the alleged anomalies, his failure to is entitled to a separation pay. Moreover, records show that
detect any anomaly in the passage tickets amounts to gross petitioners granted the employees mentioned earlier their
negligence and incompetence, which are, likewise, justifiable separation pay upon their separation by reason of their
grounds for his dismissal. Be that as it may, to our mind, it is no retirement. Under the Labor Code, retirement is not also a
longer necessary to prove the petitioner’s direct participation in ground for the grant of separation pay. If petitioners could be
the irregularity, for what is material is that his actuations were liberal to those employees who retired, there is no reason why
more than sufficient to sow in his employer the seed of mistrust they should not also extend such liberality to respondent
and loss of confidence. considering that she served petitioner for twenty one years.
2. NO Philippine National Construction vs. NLRC finds application:
- Anent the petitioner’s request for separation pay, the Court is “In the interpretation of an employer’s program providing for
constrained to deny the same. Well-settled is the rule that separation benefits, all doubts should be construed in favor of
separation pay shall be allowed only in those instances where labor. After all, workers are the intended beneficiaries of
the employee is validly dismissed for causes other than serious such program and our Constitution mandates a clear bias in
misconduct or those reflecting on his moral character. Inasmuch favor of the working class.”
as reason for which the petitioner was validly separated Disposition petition is hereby DENIED
involves his integrity, which is especially required for the
position of purser, he is not worthy of compassion as to deserve
at least separation pay for his length of service WHEN NOT ALLOWED
Disposition Petition denied
Labor Law 1 A2010 - 83 - Disini
business losses or financial reverses." Said provision does not
obligate an employer to pay separation benefits when the
NORTH DAVAO MINING CORPORATION V NLRC closure is due to losses.
254 SCRA 721 Reasoning
PANGANIBAN; March 13, 1996 [a] Where the closure was due to business losses as in the
instant case, in which the aggregate losses amounted to over
P20 billion the Labor Code does not impose any obligation upon
NATURE
the employer to pay separation benefits, for obvious reasons.
Petition for certiorari
The company's practice of giving one month's pay for every
year of service could no longer be continued precisely because
FACTS
the company could not afford it anymore. It was forced to close
- In May 1992, petitioner North Davao completely ceased
down on account of accumulated losses of over P20 billion
operations due to serious business reverses. From 1988 until its
[b] In this case, the basis for the claim of the additional
closure in 1992, North Davao suffered net losses averaging P3B
separation benefit of 17.5 days is alleged discrimination, i.e.,
per year, for each of the five years prior to its closure. It was
unequal treatment of employees, which is proscribed as an
found that 5 months prior to its closure, its total liabilities had
unfair labor practice by Art. 248 (e) of said Code. Under the
exceeded its assets by P20.4B, as shown by its financial
facts and circumstances of the present case, the grant of a
statements audited by the COA. When it ceased operations, its
lesser amount of separation pay to private respondent was
remaining employees were separated and given the equivalent
done, not by reason of discrimination, but rather, out of sheer
of 12.5 days' pay for every year of service, computed on their
financial bankruptcy, a fact that is not controlled by
basic monthly pay, in addition to the commutation to cash of
management prerogatives. Stated differently, the total
their unused vacation and sick leaves. However, it appears that,
cessation of operation due to mind-boggling losses was a
during the life of the petitioner corporation, from the beginning
supervening fact that prevented the company from continuing
of its operations in 1981 until its closure in 1992, it had been
to grant the more generous amount of separation pay. The fact
giving separation pay equivalent to 30 days' pay for every year
that North Davao at the point of its forced closure voluntarily
of service. Moreover, inasmuch as the region where North
paid any separation benefits at all although not required by law
Davao operated was plagued by insurgency and other peace
and 12.5-days worth at that, should have elicited admiration
and order problems, the employees had to collect their salaries
instead of condemnation.
at a bank in Tagum, Davao del Norte, some 58 km from their
2. YES
workplace and about 2.5 hours' travel time by public
- The award of back wages and transportation allowance and
transportation; this arrangement lasted from 1981 to 1990.
the issued connected therewith are factual, the determination
- A complaint was filed with respondent Labor Arbiter by
of which is best left to the respondent NLRC. It is well settled
respondent Wilfredo Guillema and 271 other separated
that this Court is bound by the findings of fact of the NLRC, so
employees for: (1) additional separation pay of 17.5 days for
long as said findings are supported by substantial evidence
every year of service; (2) back wages equivalent to two days a
- From the evidence on record, Court finds that the hours spent
month; (3) transportation allowance; (4) hazard pay; (5)
by complainants in collecting salaries at a bank in Tagum,
housing allowance; (6) food allowance; (7) post-employment
Davao del Norte shall be considered compensable hours
medical clearance; and (8) future medical allowance, all of
worked. Considering further the distance between Amacan,
which amounted to P58M as computed by private respondent.
Maco to Tagum which is 2.5 hours by travel and the risks in
- LA ruled in favor of private respondents. On appeal,
commuting all the time in collecting complainants' salaries,
respondent NLRC affirmed the decision in toto. Petitioner North
would justify the granting of backwages equivalent to 2 days in
Davao's motion for reconsideration was likewise denied. Hence,
a month as prayed for. Corollary to the above findings, and for
this petition.
equitable reasons, we likewise hold respondents liable for the
Respondent’s Main Contentions: That the award of
transportation expenses incurred by complainants at P40 round
separation pay should be given, based solely on petitioner
trip fare during pay days.
North Davao's long-standing policy of giving separation pay
- It is petitioners' burden or duty to present evidence of
benefits equivalent to 30-days' pay, which policy had been in
compliance of the law on labor standards, rather than for
force in the years prior to its closure. That by denying the same
private respondents to prove that they were not paid/provided
separation benefits to private respondent and the others
by petitioners of their backwages and transportation expenses.
similarly situated, petitioners discriminated against them.
Disposition Judgment MODIFYING assailed Resolution by
SETTING ASIDE and deleting the award for "additional
ISSUES
separation pay of 17.5 days for every year of service", and
1. WON an employer whose business operations ceased due to
AFFIRMING it in all other aspects.
serious business losses or financial reverses is obliged to pay
separation pay to its employees separated by reason of such
closure
2. WON the award of back wages and transportation allowance
COMPUTATION
was proper
HELD MILLARES V NLRC
1. NO
Ratio The underscored portion of Art. 28310 governs the grant
[PAGE 79]
of separation benefits "in case of closures or cessation of
operation" of business establishments "NOT due to serious EFFECT OF ACCEPTANCE
10
Art. 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of labor ANINO V NLRC
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for [PAGE 9]
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least 1 month before
the intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his 1 month pay or to at least 1 month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall be
equivalent to 1 month pay or at least 1/2 month pay for every year of service,
whichever is higher. A fraction of at least 6 months shall be considered 1 whole year.
Labor Law 1 A2010 - 84 - Disini
exercise of judicial discretion. Hence, he who seeks a writ of
certiorari must apply for it only in the manner and strictly in
LIABILITY OF CORPORATE OFFICERS accordance with the provisions of the law and the Rules
2. YES
LIABILITY RULE - In A.C. Ransom Labor Union-CCLU v. NLRC, which held that
since a corporation is an artificial person, it must have an officer
who can be presumed to be the employer, being the “person
BOGO-MEDELLIN SUGARCANE PLANTERS ASSN
acting in the interest of the employer.”
INC V NLRC - In other words the corporation, in the technical sense only, is
[PAGE 273] the employer. In a subsequent case, we ordered the corporate
officers of the employer corporation to pay jointly and solidarily
NYK INDUSTRIAL V NLRC (PUBLICO) the private respondents’ monetary award. More recently, a
corporation and its president were directed by this Court to
397 SCRA 489 jointly and severally reinstate the illegally dismissed employees
QUISUMBING; February 17, 2003 to their former positions and to pay the monetary awards.
- In this case Cathy Ng, admittedly, is the manager of NYK.
FACTS Conformably with our ruling in A. C. Ransom, she falls within the
- petitioner NYK hired respondent Virginia Publico as a sewer. meaning of an “employer” as contemplated by the Labor Code,
Under the terms and conditions of her employment, Publico was who may be held jointly and severally liable for the obligations
paid on a piece-rate basis, but required to work from 8:00 A.M. of the corporation to its dismissed employees. Pursuant to
to 12:00 midnight. On the average, she earned P185.00 daily prevailing jurisprudence, Cathy Ng, in her capacity as manager
- Publico requested that she be allowed to leave the work place and responsible officer of NYK, cannot be exonerated from her
early, as she was not feeling well due to a bout of influenza. joint and several liability in the payment of monetary award to
Permission was refused but nonetheless, Publico went home. private respondent
- The following day, Publico called up her employer and notified
management that she was still recovering from her ailment. TAN V TIMBAL, JR.
When she came back to work, she was prevented from entering
the gates on manager’s orders. When she was finally allowed 434 SCRA 381
to, she sought to talk to the owner Stephen Ng. she was asked CALLEJO SR; July 14, 2004
to return the following day
- upon meeting him, she was informed that she was dismissed NATURE
due to her refusal to do overtime work. She filed a case for CERTIORARI
illegal dismissal. Corporation countered by saying that her
husband did not allow her to work at night. As night work is a FACTS
must in their line of business, particularly when there are rush - Restituto Timbal, Jr. and Ernesto Valenciano received a letter
orders, petitioners claimed that given Publico’s failure to render from their employer, Nationwide Steel Corporation (NSC),
overtime work, they were left with no other recourse but to fire through Conrado Tan, its general manager, informing them that
her. LA held dismissal as illegal. This was affirmed by the NLRC. they were found to be among those employees who filed a
- Appeal before the CA was outright dismissed. Court of Appeals complaint with the Social Security System (SSS) in which they
pointed out that there was non-compliance with Section 1 of claimed that NSC was not remitting its employees’ SSS
Rule 65 of the 1997 Rules of Civil Procedure as the petition was premiums.
merely accompanied by a certified xerox copy of the assailed - Tan required the two to explain their side on the matter within
NLRC decision, instead of a certified true copy thereof as 24 hours.
required by the Rules of Court - After submitting their explanation, Timbal, Jr. and Valenciano
were instructed by Tan to report the following day for the
ISSUE resolution of the matter.
1. WON CA commit a reversible error in dismissing appeal on - However, when Timbal, Jr. and Valenciano were then
purely technical grounds, i.e., that the attached copy of the suspended indefinitely.
NLRC decision is a mere photocopy of the original decision - Aggrieved, Timbal, Jr. and Valenciano filed a complaint for
2. WON Cathy Ng should be held liable for payment of illegal dismissal with the NLRC, against NSC, and impleaded
backwages Conrado Tan as respondent, in his capacity as general manager
of the said corporation
HELD - NSC claims: both complainants were indefinitely suspended as
1. NO a result of the criminal case filed by Benny Sy against them for
- Section 1 of Rule 65, 1997 Rules of Civil Procedure, requires their false charge.
that the petition shall be accompanied by a certified true copy - LA rendered judgment in favor of the complainants; ordered
of the judgment or order subject thereof, together with copies reinstatement.
of all pleadings and documents relevant and pertinent thereto. - The decision became final and executory as no appeal from
In the present case, the disputed document although stamped the decision was filed by any of the parties.
as “certified true copy” is not an authenticated original of such - 1990, the LA issued a Writ of Execution directing the sheriff to
certified true copy, but only a xerox copy thereof, in effect the complainants’ reinstatement and to collect from the
contravention of paragraph 3 of the guidelines respondent NSC the accrued backwages, and remit the same to
- paragraph 5 of Administrative Circular No. 3-96, which the complainants.
provides: - The sheriff served a notice of garnishment on the Philippine
5. It shall be the duty and responsibility of the party using Banking Corporation. However, the Bank did not respond to the
the documents required by Paragraph (3) of Circular No. 1-88 notice, and the decision of the labor arbiter remained
to verify and ensure compliance with all the requirements unsatisfied.
therefor as detailed in the preceding paragraphs. Failure to - Timbal et al filed an omnibus motion, praying that they be
do so shall result in the rejection of such annexes and paid separation pay instead of being reinstated, as part of the
the dismissal of the case monetary award in their favor.
- Petitioners are hereby reminded that the right to file a special - They also prayed for the issuance of an alias writ of execution
civil action of certiorari is neither a natural right nor a part of enforceable against the NSC and its officers/stockholders.
due process. A writ of certiorari is a prerogative writ, never - LA granted the motion ordered Tan et al to pay to the NSC,
demandable as a matter of right, never issued except in the through the Office of the Labor Arbiter, their unpaid subscribed
Labor Law 1 A2010 - 85 - Disini
capital stock that the same may be applied to satisfy the - Neither did he hold the petitioner liable, either jointly or
complainants’ backwages, failing which, an alias writ of severally with the NSC, for the monetary award in favor of the
execution would be issued by his Office against their assets. complainants therein including the respondent herein.
- LA issued an alias writ of execution. Denied NSC’s motion to - CA had no jurisdiction to delve into and resolve an issue
set aside writ. already passed upon by the Labor Arbiter with finality.
- Conrado Tan and William Ang filed with the NLRC a petition for Disposition Petition is GRANTED. NLRC’S DECISION is
the issuance of a writ of preliminary injunction and a TRO to AFFIRMED.
enjoin the implementation of the alias writ of execution issued
by the Labor Arbiter.
ACESITE CORP V NLRC
- They alleged that they were never furnished copies of the
omnibus motion filed by Timbal, Jr. and Valenciano; that they [PAGE 303]
were not notified of any hearing on the matter; and, that the
Labor Arbiter acted in excess or lack of jurisdiction when he
issued an alias writ of execution ordering the sheriff to collect
14.12 DAMAGES
from the respondent NSC their unpaid subscriptions.
- NLRC rendered a Decision granting the motion of Tan and Ang
and set aside the assailed order and alias writ of execution of MORAL/EXEMPLARY
the Labor Arbiter; denied Timbal’s MR.
- CA: relied onSt. Martin Funeral Homes vs. NLRC, affirmed the
decision of the NLRC as far as William Ang was concerned,but COLEGIO SAN JUAN DE LETRAN-CALAMBA V
granted as to Tan; denied Tan’s MR. VILLAS
[PAGE 285]
ISSUE
WON TAN is liable, either jointly or severally with the NSC, for
the monetary award in favor of the Timbal ASIA PACIFIC CHARTERING (PHILS) INC V FAROLAN
[PAGE 119]
HELD
NO VIERNES V NLRC
- Only the NSC was found liable for the monetary awards in
favor of the complainants therein, including the herein [PAGE 94]
respondent. The petitioner, although the general manager of
NSC, was not ordered to pay for the monetary award in favor of TOLOSA V NLRC (QWANA KAIUN)
the complainants, jointly or severally, with the NSC. 401 SCRA 391
- The decision of the Labor Arbiter had become final and
executory; hence, immutable.
PANGANIBAN; April 10, 2003
- Industrial Management International Development Corporation
vs. NLRC: NATURE
It is an elementary principle of procedure that the resolution Petition for certiorari assailing the CA decision denying
of the court in a given issue as embodied in the dispositive petitioner’s motion without prejudice to the right of herein
part of a decision or order is the controlling factor as to petitioner to file a suit before the proper court, if she so desires
settlement of rights of the parties. Once a decision or order and the resolution denying MFR.
becomes final and executory, it is removed from the power or
jurisdiction of the court which rendered it to further alter or FACTS
amend it. It thereby becomes immutable and unalterable and - Evelyn Tolosa (hereafter EVELYN), was the widow of Captain
any amendment or alteration which substantially affects a Virgilio Tolosa (hereafter CAPT. TOLOSA) who was hired by
final and executory judgment is null and void for lack of Qwana-Kaiun, through its manning agent, Asia Bulk Transport
jurisdiction, including the entire proceedings held for that Phils. Inc., (ASIA BULK for brevity), to be the master of the
purpose. An order of execution which varies the tenor of the Vessel named M/V Lady Dona. CAPT. TOLOSA had a monthly
judgment or exceeds the terms thereof is a nullity. compensation of US$1700, plus US$400.00 monthly overtime
- None of the parties in the case before the Labor Arbiter allowance. His contract officially began on November 1, 1992,
appealed the decision; hence the same became final and as supported by his contract of employment when he assumed
executory. command of the vessel in Yokohama, Japan. The vessel
- It was, therefore, removed from the jurisdiction of the Labor departed for Long Beach California, passing by Hawaii in the
Arbiter or the NLRC to further alter or amend it. middle of the voyage. At the time of embarkation, CAPT.
- Thus, the proceedings held for the purpose of amending or TOLOSA was allegedly shown to be in good health.
altering the dispositive portion of the said decision are null and - During 'channeling activities' upon the vessel's departure from
void for lack of jurisdiction. Yokohama sometime on November 6, 1992, CAPT. TOLOSA was
- Not even the NLRC, the Court of Appeals and this Court has drenched with rainwater. The following day, November 7, 1992,
any appellate jurisdiction to alter or reverse the decision of the he had a slight fever and in the succeeding twelve (12) days,
Labor Arbiter. his health rapidly deteriorated resulting in his death on
- CA correctly cited ruling in MAM Realty Development November 18, 1992.
Corporation vs. NLRC, that in labor cases, corporate directors - Because of the death of CAPT. TOLOSA, his wife, EVELYN, as
and officers are solidarily liable with the corporation for the petitioner, filed a Complaint/Position Paper before the POEA
termination of employment of corporate employees committed (POEA Case No. 93-06-1080) against Qwana-Kaiun, thru its
with malice or bad faith. The ruling applies in a case where a resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate
corporate officer acts with malice or bad faith in suspending an and Mario Asis, as respondents.
employee. Whether or not the petitioner acted with malice or - After initial hearings and submissions of pleadings, the case
bad faith in ordering the suspension of the respondent is a was however transferred to the Department of Labor and
question of fact submitted by the parties to the Labor Arbiter for Employment.
resolution. - Labor Arbiter granted all the damages, (plus legal interest), as
- In the instant case, the Labor Arbiter did not make any finding prayed for by the petitioner:
in his decision that the petitioner acted with malice or bad faith 1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or
in ordering the suspension of the respondent. P4,586,400.00 (at P26.00 per US$1.00) by way of lost
income;
Labor Law 1 A2010 - 86 - Disini
2. interest at the legal rate of six percent (6%) per annum or FACTS
P1,238,328.00 (from November 1992 to May 1997 or 4 ½ - April 16, 1968: Dr. Maquiling (Dr. M) was employed by
years); respondent Philippine Tuberculosis Society (PTS)
3. moral damages of P200,000.00; - June 8, 1991- Dr. M was dismissed from service as Deputy
4. exemplary damages of P100,000.00; and Executive Director after serving PTS for 23 years. He was then
5. 10% of the total award, or P612,472.80, as attorney's fees.' earning P13,900 monthly salary
xxx xxx xxx - Dr. M filed complaint for reinstatement or for payment of full
- NLRC set aside the decision and dismissed due to lack of backwages and separation pay in accordance with A279 of the
jurisdiction. CA affirmed saying that the cause of action is LC, plus moral and exemplary damages
based on quasi-delict. - Records show that Dr. M received a memo April 2, 1991 from
PTS directing him to submit written explanation for 1. Delayed
ISSUES GSIS remittances; 2. Reported deficit of P7.3 m appearing in
1. WON the NLRC has jurisdiction over the case. their financial statement for 1990; 3. Expenses incurred in
2. WON the monetary awards have reached finality connection with the Dale Carnegie and Silva Mind Control
Seminar; 4. P3.7 m misc. expenses; 5. reasons for renewing
HELD their service contract with Ultra
1. NO - Dr. M submitted his explanatory letter, and had a 30 minute
Ratio Not every dispute between an employer and employee conversation with OIC-executive director Soriano.
involves matters that only labor arbiters and the NLRC can - No further related proceedings were undertaken before Dr. M
resolve in the exercise of their adjudicatory or quasi-judicial received a letter on June 8, 1991 calling for his dismissal
powers. The jurisdiction of labor arbiters and the NLRC under effective immediately, without any retirement benefits
Article 217 of the Labor Code is limited to disputes arising from Dr. M continued reporting for work despite his dismissal
an employer-employee relationship which can only be resolved - July 17, 1991- Dr. M protested non-payment of his salary
by reference to the Labor Code, other labor statutes, or their - September 1991- Dr. M stopped reporting for work, filed his
collective bargaining agreement. (Georg Grotjahn GMBH & Co. complaint with Labor Arbiter the next month.
v. Isnani) - the Labor Arbiter rendered a decision ordering PTS to
Reasoning immediately reinstate Dr. Maquiling to the position of Deputy
- The pivotal question is whether the Labor Code has any Executive Director or its equivalent in rank and pay, without
relevance to the relief sought by petitioner. From her paper, it is loss of seniority rights inclusive of all benefits attached to said
evident that the primary reliefs she seeks are as follows: (a) position at the time of his dismissal, and to pay Dr. Maquiling
loss of earning capacity denominated therein as "actual backwages computed from the time of his dismissal on 7 June
damages" or "lost income" and (b) blacklisting. The loss she 1991 until his actual reinstatement
claims does not refer to the actual earnings of the deceased, - Upon appeal by PTS to the NLRC, the Commission upheld the
but to his earning capacity based on a life expectancy of 65 decision of the labor arbiter and dismissed the appeal.However,
years. This amount is recoverable if the action is based on a PTS appealed the decision to the Court of Appeals which
quasi delict as provided for in Article 2206 of the Civil Code, but reversed the decisions of the NLRC and Labor Arbiter by
not in the Labor Code. ordering the dismissal of the complaint and declaring that his
- Claims for damages under paragraph 4 of Article 217 must dismissal from employment as legal and valid. It, however,
have a reasonable causal connection with any of the claims ordered PTS to pay Dr. Maquiling the amount of ten thousand
provided for in the article in order to be cognizable by the labor pesos (P10,000.00) as damages or indemnity for violation of his
arbiter. Only if there is such a connection with the other claims right to procedural due process and separation pay in the
can the claim for damages be considered as arising from amount of one hundred fifty-nine thousand eight hundred fifty
employer-employee relations. In the present case, petitioner's pesos (P159,850.00) in the interest of social justice.
claim for damages is not related to any other claim under
Article 217, other labor statutes, or collective bargaining ISSUES
agreements. 1. WON Dr. M was dismissed for just cause
2. NO 2. WON procedural due process was observed in effecting Dr.
Reasoning M’s dismissal
- Petitioner contends that the labor arbiter's monetary award
has already reached finality, since private respondents were not HELD
able to file a timely appeal before the NLRC. 1. YES
- Whether respondents were able to appeal on time is a Reasoning
question of fact that cannot be entertained in a petition for - Maquiling was dismissed from employment for just cause
review under Rule 45 of the Rules of Court. In general, the consisting of loss of trust and confidence. The records reveal
jurisdiction of this Court in cases brought before it from the that he was Deputy Executive Director of PTS, a responsible
Court of Appeals is limited to a review of errors of law allegedly position, at the time of his dismissal.
committed by the court a quo. - PTS imputes the delayed GSIS remittances to Dr. Maquiling’s
Disposition the Petition is hereby DENIED, and the assailed failure to follow his duties as prescribed by law. The records
Decision and Resolution AFFIRMED. disclose that Dr. Maquiling was aware of the problem but he
failed to give priority thereto.
- SC attributes the P7.3 million deficit in PTS’ 1990 financial
MAQUILING V PHILIPPINE TUBERCULOSIS SOCIETY
statements to Dr. Maquiling’s failure to consider the realities of
INC the financial condition of the institution. Dr. Maquiling even
450 SCRA 465 aggravated such omission by insisting on the salary increase of
TINGA; February 4, 2005 both managerial and non-managerial personnel despite the
financial conundrum that puzzles the future fiscal stability of
NATURE PTS. The records show that he made representations during the
Petition for Review on Certiorari of CA Decision of March 28, Board meeting that sufficient funds existed to meet the salary
2000 and its Resolution of May 22, 2000, which reversed the upgrading despite the presence of financial strains. Such a
decision of the NLRC dated December 15, 1997, and that of course of action falls short of his responsibility to safeguard the
Labor Arbiter of September 1993, which both found the financial stability of the institution he leads.
dismissal from service of Dr. Maquiling illegal 2. NO
Reasoning
Labor Law 1 A2010 - 87 - Disini
- two notices must be sent to the employee who is the subject dismissal from employment of Dr. Maquiling with a just cause
of an investigation for acts which may warrant his eventual but without observing procedural due process, PTS is ORDE