Republic of the Philippines

COURT OF APPEALS
Manila

SPECIAL THIRTEENTH DIVISION

8R FLANDERS CFS, INC., CA-G.R. SP NO. 152697
Petitioner,
Members:

-versus- CRUZ, S. C., Chairperson,

LOPEZ, J. Y., and
*
ATAL-PAÑO, P.S. T., JJ.

JOEL F. GALIT and NATIONAL Promulgated:

LABOR RELATIONS
COMMISSION (NLRC), August 30, 2019
Respondents.
x---------------------------------------------------------------------------------x

DECISION

CRUZ, S. C., J.:

Before this Court is a Petition for Certiorari1 under Rule 65 of
the Rules of Court filed on September 25, 2017 by petitioner, through
counsel, seeking to annul and set asidethe April 27, 2017 Decision 2 of
the National Labor Relations Commission (NLRC), Sixth Division, in
NLRC LAC No. 03-001009-17 (NLRC NCR Case No. 08-09226-16),
entitled “Joel F. Galit v. 8R Flanders CFS Inc., Praxedes Yu Tan and
Raymond Joshua Yu Tan.” The fallo of the NLRC's assailed Decision
is worded as follows:

WHEREFORE, premises considered, the

appeal is DENIED for lack of merit and the November
28, 2016 decision of the Labor Arbiter is hereby
AFFIRMED.

SO ORDERED.

*
Acting Junior Member per Office Order No. 358-19-RSF dated August 6, 2019.
1
Rollo, pp. 2A-15.
2
Penned by Commissioner Isabel G. Panganiban-Ortiguerra, Id., pp. 45-52.
CA-G.R. SP No. 152697
DECISION
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The Facts

The facts leading to the instant petition are synthesized in the

Labor Arbiter's Decision, We quote:

xxx xxx xxx

Complainant (Joel F. Galit) was hired by

respondents (8R Flanders CFC, Inc., Praxedes Yu
Tan and Raymond Joshua Yu Tan) on June 1, 2003 as
a Forklift Operator until he was constructively
dismissed on February 26, 2016.

As a Forklift Operator, complainant is being

paid P462.00 per day with work schedules from
Monday to Saturday from 7:00 a.m. to 4:00 p.m.
There were times that he worked beyond eight hours
or straight duty when there are rushed work.

Sometime on February 26, 2016, respondents

called a general meeting. During the said meeting,
respondents told the employees that the company is
experiencing business losses, thus they have to lay
off some employees. The company offered them good
separation package for those who want to resign and
for those who don't want, they will be allowed to work
but on a broken schedule.

Complainant being 53 years old, opted to stay

with the company. He reports for work regularly but
later on his work schedule was reduced from two to
three days work per week and this work status
continued up to the present. Besides, his allowance of
P1,000.00 was taken from him.

xxx xxx xxx

Because of this incident, complainant talked

with respondent to know that reason why his work
schedule was reduced and to know why his allowance
was also withdrawn. However, respondents got mad
and said that if they are not comfortable with their
work condition, they are free to go.

Complainant alleged that he is a regular

employee and have worked with respondents for
more than 15 years. He alleged that he was
constructively dismissed by respondent when his
CA-G.R. SP No. 152697
DECISION
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regular work schedule was reduced to two or three

days work per week coupled with the withdrawal of his
allowance without being apprised of the reason why
his benefits were stripped off. Thus, complainant claim
that he was constructively dismissed without any
factual basis and without the observance of
procedural due process.

Respondents on their part, alleged that there

was no constuctive dismissal that took place.
Complainant has been continuously reporting for work
although his work scheduled was limited and at the
same time allowing him to work with other companies
on the days other than his work schedule because of
the extreme lack of customers caused by the
issuance of the Customs Memorandum Order (CMO)
that caused the customers to stop engaging the
services of respondents. Note also that despite the
losses respondents still pays in full complainants
contribution with the SSS, and other monthly
contributions.

To prove that respondents are incurring severe

losses, they filed a letter dated July 11, 2016, with the
Department of Labor and Employment informing them
about the losses and that the company was on a labor
saving mechanism schemes to stem the effect of the
losses. Likewise, a Financial Statement was attached
to said letter signed by CPA Edward C. Santos and
duly notarized by Atty. Margarita Basco.

A Reply was submitted by complainant

reiterating that he was constructively dismissed by
respondents when his six (6) days work schedule was
suddenly reduced to one (1) day work per week and
the allowance of P1,000.00 was taken from him.

That prior to the notice to the DOLE,

respondents had already implemented their labor
saving devices such as Rotation of Duties and
Temporary Skeletal Work Schedule. Respondent
violated the very mandate of serving written notice to
the workers and the Department of Labor and
Employment at least one month before the intended
date of closure or reduction of personnel.

Complainant further alleged that respondents

failed to prove that losses incurred by the company
are substantial and not De Minimis. In addition, there
CA-G.R. SP No. 152697
DECISION
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was no criteria as to who from their employees will go

or will stay, or establish factual basis to justify the
reduction of workweek considering that there was no
notice and consultation to employees.

Respondents, in their Reply, contend that

complainant is still employed until now. In fact, he
reports for work every time his work schedule start
and ends. He was even encourage(d) by respondents
to work in other employer on days other than his work
schedule with respondents.

Furthermore, respondents alleged that

management has the right to employ labor saving
devices in order to remedy the effect of the losses due
to loss of customers. It would be unjust enrichment on
the part of complainant if he will imposed on
respondent the obligation to employ him for four or
five more days when there is no more work to be
done.

xxx xxx xxx3

After the filing of the parties' respective position papers and

replies, the case was deemed submitted for decision.

In a Decision4 dated November 28, 2016, Labor Arbiter Marita

Padolina granted private respondent Joel F. Galit's complaint. The
Labor Arbiter ruled that private respondent was constructively
dismissed from employment after petitioner 8R Flanders CFC, Inc.
(8R) reduced his 6-day work week to a 1-day work week and
removed his Php1,000.00 allowance. The Labor Arbiter also
concluded that petitioner 8R failed to prove that it was suffering from
financial losses due to lack of customers; and that it failed to report
the same to the DOLE at least a month before the intended date of
termination of employees or the reduction of work hours as
prescribed by pertinent law. Corollary, the Labor Arbiter disposed the
case in this wise:

WHEREFORE, premises considered,

judgment is hereby rendered ordering respondent 8R
Flanders CFS Inc. to pay complainant the following:

1. separation pay in the amount of

3
Id., pp. 65-68.
4
Id., pp. 65-74.
CA-G.R. SP No. 152697
DECISION
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P38,298.00
2. backwages in the amount of P170,245.22
3. salary differentials in the amount of
P861.60
4. 13th month pay (underpayment) in the
amount of P71.80
5. Holiday pay in the amount of P13,900.00
6. Attorney's fees in the amount of
P22,337.66

SO ORDERED.5

Unsatisfied, petitioner appealed the Labor Arbiter's Decision to

the public respondent NLRC, Sixth Division. In its Notice of Appeal
with Memorandum of Appeal,6 petitioner insists that: (i) it suffered
financial losses, in fact, it sent a financial statement and letter to
DOLE to prove losses; (ii) that Article 283 (now Article 289) of the
Labor Code does not apply in this case since the instant case
involves reduction of work schedules not reduction of employees; and
that (iii) private respondent failed to prove that he was constructively
dismissed.

On April 27, 2017, public respondent NLRC promulgated the

assailed Decision dismissing petitioner's appeal and affirming the
Labor Arbiter's decision granting private respondent's complaint.
Public respondent ratiocinated that petitioner failed to prove that it
suffered business losses since the financial statements submitted
show that it was profitable.

Aggrieved, petitioner moved for reconsideration. It was,

however, denied in a Resolution7 promulgated on June 30, 2017.

Hence, the instant petition.

Issue

WHETHER OR NOT THE PUBLIC RESPONDENT

NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN CONCLUDING THAT PRIVATE
RESPONDENT WAS CONSTRUCTIVELY
DISMISSED BY PETITIONER.

5
Id., p. 74.
6
Id., pp. 54-62.
7
Id., pp. 19-21.
CA-G.R. SP No. 152697
DECISION
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The Court's Ruling

After considering the arguments of petitioner and assiduously

studying the records of this case, We DISMISS the instant petition for
lack of merit.

Discussion

In the instant petition, petitioner insists that Article 283 (now

Article 289) of the Labor Code is not applicable in the instant case
since there was no termination of employees but a mere reduction of
work schedules; that, accordingly, the 30-day notice to the DOLE
does not apply; and that private respondent failed to prove that he
was contructively dismissed.

We are not persuaded.

At the outset, records of the case show that private respondent

failed to file a comment to the instant petition despite notice. This,
however, does not necessarily mean that petitioner will automatically
receive a favorable decision from this Court. Needless to state,
petitioner still has to prove its case vis-a-vis the pertinent laws and
jurisprudence. Unfortunately, petitioner failed to do so.

We elucidate.

Established is the rule that there is constructive dismissal when

an employer's act of clear discrimination, insensibility or disdain
becomes so unbearable on the part of the employee so as to
foreclose any choice on his part except to resign from such
employment.8 It exists where there is involuntary resignation because
of the harsh, hostile and unfavorable conditions set by the employer.
The Supreme Court has held that the standard for constructive
dismissal is "whether a reasonable person in the employee's position
would have felt compelled to give up his employment under the
circumstances."9

In the instant case, records show that from a 6-day work week,
8
Rodriguez v. Park N Ride, Inc., G.R. No. 222980, March 20, 2017.
9
Gan v. Galderma Philippines, Inc., 701 Phil. 612, 639 (2013); Uniwide Sales Warehouse
Club v. National Labor Relations Commission, 570 Phil. 535, 548 (2008).
CA-G.R. SP No. 152697
DECISION
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petitioner only allowed private respondent to work once a week.

Consequently, his salary was reduced to a meager amount, not
enough to shoulder even his basic needs. Even petitioner did not
refute the foregoing facts. Clearly, private respondent was placed in a
situation where he has no other option but to leave his employment.

Notwithstanding, petitioner insists that private respondent's

reduction of work schedule was due to business losses. Hence, it
merely exercised its management prerogative to salvage the
company.

We disagree.

At the outset, it may be deduced from the foregoing established

facts that private respondent was dismissed from employment, albeit
constructively. It may further be concluded that his dismissal was due
to retrenchment, which is defined as the termination of employment
initiated by the employer through no fault of the employee and without
prejudice to the latter, resorted by management during periods of
business recession, industrial depression or seasonal fluctuations or
during lulls over shortage of materials.10

Now, while petitioner may have raised a valid defense, that is,
private respondent's constructive dismissal was due to retrenchment,
an authorized cause, We hold and so rule that it failed to prove by
substantial evidence that it was indeed suffering from business losses
justifying private respondent's constructive dismissal.

We elucidate further.

Petitioner, in its Position Paper11 and Memorandum of Appeal,12

insisted that it suffered financial losses leading to the reduction of
work schedules of its employees. To prove financial losses, petitioner
submitted a letter dated July 11, 2016 addressed to the Department
of Labor and Employment (DOLE) notifying the latter that petitioner
was incurring losses since January 2016. Petitioner also attached to
the letter financial statements of the company for the years 2014 and
2015.

A careful perusal of the financial statements, however, will show

10
Philippine Carpet Employees Association v. Sto. Tomas, G.R. No. 168719, February 22, 2006.
11
Rollo, pp. 114-118.
12
Id., pp. 54-63.
CA-G.R. SP No. 152697
DECISION
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that petitioner obtained profits for the years 2014 and 2015. In fact,
the profit after tax in 2015 was even higher at Php1,286,927.00 than
in 2014 with Php747,272.00. Worse, no document, whatsoever, was
ever presented before the Labor Arbiter and public respondent NLRC
to prove that in 2016 it suffered financial losses. While an Interim
Income Statement13 was submitted by petitioner for the period of
January to May 2016, it showed that petitioner has gained an income
(net income before income tax) in the amount of Php4,261,299.97.
Also, a copy of the Bureau of Customs' policy, which petitioner claims
to be the root cause of its business losses, is nowhere to be found in
the records of the instant case.

We hold and so rule that these documents have not

satisfactorily proved petitioner's claim of financial losses. This is
pursuant to the case of Guerrero v. NLRC, where the Supreme Court
emphasized that:

xxx To justify the employees' termination of

service, the losses must be serious, actual and real,
and they must be supported by sufficient and
convincing evidence. 5 The burden of proof rests on
the employer. Respondent company alleged that the
strike paralyzed its operations and resulted in the
withdrawal of its clients' orders. Respondent company,
however, failed to prove its claim with competent
evidence which would show that it was indeed
suffering from business losses so serious as would
necessitate retrenchment or reduction of personnel.
As we held in Lopez Sugar Corporation vs. Federation
of Free Workers:

Lastly but certainly not the least

important, alleged losses if already realized,
and the expected imminent losses sought to
be forestalled, must be proved by sufficient
and convincing evidence. The reason for
requiring this quantum of proof is readily
apparent: any less exacting, standard of
proof would render too easy the abuse of
this ground for termination of services of
employees. In Garcia v. National Labor
Relations Commission, the Court said:

. . . But it is essentially required that the

alleged losses in business operations must
13
Id., p. 133.
CA-G.R. SP No. 152697
DECISION
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be prove[n]. Otherwise, said ground for

termination would be susceptible to abuse
by scheming employers who might be
merely feigning business losses or
reverses in their business ventures in order
to ease out employees. (Emphasis
supplied. Citations omitted.)

Accordingly, for failure of petitioner to prove that it was on the

verge of closing business due to financial losses, it was not
authorized to constructively dismiss private respondent from
employment.

It bears stressing at this point that although petitioner sent a

letter to the DOLE notifying the latter of petitioner's financial
misfortune, such letter is, as discussed above, without any basis,
hence, bereft of merit. It can be considered as a mere attempt to
comply with the procedural requirements set forth in Article 298
(formerly Article 283)14 of the Labor Code. Such attempt, however, is
deemed futile.

From the foregoing ratiocination, We need not belabor

Ourselves with the other issues raised by petitioner for to go over with
the other issues will be a waste of time for being a mere surplusage.

All told, petitioner failed to show that public respondent NLRC

committed acts tantamount to grave abuse of discretion amounting to
lack or excess of jurisdiction when it upheld the illegality of private
respondent's dismissal from employment. Thus, We find no reason to
deviate from the assailed decision of the NLRC.

WHEREFORE, in view of the foregoing premises, the instant

petition is hereby DISMISSED. The assailed April 27, 2017 Decision
14
Article 298. 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 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 workers and the Department of
Labor and Employment at least one (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 one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to at least one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered as one (1) whole year. (Emphasis supplied)
CA-G.R. SP No. 152697
DECISION
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of the National Labor Relations Commission (NLRC), Sixth Division,

in NLRC LAC No. 03-001009-17 (NLRC NCR Case No. 08-09226-
16), is AFFIRMED in toto.

SO ORDERED.

ORIGINAL SIGNED
STEPHEN C. CRUZ
Associate Justice

WE CONCUR:

ORIGINAL SIGNED
JHOSEP Y. LOPEZ
Associate Justice

ORIGINAL SIGNED
PERPETUA SUSANA T. ATAL-PANO
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of
the opinion of the Court.

ORIGINAL SIGNED
STEPHEN C. CRUZ
Associate Justice
Chairperson, Special Thirteenth Division