Mercado vs NLRC From 1962-1963 — P1.

50
1963-1965 — P2.00
1965-1967 — P3.00
G.R. No. 79869 September 5, 1991 1967-1970 — P4.00
1970-1973 — P5.00
1973-1975 — P5.00
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO
1975-1978 — P6.00
MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA
1978-1979 — P7.00
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA
ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO Private respondent Aurora Cruz in her answer to petitioners' complaint
MERCADO and LEON SANTILLAN, petitioners, denied that said petitioners were her regular employees and instead averred
vs. that she engaged their services, through Spouses Fortunato Mercado, Sr.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD and Rosa Mercado, their "mandarols", that is, persons who take charge in
DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA L. supplying the number of workers needed by owners of various farms, but
CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and only to do a particular phase of agricultural work necessary in rice
STO. NIÑO REALTY, INCORPORATED, respondents. production and/or sugar cane production, after which they would be free to
render services to other farm owners who need their services.2
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents. The other private respondents denied having any relationship whatsoever
with the petitioners and state that they were merely registered owners of
the land in question included as corespondents in this case.3
PADILLA, J.:

The dispute in this case revolves around the issue of whether or not
Assailed in this petition for certiorari is the decision * of the respondent
petitioners are regular and permanent farm workers and therefore entitled
national Labor Relations Commission (NLRC) dated 8 August 1984 which
to the benefits which they pray for. And corollary to this, whether or not
affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with the
said petitioners were illegally dismissed by private respondents.
slight modification of deleting the award of financial assistance to
petitioners, and the resolution of the respondent NLRC dated 17 August
1987, denying petitioners' motion for reconsideration. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private
respondents and held that petitioners were not regular and permanent
workers of the private respondents, for the nature of the terms and
This petition originated from a complaint for illegal dismissal, underpayment
conditions of their hiring reveal that they were required to perform phases
of wages, non-payment of overtime pay, holiday pay, service incentive leave
of agricultural work for a definite period of time after which their services
benefits, emergency cost of living allowances and 13th month pay, filed by
would be available to any other farm owner.4 Respondent Labor Arbiter
above-named petitioners against private respondents Aurora L. Cruz,
deemed petitioners' contention of working twelve (12) hours a day the whole
Francisco Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with
year round in the farm, an exaggeration, for the reason that the planting of
Regional Arbitration Branch No. III, National Labor Relations Commission in
lice and sugar cane does not entail a whole year as reported in the findings
San Fernando, Pampanga.1
of the Chief of the NLRC Special Task Force.5 Even the sworn statement of
one of the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato
Petitioners alleged in their complaint that they were agricultural workers Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were
utilized by private respondents in all the agricultural phases of work on the hired only as casuals, on an "on and off" basis, thus, it was within the
7 1/2 hectares of ace land and 10 hectares of sugar land owned by the prerogative of private respondent Aurora Cruz either to take in the
latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of petitioners to do further work or not after any single phase of agricultural
private respondents since 1949, Fortunato Mercado, Jr. and Antonio work had been completed by them.6
Mercado since 1972 and the rest of the petitioners since 1960 up to April
1979, when they were all allegedly dismissed from their employment; and
Respondent Labor Arbiter was also of the opinion that the real cause which
that, during the period of their employment, petitioners received the
triggered the filing of the complaint by the petitioners who are related to
following daily wages:
one another, either by consanguinity or affinity, was the filing of a criminal
complaint for theft against Reynaldo Mercado, son of spouses Fortunate
Mercado, Sr. and Rosa Mercado, for they even asked the help of Jesus David,
Zone Chairman of the locality to talk to private respondent, Aurora Cruz
regarding said criminal case.7 In his affidavit, Jesus David stated under oath
that petitioners were never regularly employed by private respondent
Aurora Cruz but were, on-and-off hired to work and render services when
needed, thus adding further support to the conclusion that petitioners were
not regular and permanent employees of private respondent Aurora Cruz.8
Respondent Labor Arbiter further held that only money claims from years
1976-1977, 1977-1978 and 1978-1979 may be properly considered since
all the other money claims have prescribed for having accrued beyond the
three (3) year period prescribed by law.9 On grounds of equity, however,
respondent Labor Arbiter awarded petitioners financial assistance by private
respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00)
to be equitably divided among an the petitioners except petitioner Fortunato
Mercado, Jr. who had manifested his disinterest in the further prosecution
of his complaint against private respondent.10
Both parties filed their appeal with the National Labor Relations
Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's
finding that they were not regular and permanent employees of private
respondent Aurora Cruz while private respondents questioned the award of
financial assistance granted by respondent Labor Arbiter.
The NLRC ruled in favor of private respondents affirming the decision of the
respondent Labor Arbiter, with the modification of the deletion of the award
for financial assistance to petitioners. The dispositive portion of the decision
of the NLRC reads:
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated
March 3, 1983 is hereby modified in that the award of P10,000.00
financial assistance should be deleted. The said Decision is affirmed
in all other aspects.
SO ORDERED.11
Petitioners filed a motion for reconsideration of the Decision of the Third
Division of the NLRC dated 8 August 1984; however, the NLRC denied tills
motion in a resolution dated 17 August 1987.12
In the present Petition for certiorari, petitioners seek the reversal of the
above-mentioned rulings. Petitioners contend that respondent Labor Arbiter
and respondent NLRC erred when both ruled that petitioners are not regular
and permanent employees of private respondents based on the terms and
conditions of their hiring, for said findings are contrary to the provisions of
Article 280 of the Labor Code.13 They submit that petitioners' employment,
even assuming said employment were seasonal, continued for so many
years such that, by express provision of Article 280 of the Labor Code as
amended, petitioners have become regular and permanent employees.14
Moreover, they argue that Policy Instruction No. 1215 of the Department of
Labor and Employment clearly lends support to this contention, when it
states:
PD 830 has defined the concept of regular and casual employment.
What determines regularity or casualness is not the employment
contract, written or otherwise, but the nature of the job. If the job
is usually necessary or desirable to the main business of the
employer, then employment is regular. If not, then the employment
is casual. Employment for a definite period which exceeds one (1)
year shall be considered re for the duration of the definite period.
This concept of re and casual employment is designed to put an end
to casual employment in regular jobs which has been abused by
many employers to prevent so-called casuals from enjoying the
benefits of regular employees or to prevent casuals from joining
unions.
This new concept should be strictly enforced to give meaning to the
constitutional guarantee of employment tenure.16
Tested under the laws invoked, petitioners submit that it would be unjust,
if not unlawful, to consider them as casual workers since they have been
doing all phases of agricultural work for so many years, activities which are
undeniably necessary, desirable and indispensable in the rice and sugar
cane production business of the private respondents.17
In the Comment filed by private respondents, they submit that the decision
of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were
only hired as casuals, is based on solid evidence presented by the parties
and also by the Chief of the Special Task Force of the NLRC Regional Office
and, therefore, in accordance with the rule on findings of fact of
administrative agencies, the decision should be given great weight.18
Furthermore, they contend that the arguments used by petitioners in
questioning the decision of the Labor Arbiter were based on matters which
were not offered as evidence in the case heard before the regional office of
the then Ministry of Labor but rather in the case before the Social Security
Commission, also between the same parties.19
Public respondent NLRC filed a separate comment prepared by the Solicitor
General. It submits that it has long been settled that findings of fact of
administrative agencies if supported by substantial evidence are entitled to
great weight.20 Moreover, it argues that petitioners cannot be deemed to
be permanent and regular employees since they fall under the exception findings of the Chief of the Special Task Force of the Regional Office
stated in Article 280 of the Labor Code, which reads: are similar to this.

The provisions of written agreements to the contrary In fact, the sworn statement of one of the petitioners Fortunato
notwithstanding and regardless of the oral agreements of the Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa
parties, an employment shall be deemed to be regular where the Mercado, indubitably shows that said petitioners were only hired as
employee has been engaged to perform activities which are usually casuals, on-and-off basis. With this kind of relationship between the
necessary or desirable in the usual business or trade of the petitioners and the respondent Aurora Cruz, we feel that there is no
employer, except where the employment has been fixed for a basis in law upon which the claims of the petitioners should be
specific project or undertaking the completion or termination of sustained, more specially their complaint for illegal dismissal. It is
which has been determined at the time of the engagement of the within the prerogative of respondent Aurora Cruz either to take in
employee or where the work or services to be performed is seasonal the petitioners to do further work or not after any single phase of
in nature and the employment is for the duration of the season.21 agricultural work has been completed by them. We are of the
(emphasis supplied) opinion that the real cause which triggered the filing of this
complaint by the petitioners who are related to one another, either
The Court resolved to give due course to the petition and required the by consanguinity or affinity was due to the filing of a criminal
parties to submit their respective memoranda after which the case was complaint by the respondent Aurora Cruz against Reynaldo
deemed submitted for decision. Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado.
In April 1979, according to Jesus David, Zone Chairman of the
locality where the petitioners and respondent reside, petitioner
The petition is not impressed with merit.
Fortunato Mercado, Sr. asked for help regarding the case of his son,
Reynaldo, to talk with respondent Aurora Cruz and the said Zone
The invariable rule set by the Court in reviewing administrative decisions of Chairman also stated under oath that the petitioners were never
the Executive Branch of the Government is that the findings of fact made regularly employed by respondent Aurora Cruz but were on-and-off
therein are respected, so long as they are supported by substantial hired to work to render services when needed.25
evidence, even if not overwhelming or preponderant;22 that it is not for the
reviewing court to weigh the conflicting evidence, determine the credibility
A careful examination of the foregoing statements reveals that the findings
of the witnesses or otherwise substitute its own judgment for that of the
of the Labor Arbiter in the case are ably supported by evidence. There is,
administrative agency on the sufficiency of the evidence;23 that the
therefore, no circumstance that would warrant a reversal of the questioned
administrative decision in matters within the executive's jurisdiction can
decision of the Labor Arbiter as affirmed by the National Labor Relations
only be set aside upon proof of gross abuse of discretion, fraud, or error of
Commission.
law.24

The contention of petitioners that the second paragraph of Article 280 of the
The questioned decision of the Labor Arbiter reads:
Labor Code should have been applied in their case presents an opportunity
to clarify the afore-mentioned provision of law.
Focusing the spotlight of judicious scrutiny on the evidence on
record and the arguments of both parties, it is our well-discerned
Article 280 of the Labor Code reads in full:
opinion that the petitioners are not regular and permanent workers
of the respondents. The very nature of the terms and conditions of
their hiring reveal that the petitioners were required to perform p of Article 280. Regular and Casual Employment. — The provisions of
cultural work for a definite period, after which their services are written agreement to the contrary notwithstanding and regardless
available to any farm owner. We cannot share the arguments of the of the oral agreement of the parties, an employment shall be
petitioners that they worked continuously the whole year round for deemed to be regular where the employee has been engaged to
twelve hours a day. This, we feel, is an exaggeration which does not perform activities which are usually necessary or desirable in the
deserve any serious consideration inasmuch as the plan of rice and usual business or trade of the employer, except where the
sugar cane does not entail a whole year operation, the area in employment has been fixed for a specific project or undertaking the
question being comparatively small. It is noteworthy that the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services
 to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That, any employee who has
rendered at least one year of service whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such actually exists.
The first paragraph answers the question of who are employees. It states
that, regardless of any written or oral agreement to the contrary, an
employee is deemed regular where he is engaged in necessary or desirable
activities in the usual business or trade of the employer, except for project
employees.
A project employee has been defined to be one whose employment has been
fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee,
or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season26 as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all
other employees who do not fan under the definition of the preceding
paragraph. The proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at least one year
of service regardless of the fact that such service may be continuous or
broken.
by many employers to prevent called casuals from enjoying the benefits of
regular employees or to prevent casuals from joining unions. The same
instructions show that the proviso in the second paragraph of Art. 280 was
not designed to stifle small-scale businesses nor to oppress agricultural land
owners to further the interests of laborers, whether agricultural or industrial.
What it seeks to eliminate are abuses of employers against their employees
and not, as petitioners would have us believe, to prevent small-scale
businesses from engaging in legitimate methods to realize profit. Hence, the
proviso is applicable only to the employees who are deemed "casuals" but
not to the "project" employees nor the regular employees treated in
paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the
correct term, seasonal employees, their employment legally ends upon
completion of the project or the season. The termination of their
employment cannot and should not constitute an illegal dismissal.30
WHEREFORE, the petition is DISMISSED. The decision of the National Labor
Relations Commission affirming that of the Labor Arbiter, under review, is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.

Petitioners, in effect, contend that the proviso in the second paragraph of

Art. 280 is applicable to their case and that the Labor Arbiter should have
considered them regular by virtue of said proviso. The contention is without
merit.

The general rule is that the office of a proviso is to qualify or modify only
the phrase immediately preceding it or restrain or limit the generality of the
clause that it immediately follows.27 Thus, it has been held that a proviso
is to be construed with reference to the immediately preceding part of the
provision to which it is attached, and not to the statute itself or to other
sections thereof.28 The only exception to this rule is where the clear
legislative intent is to restrain or qualify not only the phrase immediately
preceding it (the proviso) but also earlier provisions of the statute or even
the statute itself as a whole.29

Policy Instruction No. 12 of the Department of Labor and Employment

discloses that the concept of regular and casual employees was designed to
put an end to casual employment in regular jobs, which has been abused
Hacienda fatima vs NFSW-Food and General Trade
[G.R. No. 149440. January 28, 2003]
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO
VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL
FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL
TRADE, respondents.
DECISION
PANGANIBAN, J.:
Although the employers have shown that respondents performed work that
was seasonal in nature, they failed to prove that the latter worked only for
the duration of one particular season. In fact, petitioners do not deny that
these workers have served them for several years already. Hence, they are
regular -- not seasonal -- employees.
THE CASE
Before the Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the February 20, 2001 Decision of the Court of
Appeals[1] (CA) in CA-GR SP No. 51033. The dispositive part of the Decision
reads:
WHEREFORE, premises considered, the instant special civil action for
certiorari is hereby DENIED.
On the other hand, the National Labor Relations Commission (NLRC)
Decision,[3] upheld by the CA, disposed in this wise:
WHEREFORE, premises considered, the decision of the Labor Arbiter is
hereby SET ASIDE and VACATED and a new one entered declaring
complainants to have been illegally dismissed. Respondents are hereby
ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo,
Bobong Abriga and Boboy Silva to their previous position and to pay full
backwages from September 1991 until reinstated. Respondents being guilty
of unfair labor practice are further ordered to pay complainant union the
sum of P10,000.00 as moral damages and P5,000.00 as exemplary
damages.[4]
THE FACTS
The facts are summarized in the NLRC Decision as follows:
Contrary to the findings of the Labor Arbiter that complainants [herein
respondents] refused to work and/or were choosy in the kind of jobs they
wanted to perform, the records is replete with complainants persistence and
dogged determination in going back to work.
Indeed, it would appear that respondents did not look with favor workers
having organized themselves into a union. Thus, when complainant union
was certified as the collective bargaining representative in the certification
elections, respondents under the pretext that the result was on appeal,
refused to sit down with the union for the purpose of entering into a
collective bargaining agreement. Moreover, the workers including
complainants herein were not given work for more than one month. In
protest, complainants staged a strike which was however settled upon the
signing of a Memorandum of Agreement which stipulated among others
that:
a) The parties will initially meet for CBA negotiations on the 11th day of
January 1991 and will endeavor to conclude the same within thirty (30)
days.
b) The management will give priority to the women workers who are
members of the union in case work relative x x x or amount[ing] to gahit
and [dipol] arises.
c) Ariston Eruela Jr. will be given back his normal work load which is six (6)
days in a week.
d) The management will provide fifteen (15) wagons for the workers and
that existing workforce prior to the actual strike will be given priority.
However, in case the said workforce would not be enough, the management
can hire additional workers to supplement them.
e) The management will not anymore allow the scabs, numbering about
eighteen (18) workers[,] to work in the hacienda; and
f) The union will immediately lift the picket upon signing of this agreement.
However, alleging that complainants failed to load the fifteen wagons,
respondents reneged on its commitment to sit down and bargain
collectively. Instead, respondent employed all means including the use of
private armed guards to prevent the organizers from entering the premises.
Moreover, starting September 1991, respondents did not any more give
work assignments to the complainants forcing the union to stage a strike on
January 2, 1992. But due to the conciliation efforts by the DOLE, another
Memorandum of Agreement was signed by the complainants and
respondents which provides:
Whereas the union staged a strike against management on January 2, 1992
grounded on the dismissal of the union officials and members;
Whereas parties to the present dispute agree to settle the case amicably
once and for all;
Now therefore, in the interest of both labor and management, parties herein
agree as follows:
1. That the list of the names of affected union members hereto attached and
made part of this agreement shall be referred to the Hacienda payroll of
1990 and determine whether or not this concerned Union members are
hacienda workers;
2. That in addition to the payroll of 1990 as reference, herein parties will
use as guide the subjects of a Memorandum of Agreement entered into by
and between the parties last January 4, 1990;
3. That herein parties can use other employment references in support of
their respective claims whether or not any or all of the listed 36 union
members are employees or hacienda workers or not as the case may be;
4. That in case conflict or disagreement arises in the determination of the
status of the particular hacienda workers subject of this agreement herein
parties further agree to submit the same to voluntary arbitration;
5. To effect the above, a Committee to be chaired by Rose Mengaling is
hereby created to be composed of three representatives each and is given
five working days starting Jan. 23, 1992 to resolve the status of the subject
36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-
as, Ariston Arulea Jr.)
Pursuant thereto, the parties subsequently met and the Minutes of the
Conciliation Meeting showed as follows:
The meeting started at 10:00 A.M. A list of employees was submitted by
Atty. Tayko based on who received their 13th month pay. The following are
deemed not considered employees:
1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva
The name Orencio Rombo shall be verified in the 1990 payroll.
The following employees shall be reinstated immediately upon availability of
work:
1. Jose Dagle 7. Alejandro Tejares
2. Rico Dagle 8. Gaudioso Rombo
3. Ricardo Dagle 9. Martin Alas-as Jr.
4. Jesus Silva 10. Cresensio Abrega
5. Fernando Silva 11. Ariston Eruela Sr.
6. Ernesto Tejares 12. Ariston Eruela Jr.
When respondents again reneged on its commitment, complainants filed the
present complaint.
But for all their persistence, the risk they had to undergo in conducting a
strike in the face of overwhelming odds, complainants in an ironic twist of
fate now find themselves being accused of refusing to work and being
choosy in the kind of work they have to perform.[5] (Citations omitted)
Ruling of the Court of Appeals
The CA affirmed that while the work of respondents was seasonal in nature,
they were considered to be merely on leave during the off-season and were
therefore still employed by petitioners. Moreover, the workers enjoyed
security of tenure. Any infringement upon this right was deemed by the CA
to be tantamount to illegal dismissal.
The appellate court found neither rhyme nor reason in petitioners argument
that it was the workers themselves who refused to or were choosy in their
work. As found by the NLRC, the record of this case is replete with
complainants persistence and dogged determination in going back to
work.[6]
The CA likewise concurred with the NLRCs finding that petitioners were
guilty of unfair labor practice.
Hence this Petition.[7]
ISSUES

Petitioners raise the following issues for the Courts consideration:
A. Whether or not the Court of Appeals erred in holding that respondents,
admittedly seasonal workers, were regular employees, contrary to the clear
provisions of Article 280 of the Labor Code, which categorically state that
seasonal employees are not covered by the definition of regular employees
under paragraph 1, nor covered under paragraph 2 which refers exclusively
to casual employees who have served for at least one year.
B. Whether or not the Court of Appeals erred in rejecting the ruling in
Mercado, xxx, and relying instead on rulings which are not directly
applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and
Gaco, xxx.
C. Whether or not the Court of Appeals committed grave abuse of discretion
in upholding the NLRCs conclusion that private respondents were illegally
dismissed, that petitioner[s were] guilty of unfair labor practice, and that
the union be awarded moral and exemplary damages.[8]
Consistent with the discussion in petitioners Memorandum, we shall take up
Items A and B as the first issue and Item C as the second.
The Courts Ruling
The Petition has no merit.
FIRST ISSUE:
REGULAR EMPLOYMENT
At the outset, we must stress that only errors of law are generally reviewed
by this Court in petitions for review on certiorari of CA decisions.[9]
Questions of fact are not entertained.[10] The Court is not a trier of facts
and, in labor cases, this doctrine applies with greater force.[11] Factual
questions are for labor tribunals to resolve.[12] In the present case, these
have already been threshed out by the NLRC. Its findings were affirmed by
the appellate court.
Contrary to petitioners contention, the CA did not err when it held that
respondents were regular employees.
Article 280 of the Labor Code, as amended, states:
Art. 280. Regular and Casual Employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exist.
(Italics supplied)
For respondents to be excluded from those classified as regular employees,
it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one
season. The evidence proves the existence of the first, but not of the second,
condition. The fact that respondents -- with the exception of Luisa Rombo,
Ramona Rombo, Bobong Abriga and Boboy Silva -- repeatedly worked as
sugarcane workers for petitioners for several years is not denied by the
latter. Evidently, petitioners employed respondents for more than one
season. Therefore, the general rule of regular employment is applicable.
In Abasolo v. National Labor Relations Commission,[13] the Court issued
this clarification:
[T]he test of whether or not an employee is a regular employee has been
laid down in De Leon v. NLRC, in which this Court held:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
trade or business of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme
of the particular business or trade in its entirety. Also if the employee has
been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such
activity exists.
xxxxxxxxx
x x x [T]he fact that [respondents] do not work continuously for one whole
year but only for the duration of the x x x season does not detract from
considering them in regular employment since in a litany of cases this Court
has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-
employed.[14]
The CA did not err when it ruled that Mercado v. NLRC[15] was not
applicable to the case at bar. In the earlier case, the workers were required
to perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They were
not hired regularly and repeatedly for the same phase/s of agricultural work,
but on and off for any single phase thereof. On the other hand, herein
respondents, having performed the same tasks for petitioners every season
for several years, are considered the latters regular employees for their
respective tasks. Petitioners eventual refusal to use their services -- even if
they were ready, able and willing to perform their usual duties whenever
these were available -- and hiring of other workers to perform the tasks
originally assigned to respondents amounted to illegal dismissal of the latter.
within their respective jurisdictions, are generally accorded not only respect
but even finality. Their findings are binding on the Supreme Court.[18]
Verily, their conclusions are accorded great weight upon appeal, especially
when supported by substantial evidence.[19] Consequently, the Court is not
duty-bound to delve into the accuracy of their factual findings, in the
absence of a clear showing that these were arbitrary and bereft of any
rational basis.[20]
The finding of unfair labor practice done in bad faith carries with it the
sanction of moral and exemplary damages.[21]
WHEREFORE, the Petition is hereby DENIED and the assailed Decision
AFFIRMED. Costs against petitioners.
SO ORDERED.

The Court finds no reason to disturb the CAs dismissal of what petitioners
claim was their valid exercise of a management prerogative. The sudden
changes in work assignments reeked of bad faith. These changes were
implemented immediately after respondents had organized themselves into
a union and started demanding collective bargaining. Those who were union
members were effectively deprived of their jobs. Petitioners move actually
amounted to unjustified dismissal of respondents, in violation of the Labor
Code.

Where there is no showing of clear, valid and legal cause for the termination
of employment, the law considers the matter a case of illegal dismissal and
the burden is on the employer to prove that the termination was for a valid
and authorized cause.[16] In the case at bar, petitioners failed to prove any
such cause for the dismissal of respondents who, as discussed above, are
regular employees.

SECOND ISSUE:

UNFAIR LABOR PRACTICE

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled
as follows:

Indeed, from respondents refusal to bargain, to their acts of economic

inducements resulting in the promotion of those who withdrew from the
union, the use of armed guards to prevent the organizers to come in, and
the dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their haciendaa clear interference in the
right of the workers to self-organization.[17]

We uphold the CAs affirmation of the above findings. Indeed, factual findings
of labor officials, who are deemed to have acquired expertise in matters
Philippine-Singapore Transit vs NLRC
[G.R. No. 95449. August 18, 1997]
PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and Capt. WENEFREDO
N. ESTRADA, respondents.
DECISION
TORRES, JR., J.:
The instant case basically revolves around the issue of whether or not
private respondent Wenefredo N. Estrada, the complainant in POEA Case
No. M-88-02-102 entitled Capt. Wenefredo N. Estrada vs. Philippine
Singapore Transport Services, Inc., et. al., is validly dismissed from the
service on account of his alleged incompetence as the master/captain of the
vessel Sea Carrier I.
It appears that on November 24, 1987, herein petitioner Philippine-
Singapore Transport Services, Inc. (PSTS, for brevity), a manning agency,
hired private respondent Estrada as master of the vessel Sea Carrier I for
its foreign principal, Intra-Oil Supplies Sbn Bhd (Intra-Oil, for brevity).
Intra-Oil had a charter agreement, then, with a company which was
engaged in a project of oil drilling in the high seas of Bombay, India.
On January 21, 1988 or barely two months following his employment,
private respondent Estrada was informed by a representative of Modest
Shipping, an agent of Intra-Oil, that he would be relieved from his
employment and repatriated back to the Philippines. He was not given any
explanation or reason for his relief. On that same day, someone took over
as captain of Sea Carrier I, which prompted Estrada to relinquish his post.
On account of this unfortunate incident, he decided to return to Manila the
following day. Upon his arrival, he readily went to petitioner PSTS to ask
about his dismissal from employment and to claim for his unpaid salary and
the sum corresponding to his plane fare which was deducted from his salary.
Petitioner PSTS informed him that his service was terminated due to his
incompetence. It also denied his claim for the sum of money.
On February 10, 1988, private respondent Estrada filed with the POEA
Adjudication Department a complaint against PSTS and Intra-Oil for illegal
dismissal, docketed as POEA Case No. M-88-02-102. He asked for the
reimbursement of his plane fare and payment of his leave pay and of the
remaining salaries for the unexpired portion of his six-month contractual
period.
In its answer, PSTS alleged that the dismissal of private respondent Estrada
was due to a valid cause, which is incompetency. It asserted that his
incompetency is evidenced by the telexes of the charterer to PSTS
complaining about the private respondents incompetency in handling the
vessel for any tow or even approaching the oil drilling platforms, and
informing about its (charterers) decision to terminate the services of private
respondent as master of the vessel and to off-hire the Sea Carrier I due to
private respondents incompetence. According to PSTS, it had no choice but
to give its consent to the dismissal of private respondent by the charterer
because the latter was in a best position to determine the qualification of
the private respondent.
In his position paper, private respondent revealed that his termination from
service was an offshoot of his justified refusal to obey the order of the
charterer to tow another of its vessel. He explained that during the voyage
from Singapore to Bombay, in the course of maneuvering the charterers
barge, specifically alongside jetties, quays and in navigational channels, all
the ropes on board the Sea Carrier I suffered extreme wear and tear, that
when the charterer ordered him to tow its barge, he refused to do so since
the ropes were worn out and inadequate to maneuver a barge in close water
situation and, in his professional opinion, damage would result from using
inadequate ropes. This shortage of ropes was made known to Mr. Bala of
Essar Shipping, who was asked by the private respondent to supply
additional mooring ropes. According to the private respondent, the
relationship between him and the charterer degenerated rapidly following
this particular incident.
On June 7, 1989, the POEA Adjudication Department ruled in favor of the
private respondent by holding that his dismissal from service was illegal, the
dispositive portion of its decision states:
WHEREFORE, in view of all the foregoing circumstances, judgment is hereby
rendered ordering respondent Philippine-Singapore Transport Services, its
principal Intra Oil Supplies SBN BND and Fortune Life and General Insurance
Co., Inc. (PSTSIs surety) to pay complainant (Estrada) jointly and severally
the sum of THIRTEEN THOUSAND FIVE HUNDRED THIRTY MALAYSIAN
DOLLARS (M$13,530.00) or its peso equivalent at the time of payment
(representing Estradas salaries covering the unexpired portion of his
contract of employment) plus the sum of TEN THOUSAND PESOS
(P10,000.00) as refund of airplane expenses.[1]
Dissatisfied, PSTS appealed to the NLRC on July 12, 1989. The NLRC,
however, through its questioned Resolution dated August 17, 1990,[2] held
that the charge of private respondents incompetency was unmeritorious.
The real reason for private respondents repatriation was not due to his
incompetence but due to his refusal to tow another barge belonging to the
charterer and which refusal had been shown to be justified and fully
explained by the private respondent. Thus, the NLRC affirmed the decision
of the POEA and dismissed the appeal of petitioner for lack of merit.
A motion for reconsideration dated September 14, 1990 was filed by
petitioner, but the same was denied in a Resolution dated September 25,
1990.[3]
Hence, this petition.[4]
Petitioner argued that the private respondents inability to foresee and
anticipate the quantity of ropes to be used during the voyage could only be
attributed to his incompetency. As master of the vessel, he was required to
see to it that the ship was fitted with all the things necessary for its smooth
operation. The fact that the shortage of ropes was made known by private
respondent to Mr. Bala did not cure his incompetency. The request for fresh
ropes should have been directed to his principal, and not to a third person
(Mr. Bala) who was not even connected with the petitioner nor with its
principal.
Petitioner likewise asserted that in defying the charterers request to tow its
barge, the private respondent failed to comply with his duty to maintain
good relationship and cooperate with the charterer as laid down on his
employment contract, an incident which led to the off-hiring of Sea Carrier
I and the consequent cancellation of the charter agreement. And the
cancellation of the charter agreement carried with it the dismissal from
service of private respondent because he was a project employee whose
employment was coterminous with the charter of Sea Carrier I. It could not
therefore be said that the dismissal was not valid.
As to the procedural aspect of private respondents dismissal, petitioner
alleged that his termination was done pursuant to the terms of the
employment contract, hence, with due regard to due process of law.
We are not persuaded by the foregoing arguments of petitioner.
It is noteworthy to state that an employer is free to manage and regulate,
according to his own discretion and judgment, all phases of employment,
which includes hiring, work assignments, working methods, time, place and
manner of work, supervision of workers, working regulations, transfer of
employees, lay-off of workers, and the discipline, dismissal and recall of
work.[5] While the law recognizes[6] and safeguards[7] this right of an
employer to exercise what are clearly management prerogatives, such right
should not be abused and used as a tool of oppression against labor. The
companys prerogatives must be exercised in good faith and with due regard
to the rights of labor. A priori, they are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements and the general
principles of fair play and justice.[8]
The power to dismiss an employee is a recognized prerogative that is
inherent in the employers right to freely manage and regulate his business.
Corollarily, an employer can not rationally be expected to retain the
employment of a person whose lack of morals, respect and loyalty to his
employer, regard for his employers rules and appreciation of the dignity and
responsibility of his office, has so plainly and completely been bared.[9] He
may not be compelled to continue to employ such person whose continuance
in the service will patently be inimical to his employers interest.[10] The
right of the company to dismiss an employee is a measure of self-
protection.[11] Such right, however, is subject to regulation by the State,
basically in the exercise of its paramount police power.[12] Thus, the
dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fairplay. It must not be
done arbitrarily and without just cause.[13]
Due process must be observed because the dismissal affects not only the
employees position but also his means of livelihood. Truly, unemployment
brings untold misery and hardship not only to the workingmen but also to
those who are dependent on the wage earners. When a person has no
property, his job may possibly be his only possession or means of livelihood.
Therefore he should be protected against arbitrary deprivation of his
job.[14]
No less than the Constitution recognizes and guarantees the labors right to
security of tenure.[15] Under the Labor Code of the Philippines, as
amended, specifically, Article 279 of the said Code, the security of tenure
has been construed to mean as that the employer shall not terminate the
services of an employee except for a just cause or when authorized by the
Code.[16] The two facets of this legal provision are: (a) the legality of the
act of dismissal; and (b) the legality in the manner of dismissal. The illegality
of the act of dismissal constitutes discharge without just cause, while
illegality in the manner of dismissal is dismissal without due process.[17] If
an employee is dismissed without just cause, he is entitled to reinstatement
with backwages up to the time of his actual reinstatement, if the contract of
employment is not for a definite period; or to the payment of his salaries
corresponding to the unexpired portion of the employment contract, if the
contract is for the definite period. If the dismissal is for a just cause but it
was made without due process, the employee is entitled to the payment of
an indemnity.[18]
Guided by the foregoing rules and principles, this Court holds that the
dismissal of private respondent from service is done without just cause, in
apparent violation of Article 279 in relation to Article 282 of the Labor Code
of the Philippines, as amended, and without due process, in obvious
contravention of Article 277 (b) of the said Code.
Petitioners imputation of incompetence on the part of the private respondent
due to his lack of foresight to anticipate the number of mooring ropes to be
used is unworthy of being given credence. As explained by private
respondent, the Sea Carrier I was sufficiently furnished with mooring ropes
prior to the voyage. It so happened that the ropes would later on suffer(ed)
extreme wear and tear during its voyage from Singapore to Bombay
especially along jetties and quays, and in navigational channels. Faced by
such problem, he immediately reported the situation to, and at the same
time, requested for new mooring ropes from, Mr. Bala of Essar Shipping, a
person whom the private respondent alleged to be connected with the
petitioner and its principal. No new ropes came, however. So, when the
charterer ordered private respondent to tow its barge, he explained that the
ropes were worn out and, in his professional opinion, inadequate for
maneuvering a barge in close water situation, hence, damage would result
if towing of the barge would proceed. Evidently, as called for by the
circumstances of the situation, the private respondent complied with his
responsibility as master of the vessel. To ask for more from him is to require
an undertaking that is beyond or in excess of the scope of his duty as master
of the vessel. Even the NLRC belied the claim of petitioner that private
respondent was incompetent, thus:
To our mind, respondents charge of incompetence is rather sweeping xxx.
Complainants refusal to carry out the towing order on the basis of his
professional opinion that there was a shortage in towing ropes, a situation
which was known to a certain Mr. Bala of Essar Shipping, or that they were
inadequate and that it might result in an accident or cause damage certainly
does not prove that he was incompetent. On the other hand, it would even
show that he was very professional in his job as master, regardless of the
intrusions of the charterer into his area of responsibility. It would have been
a different story had complainant refused the towing order simply because
he didnt know how to, in which case he could be said to be incompetent in
that area of expertise.[19]
The contention of petitioner that Mr. Bala was not in any way connected with
it or to its principal deserves scant consideration. Suffice it to say that during
the proceedings below, petitioner did not raise this issue. It is only now
when petitioner elevated the case to this Court that it is challenging the
claim of private respondent that Mr. Bala was connected with the petitioner
and its principal. Settled is the rule that issues not raised in the proceedings
below can not be ventilated for the first time before this Court.[20]
Petitioner argued that private respondent is a project employee whose term
of service depends upon the charter of Sea Carrier I, hence, the cancellation
of the charter agreement carries with it the termination from service of the
private respondent. This argument has no leg to stand on because the
cancellation of the charter agreement, which was the very basis for
terminating the services of the private respondent, was unjustifiable. It
must be pointed out that the charter decided to off-hire the Sea Carrier I
and eventually canceled the charter agreement because of the alleged
incompetence of the master of the vessel. But as discussed earlier, the
imputation of incompetence on the part of the private respondent is bereft
of any basis. Thus, the alleged incompetence can not be utilized as a valid
and justifiable reason to dismiss the private respondent from employment,
much less, to cancel the charter agreement. In like manner, the procedural
aspect of private respondents termination from employment leaves much to
be desired.
Before an employee can be dismissed, the Labor Code, as amended,
requires the employer to furnish the employee a written notice containing a
statement of the causes for termination and to afford said employee ample
opportunity to be heard and to defend himself with the assistance of his
representative if he so desires. If the employer decides to terminate the
services of the employee, the employer mush notify the worker in writing of
the decision to dismiss him, stating clearly the reasons therefor.[21] The
record of the instant case clearly shows that the foregoing requirements are
not complied with. Private respondent Estrada was caught by surprise when
on January 21, 1988 he was told by the agent of the principal that he would
be replaced as master of the vessel and would be repatriated to the
Philippines. He was not given any explanation or reason for his dismissal.
His replacement as master of the vessel came in the afternoon of the same
day he was informed of his repatriation. He was thus forced to disembarked
from the vessel. Obviously, the dismissal of private respondent was
impetuously made without the benefit of the required notice and hearing.
Petitioner seeks to justify the absence of the said notice and hearing by
invoking a provision in the contract of employment which authorizes the
company to terminate employment without notice. The pertinent provision
of the said employment contract reads as follows:
However, in the event of serious misconduct or neglect of duty or breach by
you of any rules or regulations imposed by the Company, the Company may
without notice or payment in lieu of notice terminated your employment and
all expenses for your repatriation will be borne by you.[22]
The foregoing contractual provision is inapplicable in the situation of private
respondent. The said provision applies only when the employee is liable for
serious misconduct, neglect of duty or violation of company rules and
regulations. Apparently, private respondent Estrada was not found guilty of
any of these offenses. The allegation of petitioner that the private
respondent committed neglect of duty or serious misconduct for refusing to
obey the order of the charterer to tow the barge is unmeritorious. It was the
professional opinion of private respondent that the mooring ropes which had
been worn out during the vessels voyage were inadequate for maneuvering
in close water situations and that an accident might result from using the
said ropes. Thus, the private respondent, in refusing to tow the other vessel,
wanted to secure the vessel of its safety and to save it from an impending
peril. He simply did what a prudent and careful master of the vessel ought
to do under the circumstances. By faithfully complying with his duty as
master of the vessel, it would not be justified to punish him by terminating
his employment for reasons not sanctioned by law and maritime usage.
ACCORDINGLY, the instant petition is hereby DISMISSED for lack of merit.
The resolution of the NLRC dated August 17, 1990 and its Resolution dated
September 25, 1990 are hereby AFFIRMED.
SO ORDERED.
PT & T vs Laplana
G.R. No. 76645 July 23, 1991
PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, petitioner,
vs.
ALICIA LAPLANA, Hon. RICARDO ENCARNACION, and NATIONAL
LABOR RELATIONS COMMISSION, respondents.
D.P. Mercado & Associates for petitioner.
NARVASA, J.:
Alicia Laplana was the cashier of the Baguio City Branch Office of the
Philippine Telegraph and Telephone Corporation (hereafter, simply PT & T).
Sometime in March 1984, PT & T's treasurer, Mrs. Alicia A. Arogo, directed
Laplana to transfer to the company's branch office at Laoag City. Laplana
refused the reassignment and proposed instead that qualified clerks in the
Baguio Branch be trained for the purpose. She set out her reasons therefor
in her letter to Mrs. Arogo dated March 27, 1984, viz.:
1. I have established Baguio City as my permanent residence. Working in
Laoag will involve additional expenses like for my board and lodgingly, fare,
and other miscellaneous expenses. My salary alone will not be enough —
there will be no savings and my family will spend more on account of my
transfer.
2. I will be away from my family. A far assignment would be a big sacrifice
on my part keeping me away from my husband and family which might
affect my efficiency.
3. Since I have been with PT & T for more than six years already, I have
learned to work with my co-employees here more effectively. Working in
another place with entirely different environment will require long
adjustment period, thereby affecting performance of my job.
On April 12, 1984, Mrs. Arogo reiterated her directive for Laplana's transfer
to the Laoag Branch, this time in the form of a written Memorandum,
informing Laplana that "effective April 16, 1984, you will be reassigned to
Laoag branch assuming the same position of branch cashier," and ordering
her "to turn over your accountabilities such as PCF, undeposited collections,
used and unused official receipts, other accountable forms and files to Rose
Caysido who will be in charge of cashiering in Baguio."
Apparently Laplana was not allowed to resume her work as Cashier of the
Baguio Branch when April 16, 1984 came. She thereupon wrote again to
Mrs. Arogo advising that the directed transfer was unacceptable, reiterating
the reasons already given by her in her first letter dated March 27, 1984.
On April 30, 1984, Laplana received a telegram from Mrs. Arogo reading as
follows:
PLEASE REPORT TO MANILA ON MAY 2, 1984 FOR NEW JOB ASSIGNMENT
IF YOU DON'T REPORT ON MAY 2, 1984, WE WILL CONSIDER THIS AS
ABANDONMENT OF YOUR JOB AND THIS MIGHT CONSTRAIN US TO IMPOSE
DISCIPLINARY ACTION AGAINST YOU
YOU CAN GET YOUR CASH ADVANCE FOR TRANSPORTATION PETITION
FROM MRS. BAUTISTA TODAY.
On May 8, 1984, Laplana in turn sent a telex message to Mrs. Arogo which
reads as follows:
I LOVE WORKING FOR OUR COMPANY HOWEVER I AM SORRY I CANNOT
ACCEPT YOUR JOB OFFER IN MANILA THANK YOU AND RETRENCH ME
INSTEAD. MY BEST REGARDS.
Thereafter, Laplana sent a letter to Mrs. Arogo on May 15, 1984, expatiating
on her telex message and reiterating her request to be retrenched, as
follows:
Dear Mrs. Arogo:
Thank you for the job in Manila. However, I cannot accept the said offer
because I have established Baguio City as my permanent residence.
Considering the high cost of living in Manila it will surely involve additional
expenses on my part. My salary alone will not be enough to sustain my
expenses. Furthermore, a far assignment will be a big sacrifice on my part
keeping me away from my husband which might affect my health due to an
entirely new environment and climate, thereby affecting my efficiency.
In view of the above reasons, I hereby request management to retrench
me.
xxx xxx xxx
Termination of Laplana's employment on account of retrenchment
thereupon followed.1awp++i1 On May 19, 1984, PT & T issued an
"Employees's Service Report" which contained the following remarks
regarding Laplana: "Services terminated due to retrenchment with
corresponding termination pay effective May 16, 1984. " And on June 30,
1984, Mrs. Arogo sent a Memorandum to the company's Baguio Branch
Manager embodying the computation of the separation and 13th month pay
due to Laplana, together with a check for the amount thereof, P2,512.50
and a quitclaim deed, and instructing said manager to "have the quitclaim
signed by Alicia Laplana before releasing the check and return all copies of
said form . . . immediately." On July 4, 1984, Laplana signed the quitclaim
and received the check representing her 13th month and separation pay.
On October 9, 1984, Laplana filed with the Labor Arbiters' Office at Baguio
City, thru the CLAO, a complaint against PT & T its "Baguio Northwestern
Luzon Branch, Baguio City," and Paraluman Bautista, Area Manager. In her
complaint, she set forth substantially the facts just narrated, and alleged,
as right of action, that "when she insisted on her right of refusing to be
transferred, the Defendants made good its warning by terminating her
services on May 16, 1984 on alleged ground of "retrenchment," although
the truth is, she was forced to be terminated and that there was no ground
at all for the retrenchment;" that the company's "act of transferring is not
only without any valid ground but also arbitrary and without any purpose
but to harass and force . . . (her) to eventually resign."
In answer, the defendants alleged that —
1) Laplana "was being transferred to Laoag City because of increase in sales
due to the additional installations of vodex line;"
2) in connection with her transfer, Laplana had been informed "that she
would be given ten (10) days. relocation allowance and transportation
expense from Baguio to Laoag City;"
3) the company "was exercising management prerogatives in transferring
complainant . . . and there is no showing that this exercise was arbitrarily
and whimsically done;"
4) Laplana's services were terminated on her explicit declaration that "she
was willing to be retrenched rather than be assigned to Laoag City or
Manila;"
5) in any event, the company had been actually suffering losses; in fact, in
June, 1984, several employees "were retrenched because of losses incurred
due to rising costs in wages, rentals, production supplies and other
operational costs."
Upon the issues thus raised, judgment was rendered on March 28, 1985 by
the Labor Arbiter in Laplana's favor.1 The Arbiter's verdict was made to rest
essentially on the following pronouncements (made avowedly in reliance on
the doctrine laid down by this Court in Helmut Dosch v. NLRC and Northwest
Airlines, Inc., G.R. No. 51182, July 5, 19832), to wit:
Transferring an employee from one place to another is not by itself unlawful.
It is within the inherent right of an employer to transfer or assign an
employee in the pursuit of its legitimate business interests. However, this
right is not absolute.
Transfer becomes unlawful where it is motivated by discrimination or in bad
faith, or is effected as a form of punishment or demonition without sufficient
cause.
The transfer of the complainant from Baguio City to Laoag City or to Manila
is patently a demotion and a form of punishment without just cause and
would cause untold suffering on the part of the complainant. . . .
With these premises in mind, the Arbiter ruled "that the complainant was
illegally dismissed . . . (and her) acceptance of separation pay . . . cannot
cure the illegality of her dismissed because it was forced upon her — she
was compelled to accept the lesser evil," and that there was "no evidence
to show that the complainant was retrenched to prevent losses," but that
on the contrary, "it is continuously expanding and improving its facilities,
and hiring new employees." Accordingly, he ordered —
1) PT & T "to reinstate immediately the complainant, Alicia R. Laplana, to
her former position or equivalent position without loss of seniority rights and
benefits earned with full backwages and benefits less P2,512.50, the amount
she received as separation, from the time her compensation was suspended
until reinstated;"
2) the dismissal of the claim for moral and exemplary damages for lack of
merit; and
3) the dismissal of the case against Mrs. Paraluman Bautista also for lack of
merit.
The National Labor Relations Commission affirmed the Arbiter's judgment
and dismissed the respondents' appeal, by Resolution dated August 5,
1986.3
There can be no quarrel with the Arbiter's formulation of the general
principle governing an employer's prerogative to transfer his employees
from place to place or from one position to another. The Arbiter
acknowledges "the inherent right of an employer to transfer or assign an
employee in the pursuit of its legitimate business interests" subject only to
the condition that it be not "motivated by discrimination or (made) in bad
faith, or . . . effected as a form of punishment or demotion without sufficient
cause." This is a principle uniformly adhered to by this Court.4
The case law on the matter is succinctly set out by a noted commentator on
Labor Relations Law as follows:5
. . . Except as limited by special laws, the employer is free to regulate,
according to his own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-
off of workers, and the discipline, dismissal and recall of workers. This flows
from the established rule that labor law does not authorize the substitution
of the judgment of the employer in the conduct of his business and does not
deprive the employer of the right to select or dismiss his employees for any
cause, except in cases of unlawful discrimination (NLU v. Insular-Yebana
Tobacco Corp., 2 SCRA 924, 931; Republic Savings Bank v. CIR, 21 SCRA
226, 235).
. . . The employer has the prerogative of making transfers and reassignment
of employees to meet the requirements of the business. Thus, where the
rotation of employees from the day shift to the night shift was a standard
operating procedure of management, an employee who had been on the day
shift for some time may be transferred to the night shift (Castillo v. CIR, 39
SCRA 81). Similarly, transfers effected pursuant to a company policy to
transfer employees from one theater to other theaters operated by the
employer, in order to prevent connivance among them, was sustained
(Cinema, Stage and Radio Entertainment Free Workers v. CIR, 18 SCRA
1071). Similar transfers and re-assignments of employees have been upheld
such as the re-assignment of one from a position of supervisor to that of
engineer at the power house (Interwood Employees Assn. v. Interwood, 99
Phil. 82), or the transfer of the union president from his position of
messenger clerk in a hotel to purely office work and two other unionists from
the position of hotel guard to line and elevator men, without diminution of
pay or other employee's rights (Bay View Hotel Employees Union v. Bay
View Hotel, L-10393, March 30, 1960), or the temporary assignment of a
sales clerk to another section of the store (Marcaida v. PECO, 63 O.G. 8559).
Subsequent decisions of this Court have made no deviation from the
doctrine. In Philippine Japan Active Carbon Corp. v. NLRC, promulgated on
March 8, 19896 this Court made the following pronouncement, to wit:
It is the employer's prerogative, based on its assessment and perception of
its employees' qualifications, aptitudes, and competence, to move them
around in the various areas of its business operations in order to ascertain
where they will function with maximum benefit to the company. An
employee's right to security of tenure does not give him such a vested right
in his position as would deprive the company of its prerogative to change
his assignment or transfer him where he will be most useful. When his
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and
it does not involve a demotion in rank or diminution of his salaries, benefits,
and other privileges, the employee may not complain that it amounts to a
constructive dismissal.
In Yuco Chemical Industries, Inc. v. MOLE et al. (judgment promulgated on
May 28, 1990)7 the same "general principles on transfer" were re-stated.
The Court said:
. . . In a number of cases, the Court has recognized and upheld the
prerogative of management to transfer an employee from one office to
another within the business establishment provided that there is no
demotion in rank or diminution of his salary, benefits and other privileges.
This is a privilege inherent in the employer's right to control and manage its
enterprise effectively. Even as the law is solicitous of the employees'
welfare, it cannot ignore the right of the employer to exercise what are
clearly and obviously management prerogatives. The freedom of
management to conduct its business operations to achieve its purpose
cannot be denied.
But like all other rights, there are limits. The managerial prerogative to
transfer personnel must be exercised without grave abuse of discretion and
putting to mind the basic elements of justice and fair play. Having the right
should not be confused with the manner in which that right must be
exercised. Thus it cannot be used as a subterfuge by the employer to rid
himself of an undesirable worker. Nor when the real reason is to penalize an
employee for his union activities and thereby defeat his right to self-
organization. But the transfer can be upheld when there is no showing that
it is unnecessary, inconvenient and prejudicial to the displaced employee.
The acceptability of the proposition that transfers made by an employer for
an illicit or underhanded purpose — e.g., to evade the duty to bargain
collectively, or to defeat the welfare, right of collective bargaining, or
discriminate against one or some of them on account of their union activities
— is self-evident and cannot be gainsaid. The difficulty lies in the situation
where no such illicit, improper or underhanded purpose can be ascribed to
the employer, the objection to the transfer being ground solely upon the,
personal inconvenience or hardship that will be caused to the employee by
reason of the transfer. What then?
In Dosch v. NLRC, supra, this Court found itself unable to agree with the
NLRC that the petitioner employee was guilty of disobedience and
insubordination in refuse to accept his transfer from the Philippines to an
overseas post. Said the Court:
. . . The only piece of evidence on which (respondent employer) Northwest
bases the charge of contumacious refusal is petitioner's letter dated August
28, 1975 to R.C. Jenkins wherein petitioner acknowledged receipt of the
former's memorandum dated August 18, 1975, appreciated his promotion
to Director of International Sales but at the same time regretted "that at
this time for personal reasons and reasons of my family, I am unable to
accept the transfer from the Philippines' and thereafter expressed his
preference to remain in my Position of Manager-Philippines until such time
that my services in that capacity are no longer required by Northwest
Airlines." From this evidence, We cannot discern even the slightest hint of
defiance, much less imply insubordination on the part of petitioner.
Withal, it is evident that the courteous tone of the employee's letter did not
alter the actuality of his refusal to accept the transfer decreed by his
employer in the exercise of its sound business judgment and discretion; and
that the transfer of an employee to an overseas post cannot be likened to a
transfer from a city to another within the country, as in the case at bar.

In this case, the employee (Laplana) had to all intents and purposes
resigned from her position. She had unequivocally asked that she be
considered dismissed, herself suggesting the reason therefor ––
retrenchment. When so dismissed, she accepted separation pay. On the
other hand, the employer has not been shown to be acting otherwise than
in good faith, and in the legitimate pursuit of what it considered its best
interests, in deciding to transfer her to another office. There is no showing
whatever that the employer was transferring Laplana to another work place,
not because she would be more useful there, but merely "as a subterfuge
to rid . . . (itself) of an undesirable worker," or "to penalize an employee for
. . . union activities. . . ." The employer was moreover not unmindful of
Laplana's initial plea for reconsideration of the directive for her transfer to
Laoag; in fact, in response to that plea not to be moved to the Laoag Office,
the employer opted instead to transfer her to Manila, the main office,
offering at the same time the normal benefits attendant upon transfers from
an office to another.

The situation here presented is of an employer transferring an employee to

another office in the exercise of what it took to be sound business judgment
and in accordance with pre-determined and established office policy and
practice, and of the latter having what was believed to be legitimate reasons
for declining that transfer, rooted in considerations of personal convenience
and difficulties for the family. Under these circumstances, the solution
proposed by the employee herself, of her voluntary termination of her
employment and the delivery to her of corresponding separation pay, would
appear to be the most equitable. Certainly, the Court cannot accept the
proposition that when an employee opposes his employer's decision to
transfer him to another work place, there being no bad faith or underhanded
motives on the part of either party, it is the employee's wishes that should
be made to prevail. In adopting that proposition by way of resolving the
controversy, the respondent NLRC gravely abused its discretion.

WHEREFORE, the writ of certiorari prayed for is GRANTED and the Resolution
of August 5, 1986 of respondent NLRC is thereby nullified and set aside, and
the termination of services of private respondent is declared legal and
proper. No costs.

SO ORDERED.
Yuco Chemicals vs Minister of Labor
G.R. No. L-75656 May 28, 1990
YUCO CHEMICAL INDUSTRIES, INC., petitioner,
vs.
MINISTRY OF LABOR AND EMPLOYMENT thru HONORABLE VICENTE
LEOGARDO, JR., DEPUTY MINISTER, GEORGE HALILI and AMADO
MAGNO, respondents.
Ricardo C. Atienza for petitioner.
Bienvenido B. Balot for private respondents.
FERNAN, C.J.:
Assailed in this petition for certiorari is the order dated April 8, 1986 of
Deputy Minister Leogardo, Jr. of the then Ministry of Labor and Employment
(MOLE) which reversed the order of the officer-in-charge of the Tarlac
provincial labor office and directed petitioner "to reinstate complainants with
backwages fixed at two years without deduction or qualification." 1
In 1978, private respondents (complainants) George Halili and Amado
Magno were employed by petitioner company which is engaged in the
manufacture/assembly of ice boxes in Barangay Matatalaib, Tarlac, Tarlac.
They were assigned to make aluminum handles for the ice boxes.
On August 12,1981, after obtaining a favorable legal opinion from the Tarlac
provincial office of MOLE concerning the legality of moving the production
of aluminum handles from Tarlac to Manila, petitioner addressed a
memorandum to private respondents directing them to report for work
within one week from notice at their new place of work at Felix Huertas
Street, Sta. Cruz, Manila. The memorandum further stated that private
respondents would be paid with a salary of P27.00 and an additional
allowance of P2.00 "to meet the higher cost of living in Manila. 2
A day after or on August 13, 1981, instead of complying with the
memorandum, private respondents filed a complaint with the provincial
labor office for illegal dismissal, 13th month pay and service incentive leave
pay. 3
As a countermove, on August 21, 1981, petitioner filed an application for
clearance to terminate the two employees on the ground of abandonment.
On September 25,1981, the OIC of the Tarlac labor office issued an order
directing petitioner to give private respondents their separation pay within
ten (10) days from receipt of notice.
Private respondents appealed to the Office of the Minister of MOLE through
Deputy Minister Leogardo, Jr. who rendered the order in question with the
following reasons cited:
1. At the time of acceptance of the employment relation between the parties,
it was assumed that the place of work was in Matatalaib, Tarlac, Tarlac.
Thus, to transfer the place of work at such a distant place as Manila without
the consent of the employees concerned can no longer be construed as a
reasonable exercise of management prerogative in the assignment of
personnel dictated by business exigencies;
2. If petitioner company had indeed relocated its operations from Tarlac to
Manila, it is puzzling why out of the 50 employees, it singled out the two (2)
plain laborers to man the Manila operations. Such actuation tended to
support the allegation that private respondents were discriminated against
because of their union activities and their refusal to disaffiliate from the
union.
A motion for reconsideration subsequently filed by the petitioner was denied.
Hence this present petition.
First, some general principles on transfer. In a number of cases, the Court
has recognized and upheld the prerogative of management to transfer an
employee from one office to another within the business establishment
provided that there is no demotion in rank or a diminution of his salary,
benefits and other privileges. This is a privilege inherent in the employer's
right to control and manage its enterprise effectively. Even as the law is
solicitous of the employees' welfare, it cannot ignore the right of the
employer to exercise what are clearly and obviously management
prerogatives. The freedom of management to conduct its business
operations to achieve its purpose cannot be denied .4
But like all other rights, there are limits. The managerial prerogative to
transfer personnel must be exercised without grave abuse of discretion and
putting to mind the basic elements of justice and fair play. 5 Having the
right should not be confused with the manner in which that right must be
exercised. Thus it cannot be used as a subterfuge by the employer to rid
himself of an undesirable worker. Nor when the real reason is to penalize an
employee for his union activities and thereby defeat his right to self-
organization. But the transfer can be upheld when there is no showing that
it is unnecessary, inconvenient and prejudicial to the displaced employee .6
The reassignment of Halili and Magno to Manila is legally indefensible on
several grounds. Firstly, it was grossly inconvenient to private respondents.
They are working students. When they received the transfer memorandum
directing their relocation to Manila within seven days from notice, classes
had already started. The move from Tarlac to Manila at such time would
mean a disruption of their studies. Secondly, there appears to be no genuine
business urgency that necessitated their transfer. As well pointed out by
private respondents' counsel, the fabrication of aluminum handles for ice
boxes does not require special dexterity. Many workers could be contracted
right in Manila to perform that particular line of work.

Altogether, there is a strong basis for public respondent's conclusion that

the controversial transfer was not prompted by legitimate reasons.
Petitioner company had indeed discriminated against Magno and Halili when
the duo was selected for reassignment to Manila. The transfer was timed at
the height of union concerted activities in the firm, deliberately calculated
to demoralize the other union members. Under such questionable
circumstances, private respondents had a valid reason to refuse the Manila
re-assignment. 7 Public respondent did not err or abuse his discretion in
upholding the employees' cause.

WHEREFORE, the questioned order dated April 8, 1986 of Deputy Minister

Leogardo, Jr. is hereby AFFIRMED. Assuming that the positions of private
respondents have been filled up, they should be reinstated to substantially
equivalent position without loss of seniority rights, privileges and benefits
due them. Costs against petitioner.

SO ORDERED.
Almodiel vs NLRC
G.R. No. 100641 June 14, 1993
FARLE P. ALMODIEL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),
RAYTHEON PHILS., INC., respondents.
Apolinario Lomabao, Jr. for petitioner.
Vicente A. Cruz, Jr., for private respondent.
NOCON, J.:
Subject of this petition for certiorari is the decision dated March 21, 1991 of
the National Labor Relations Commission in NLRC Case No.
00-00645-89 which reversed and set aside the Labor Arbiter's decision
dated September 27, 1989 and ordered instead the payment of separation
pay and financial assistance of P100,000.00. Petitioner imputes grave abuse
of discretion on the part of the Commission and prays for the reinstatement
of the Labor Arbiter's decision which declared his termination on the ground
of redundancy illegal.
Petitioner Farle P. Almodiel is a certified public accountant who was hired in
October, 1987 as Cost Accounting Manager of respondent Raytheon
Philippines, Inc. through a reputable placement firm, John Clements
Consultants, Inc. with a starting monthly salary of P18,000.00. Before said
employment, he was the accounts executive of Integrated Microelectronics,
Inc. for several years. He left his lucrative job therein in view of the
promising career offered by Raytheon. He started as a probationary or
temporary employee. As Cost Accounting Manager, his major duties were:
(1) plan, coordinate and carry out year and physical inventory; (2) formulate
and issue out hard copies of Standard Product costing and other cost/pricing
analysis if needed and required and (3) set up the written Cost Accounting
System for the whole company. After a few months, he was given a
regularization increase of P1,600.00 a month. Not long thereafter, his salary
was increased to P21,600.00 a month.
On August 17, 1988, he recommended and submitted a Cost
Accounting/Finance Reorganization, affecting the whole finance group but
the same was disapproved by the Controller. However, he was assured by
the Controller that should his position or department which was apparently
a one-man department with no staff becomes untenable or unable to deliver
the needed service due to manpower constraint, he would be given a three
(3) year advance notice.
In the meantime, the standard cost accounting system was installed and
used at the Raytheon plants and subsidiaries worldwide. It was likewise
adopted and installed in the Philippine operations. As a consequence, the
services of a Cost Accounting Manager allegedly entailed only the
submission of periodic reports that would use computerized forms
prescribed and designed by the international head office of the Raytheon
Company in California, USA.
On January 27, 1989, petitioner was summoned by his immediate boss and
in the presence of IRD Manager, Mr. Rolando Estrada, he was told of the
abolition of his position on the ground of redundancy. He pleaded with
management to defer its action or transfer him to another department, but
he was told that the decision of management was final and that the same
has been conveyed to the Department of Labor and Employment. Thus, he
was constrained to file the complaint for illegal dismissal before the
Arbitration Branch of the National Capital Region, NLRC, Department of
Labor and Employment.
On September 27, 1989, Labor Arbiter Daisy Cauton-Barcelona rendered a
decision, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered declaring that complainant's
termination on the ground of redundancy is highly irregular and without
legal and factual basis, thus ordering the respondents to reinstate
complainant to his former position with full backwages without lost of
seniority rights and other benefits. Respondents are further ordered to pay
complainant P200,000.00 as moral damages and P20,000.00 as exemplary
damages, plus ten percent (10%) of the total award as attorney's fees.1
Raytheon appealed therefrom on the grounds that the Labor Arbiter
committed grave abuse of discretion in denying its rights to dismiss
petitioner on the ground of redundancy, in relying on baseless surmises and
self-serving assertions of the petitioner that its act was tainted with malice
and bad faith and in awarding moral and exemplary damages and attorney's
fees.
On March 21, 1991, the NLRC reversed the decision and directed Raytheon
to pay petitioner the total sum of P100,000.00 as separation pay/financial
assistance. The dispositive portion of which is hereby quoted as follows:
WHEREFORE, the appealed decision is hereby set aside. In its stead, Order
is hereby issued directing respondent to pay complainant the total
separation pay/financial assistance of One Hundred Thousand Pesos
(P100,000.00).
SO ORDERED.2
From this decision, petitioner filed the instant petition averring that:
The public respondent committed grave abuse of discretion amounting to
(lack of) or in excess of jurisdiction in declaring as valid and justified the
termination of petitioner on the ground of redundancy in the face of clearly
established finding that petitioner's termination was tainted with malice, bad
faith and irregularity.3
Termination of an employee's services because of redundancy is governed
by Article 283 of the Labor Code which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. — The
employer may also terminate the employment of any employee due to
installation of labor-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 on the worker and the
Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to installation of labor-
saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least one (1) month pay for every year
of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to at least one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1) whole year.
There is no dispute that petitioner was duly advised, one (1) month before,
of the termination of his employment on the ground of redundancy in a
written notice by his immediate superior, Mrs. Magdalena B.D. Lopez
sometime in the afternoon of January 27, 1989. He was issued a check for
P54,863.00 representing separation pay but in view of his refusal to
acknowledge the notice and the check, they were sent to him thru registered
mail on January 30, 1989. The Department of Labor and Employment was
served a copy of the notice of termination of petitioner in accordance with
the pertinent provisions of the Labor Code and the implementing rules.
The crux of the controversy lies on whether bad faith, malice and irregularity
crept in the abolition of petitioner's position of Cost Accounting Manager on
the ground of redundancy. Petitioner claims that the functions of his position
were absorbed by the Payroll/Mis/Finance Department under the
management of Danny Ang Tan Chai, a resident alien without any working
permit from the Department of Labor and Employment as required by law.
Petitioner relies on the testimony of Raytheon's witness to the effect that
corollary functions appertaining to cost accounting were dispersed to other
units in the Finance Department. And granting that his department has to
be declared redundant, he claims that he should have been the Manager of
the Payroll/Mis/Finance Department which handled general accounting,
payroll and encoding. As a B. S. Accounting graduate, a CPA with M.B.A.
units, 21 years of work experience, and a natural born Filipino, he claims
that he is better qualified than Ang Tan Chai, a B.S. Industrial Engineer,
hired merely as a Systems Analyst Programmer or its equivalent in early
1987, promoted as MIS Manager only during the middle part of 1988 and a
resident alien.
On the other hand, Raytheon insists that petitioner's functions as Cost
Accounting Manager had not been absorbed by Ang Tan Chai, a permanent
resident born in this country. It claims to have established below that Ang
Tan Chai did not displace petitioner or absorb his functions and duties as
they were occupying entirely different and distinct positions requiring
different sets of expertise or qualifications and discharging functions
altogether different and foreign from that of petitioner's abolished position.
Raytheon debunks petitioner's reliance on the testimony of Mr. Estrada
saying that the same witness testified under oath that the functions of the
Cost Accounting Manager had been completely dispensed with and the
position itself had been totally abolished.
Whether petitioner's functions as Cost Accounting Manager have been
dispensed with or merely absorbed by another is however immaterial. Thus,
notwithstanding the dearth of evidence on the said question, a resolution of
this case can be arrived at without delving into this matter. For even
conceding that the functions of petitioner's position were merely transferred,
no malice or bad faith can be imputed from said act. A survey of existing
case law will disclose that in Wiltshire File Co., Inc. v. NLRC,4 the position
of Sales Manager was abolished on the ground of redundancy as the duties
previously discharged by the Sales Manager simply added to the duties of
the General Manager to whom the Sales Manager used to report. In
adjudging said termination as legal, this Court said that redundancy, for
purposes of our Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the
enterprise. The characterization of an employee's services as no longer
necessary or sustainable, and therefore, properly terminable, was an
exercise of business judgment on the part of the employer. The wisdom or
soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so
long, of course, as violation of law or merely arbitrary and malicious action
is not shown.
In the case of International Macleod, Inc. v. Intermediate Appellate Court,5
this Court also considered the position of Government Relations Officer to
have become redundant in view of the appointment of the International
Heavy Equipment Corporation as the company's dealer with the
government. It held therein that the determination of the need for the
phasing out of a department as a labor and cost saving device because it
was no longer economical to retain said services is a management
prerogative and the courts will not interfere with the exercise thereof as long
as no abuse of discretion or merely arbitrary or malicious action on the part
of management is shown.
In the same vein, this Court ruled in Bondoc v. People's Bank and Trust
Co.,6 that the bank's board of directors possessed the power to remove a
department manager whose position depended on the retention of the trust
and confidence of management and whether there was need for his services.
Although some vindictive motivation might have impelled the abolition of
his position, this Court expounded that it is undeniable that the bank's board
of directors possessed the power to remove him and to determine whether
the interest of the bank justified the existence of his department.
Indeed, an employer has no legal obligation to keep more employees than
are necessary for the operation of its business. Petitioner does not dispute
the fact that a cost accounting system was installed and used at Raytheon
subsidiaries and plants worldwide; and that the functions of his position
involve the submission of periodic reports utilizing computerized forms
designed and prescribed by the head office with the installation of said
accounting system. Petitioner attempts to controvert these realities by
alleging that some of the functions of his position were still indispensable
and were actually dispersed to another department. What these
indispensable functions that were dispersed, he failed however, to specify
and point out. Besides, the fact that the functions of a position were simply
added to the duties of another does not affect the legitimacy of the
employer's right to abolish a position when done in the normal exercise of
its prerogative to adopt sound business practices in the management of its
affairs.
Considering further that petitioner herein held a position which was
definitely managerial in character, Raytheon had a broad latitude of
discretion in abolishing his position. An employer has a much wider
discretion in terminating employment relationship of managerial personnel
compared to rank and file employees.7 The reason obviously is that officers
in such key positions perform not only functions which by nature require the
employer's full trust and confidence but also functions that spell the success
or failure of an enterprise.
petitioner's position in early 1989. Besides the fact that Ang Tan Chai's
promotion thereto is a settled matter, it has been consistently held that an
objection founded on the ground that one has better credentials over the
appointee is frowned upon so long as the latter possesses the minimum
qualifications for the position. In the case at bar, since petitioner does not
allege that Ang Tan Chai does not qualify for the position, the Court cannot
substitute its discretion and judgment for that which is clearly and
exclusively management prerogative. To do so would take away from the
employer what rightly belongs to him as aptly explained in National
Federation of Labor Unions v. NLRC:8
It is a well-settled rule that labor laws do not authorize interference with the
employer's judgment in the conduct of his business. The determination of
the qualification and fitness of workers for hiring and firing, promotion or
reassignment are exclusive prerogatives of management. The Labor Code
and its implementing Rules do not vest in the Labor Arbiters nor in the
different Divisions of the NLRC (nor in the courts) managerial authority. The
employer is free to determine, using his own discretion and business
judgment, all elements of employment, "from hiring to firing" except in
cases of unlawful discrimination or those which may be provided by law.
There is none in the instant case.
Finding no grave abuse of discretion on the part of the National Labor
Relations Commission in reversing and annulling the decision of the Labor
Arbiter and that on the contrary, the termination of petitioner's employment
was anchored on a valid and authorized cause under Article 283 of the Labor
Code, the instant petition for certiorari must fail.
SO ORDERED.

Likewise destitute of merit is petitioner's imputation of unlawful

discrimination when Raytheon caused corollary functions appertaining to
cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien
without a working permit. Article 40 of the Labor Code which requires
employment permit refers to non-resident aliens. The employment permit
is required for entry into the country for employment purposes and is issued
after determination of the non-availability of a person in the Philippines who
is competent, able and willing at the time of application to perform the
services for which the alien is desired. Since Ang Tan Chai is a resident alien,
he does not fall within the ambit of the provision.

Petitioner also assails Raytheon's choice of Ang Tan Chai to head the
Payroll/Mis/Finance Department, claiming that he is better qualified for the
position. It should be noted, however, that Ang Tan Chai was promoted to
the position during the middle part of 1988 or before the abolition of
Caltex Refinery vs NLRC
G.R. No. 102993 July 14, 1995
CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA) and ARNELIO
M. CLARETE, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division),
CALTEX PHILIPPINES, INC. and/or EDGARDO C. CATAQUIS,
respondents.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court
to reverse the Resolution dated August 30, 1991 of the National Labor
Relations Commission (NLRC) in NLRC Case No. L-000063 and its Resolution
dated October 15, 1991 denying the motion for reconsideration of the
decision.
I Company property from the Refinery without authorization.'" (Rollo, p. 58).
Petitioner Arnelio M. Clarete was hired by respondent Caltex Philippines, Inc.
(Caltex) as Mechanic C on November 3, 1981. He was later promoted to the
position of Mechanic B and assigned to the Mechanical/Metal Grades Section
of respondent Caltex's refinery in San Pascual, Batangas.
According to Clarete, at about 4:00 p.m. on April 13, 1989, on his way to
the refinery's main gate after completing a day's work at the Maintenance
Area IV, he saw on a pile of rubbish a bottle of lighter fluid, which mechanics
use to remove grease from their hands. He picked up the bottle and placed
it in the basket attached to the handlebar of his bicycle with the intention of
asking the security guard at the gate to allow him to bring it home.
Upon reaching the gate, he took the bottle of lighter fluid from the basket,
punched out his time card at the bundy clock and then asked Juan de Villa,
the security guard on duty, permission to take home the bottle. Replying
that he was not authorized to grant the permission sought, de Villa referred
Clarete to Dominador Castillo, the security supervisor. When so approached,
however, Castillo told Clarete to leave the bottle in his office. Clarete
complied and left for home.
Respondent Caltex gave a different version of the incident: On said date, de
Villa noticed a black bag which Clarete did not submit for inspection. When
requested by de Villa to open the same for inspection, Clarete retorted that
it was not necessary to inspect the bag as it contained only dirty clothes.
Unconvinced, de Villa opened the bag and found a one-liter sample bottle
filled with lighter fluid surreptitiously hidden inside in the sleeves of Clarete's
working clothes, which, in turn, were covered by other clothes. When asked
if he had a gate pass to bring the bottle out of the premises, Clarete replied
that he did not secure a gate pass as the lighter fluid was for his personal
use.
On April 18, 1989, Clarete received a letter from his immediate supervisor,
requiring him to explain in writing why he should not be subjected to
disciplinary action for violation of company rules and regulations. In his
written explanation of April 20, 1989, Clarete stated: (1) that he had no
intention of bringing the bottle of lighter fluid out of the company premises
without the guard's permission; (2) that he did seek permission but was
denied; and (3) that he left the bottle behind with the guard when told to
do so.
On August 16, 1989, Clarete was charged with the crime of theft before the
Municipal Trial Court of San Pascual, Batangas (Criminal Case No. 3331).
On October 19, 1989, he received a letter from Antonio Z. Palad, Section
Head, Mechanical/Metal Section, requiring him to explain why his services
should not be terminated for cause in view of Criminal Case No. 3331 and
his violation of the "policy on disciplinary action per G.M. Circular No. 484
of August 28, 1974, specifically '(f) Removing or attempting to remove
In reply, Clarete requested time to consult his lawyer, which request
respondent Caltex granted on November 14, 1989. Clarete was given up to
November 30, 1989 to submit his explanation. However, instead of
submitting a written explanation, petitioner served a letter on Palad,
requesting a formal investigation of the allegations against him, at the same
time, invoking his right to be represented by the Union and his legal counsel.
The request was granted and a hearing was scheduled on January 5, 1990.
Said hearing, as well as a subsequent one, was however deferred upon the
request of Clarete.
Believing that Clarete has been given enough time to consult his lawyer and
to prepare his explanation, a final meeting was scheduled on February 27,
1990. At the said meeting, Clarete, through counsel, requested a formal
trial-type investigation of the case. A letter reiterating that request was
addressed by Clarete's counsel to Palad on March 12, 1990. In his letter
dated April 26, 1990, Palad denied the request on the ground that a trial-
type hearing and confrontation of witnesses were not applicable to the
company's administrative fact-finding investigation. Clarete was then given
only up to May 4, 1990 to submit his written explanation. He finally did so
on May 3, 1990.
In the meantime, on April 19, 1990, a decision was rendered in Criminal
Case No. 3331, acquitting Clarete of the crime charged based on the
insufficiency of the evidence to establish his guilt beyond reasonable doubt.
On August 20, 1990, Clarete was informed that his services were being
terminated effective August 24, 1990 for "serious misconduct and loss of
trust and confidence resulting from your having violated a lawful order of
the Company, i.e., GM Circular No. 484 of 8-28-74 which gave notice that
the Company considers 'removing or attempting to remove Company
property from the Refinery without authorization' to be sufficiently serious
that the erring employee be dismissed." (Rollo, p. 63). Clarete was placed
under preventive suspension with pay upon notice up to the termination of
his services on August 24, 1990.
On August 27, 1990, Clarete filed a complaint for illegal dismissal against
private respondents Caltex and/or Edgardo C. Cataquio, in his capacity as
Vice President of the Company with the Regional Arbitration Branch IV of
the National Labor Relations Commission. On January 15, 1991, Labor
Arbiter Joaquin A. Tanodra rendered a decision, finding Clarete neither
culpable of theft nor of violating GM Circular No. 484 of August 28, 1974 as
"his purpose in going to security guard de Villa was precisely to ask the
latter's permission to bring out the lighter fluid from the Refinery
Compound." (Rollo, p. 27). He, therefore, directed the reinstatement of
Clarete with full back wages which then totaled P40,081.60, without loss of
seniority rights and other privileges.
On appeal by private respondents, NLRC rendered judgment on August 20,
1991, vacating the decision of the Labor Arbiter and entering a new one
dismissing the complaint for lack of merit. NLRC gave credence to the
version of respondent Caltex of the incident. It found no reason to doubt the
veracity of the narration of the security guard, who was simply doing his job
of protecting the property of private respondent and who was not shown to
hold a personal grudge or ill motive to testify falsely against Clarete.
Nonetheless, NLRC awarded Clarete financial assistance equivalent to one
month salary for every year of service in the amount of P76,752.00.
Both parties moved for reconsideration — Clarete, on the ground that his
dismissal was without valid cause as there was no violation of company
rules, and private respondents on the ground that Clarete was not entitled
to the award of financial assistance pursuant to the ruling in Philippine Long
Distance Telephone Company v. National Labor Relations Commission, 164
SCRA 671 (1988).
Hence, this petition filed by Clarete and The Caltex Refinery Employees
Association, the exclusive bargaining representative of all rank and file
employees of respondent Caltex.
II
Petitioners contend that NLRC acted with grave abuse of discretion calling
for the exercise of this Court's corrective power. They maintain that Clarete's
version of the incident is more in accord with logic and common experience.
They further allege that loss of confidence, to be valid ground for dismissal,
must be based on just and duly substantiated causes. Since Clarete's
position as mechanic is not one of trust and does not involve the production,
safekeeping or even the handling of lighter fluid, his act of picking up the
bottle of lighter fluid with the intention of asking permission to bring it home,
cannot serve as basis for loss of confidence.
Respondent Caltex, on the other hand, asserts that G.M. Circular No. 484
was issued pursuant to its management prerogative to prescribe rules and
regulations necessary for the conduct of its business and specifically to put
a stop to rampant pilferages of company property by its employees, which
has resulted not only in substantial losses in its operations but also in the
perceptible breakdown in employee discipline. The findings of fact of NLRC,
which are supported by evidence on record, show that petitioner Clarete
attempted to remove a bottle of lighter fluid owned by respondent Caltex
from the company premises; therefore, Clarete committed not only a serious
misconduct but also a willful breach of trust and confidence reposed upon
him in the performance of his duties. The loss of trust and confidence is not
precluded by the fact that Clarete's position does not require the
safekeeping or handling a lighter fluid. If this were the rule, an employee
may then help himself to his employer's property without fear of disciplinary
action as long as the property taken was not entrusted to his care or is not
related to his function.
III
The prerogative of employers to regulate all aspects of employment subject
to the limitation of special laws is recognized. A valid exercise of
management prerogative encompasses hiring, work assignments, working
methods, time, place and manner of work, tools to be used, procedure to
be followed, supervision of workers, working regulations, transfer of
employees, discipline, dismissal and recall of workers. (San Miguel
Corporation v. Ubaldo, 218 SCRA 293 [1993]). This prerogative must,
however, be exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating the rights of the employees
granted by law or contract. (Garcia v. Manila Times, 224 SCRA 399 [1993]).
There are restrictions to guide the employers in the exercise of management
prerogatives, particularly the right to discipline or dismiss employees, for
both the Constitution and the law guarantee employees' security of tenure.
Thus, employees may be dismissed only in the manner provided by law.
(Radio Communications of the Phil., Inc. v. National Labor Relations
Commission, 223 SCRA 656 [1993]). The right of the employer must not be
exercised arbitrarily and without just cause. Otherwise, the constitutional
mandate of security of tenure of the workers would be rendered nugatory.
(China City Restaurant Corporation v. National Labor Relations Commission,
217 SCRA 443 [1993]).
We concur in NLRC's conclusion that the version of respondent Caltex of the
incident under consideration is more credible. As correctly pointed out by
NLRC, there is no reason to doubt the veracity of the Report of Security
Guard Juan de Villa dated April 14, 1989 and his Sinumpaang Salaysay
dated April 21, 1989 as "he simply did what he was primarily tasked to do
— to protect the company property and to apprehend misdeeds committed
thereat — neither ill motive nor personal grudge against complainant-
appellee (Clarete) was attributed to him to falsely testify against the former"
(Rollo, p. 36). Undoubtedly, the lighter fluid is a property of private
respondent and to take the same out of its premises without the
corresponding gate pass is a violation of company rules on theft and
pilferage of company property.
Educational Center v. National Labor Relations Commission, 227 SCRA 655
(1993), the Court stated that in ascertaining the total amount of back wages
payable to them, we go back to the rule prior to the Mercury Drug rule that
the total amount derived from employment elsewhere by the employee from
the date of dismissal up to the date of reinstatement, if any, should be
deducted therefrom. (Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon Workers'
Union, et al., 24 SCRA 873 [1968]). Inasmuch as petitioner received pay
during his preventive suspension, the same must also be deducted from the
monetary awards to be received by him.

But while Clarete may be guilty of violation of company rules, we find the
penalty of dismissal imposed upon him by respondent Caltex too harsh and
unreasonable. As enunciated in Radio Communications of the Philippines,
Inc. v. National Labor Relations Commission, supra, "such a penalty (of
dismissal) must be commensurate with the act, conduct or omission imputed
to the employee and imposed in connection with the employer's disciplinary
authority" (at p. 667). Even when there exist some rules agreed upon
between the employer and employee on the subject of dismissal, we have
ruled in Gelmart Industries Phils., Inc. v. National Labor Relations
Commission, 176 SCRA 295 (1989), that the same cannot preclude the
State from inquiring on whether its rigid application would work too harshly
on the employee.
Of the same mind is the Solicitor General who, invoking Gelmart Industries,
prayed in his Manifestation, in lieu of Comment, that the assailed decision
of NLRC be set aside and reinstatement of petitioner Clarete be ordered.
WHEREFORE, the Resolution of National Labor Relations Commission dated
August 30, 1991 is REVERSED and SET ASIDE. Respondent Caltex Phil., Inc.
is ORDERED to reinstate petitioner Clarete to his former position of Mechanic
B without loss of seniority rights and to pay him his full back wages inclusive
of allowances, and other benefits or their monetary equivalent pursuant to
Art. 279 of the Labor Code, as amended by Section 34 of R.A. No. 6715,
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement deducting therefrom the amount received
by petitioner during his preventive suspension and any income earned
elsewhere during the period of dismissal if any. No pronouncement as to
costs.
SO ORDERED.

Indeed, considering that Clarete has no previous record in his eight years of
service; that the value of the lighter fluid, placed at P8.00, is very minimal
compared to his salary of P325.00 a day; that after his dismissal, he has
undergone mental torture; that respondent Caltex did not lose anything as
the bottle of lighter fluid was retrieved on time; and that there was no
showing that Clarete's retention in the service would work undue prejudice
to the viability of employer's operations or is patently inimical to its interest,
we hold that the penalty of dismissal imposed on Clarete is unduly harsh
and grossly disproportionate to the reason for terminating his employment.
Hence, we find that the preventive suspension imposed upon private
respondent is a sufficient penalty for the misdemeanor committed by
petitioner. (Gelmart Industries Phils., Inc. v. National Labor Relations
Commission, supra).

Since the dismissal took place on August 24, 1990, or after the passage of
R.A. No. 6715, Clarete is entitled to reinstatement without loss of seniority
rights and other privileges and his full back wages inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement. (Maranaw Hotels and Resorts Corporation v. Court of
Appeals, 215 SCRA 501 [1992]). As in the case of Pines City v. National
Labor Relations Commission, 224 SCRA 110 (1993) and Pines City
Firestone Tire and Rubber vs Lariosa
G.R. No. 70479 February 27, 1987
FIRESTONE TIRE AND RUBBER COMPANY OF THE PHILIPPINES,
petitioner,
vs.
CARLOS LARIOSA and NATIONAL LABOR RELATIONS COMMISSION,
respondents.
FERNAN, J:
In this petition for certiorari, petitioner Firestone Tire and Rubber Company
of the Philippines [Firestone for brevity] assails the decision of public
respondent National Labor Relations Commission which ordered the
reinstatement without backwages of Carlos Lariosa, a dismissed tire builder
of petitioner, as having been rendered with grave abuse of discretion
amounting to lack of jurisdiction.
The facts are as follows:
Carlos Lariosa started working with Firestone on January 3, 1972 as a
factory worker. At the time of his dismissal, he was a tire builder.
At around 2:00 o'clock in the afternoon of July 27, 1983, as he was about
to leave the company premises Lariosa submitted himself to a routine check
by the security guards at the west gate. He was frisked by Security Guard
Ambrosio Liso [Lizo] while his personal bag was inspected by Security Guard
Virgilio Olvez. In the course of the inspection, sixteen [16] wool flannel
swabs, all belonging to the company, were found inside his bag, tucked
underneath his soiled clothes.
As a result of the incident, Firestone terminated Lariosa's services on August
2, 1983, citing as grounds therefor: "stealing company property and loss of
trust." 1 Firestone also filed a criminal complaint against him with the Rizal
provincial fiscal for attempted theft [IS No. 83-436-M]. 2
Lariosa, on the other hand, sued Firestone before the Ministry of Labor and
Employment for illegal dismissal, violation of Batas Pambansa Blg. 130 and
its related rules and regulations, and damages. The Labor Arbiter, in his
decision dated May 8, 1984, found Lariosa's dismissal justified. 3 However,
on appeal, the National Labor Relations Commission on December 28, 1984
reversed the decision of the Labor Arbiter [with one commissioner voting for
affirmance] and held that the dismissal of Lariosa was too severe a penalty.
It therefore ordered Lariosa's reinstatement but without backwages, the
period when he was out of work to be considered a suspension. 4
Petitioner Firestone, in this special civil action for certiorari, contends that
the NLRC erred in not dismissing Lariosa's appeal for being late, in finding
that Lariosa was not accorded due process and in reversing the Labor
Arbiter.
We shall deal first with the timeliness of the appeal. It is admitted that
Lariosa filed his appeal on June 7, 1984 or after the lapse of fourteen days
from notice of the decision of the Labor Arbiter. Article 223 of the Labor
Code clearly provides for a reglementary period of ten days within which to
appeal decision of the Labor Arbiter to the NLRC. The ten-day period has
been interpreted by this Court in the case of Vir-jen Shipping and Marine
Services, Inc. vs. NLRC, G.R. No. 58011-12, July 20, 1982, 115 SCRA 347,
361, to mean ten "calendar" days and not ten "working" days. However, the
"Notice of Decision" which Lariosa's lawyer received together with a copy of
the arbiter's decision advised them that an appeal could be taken to the
NLRC within ten "working" days from receipt of the said decision. 5
Mindful of the fact that Lariosa's counsel must have been misled by the
implementing rules of the labor commission and considering that the
shortened period for appeal is principally intended more for the employees'
benefit, rather than that of the employer, We are inclined to overlook this
particular procedural lapse and to proceed with the resolution of the instant
case.
A review of the record shows that Lariosa was indubitably involved in the
attempted theft of the flannel swabs. During the investigation called by the
company's industrial relations manager Ms. Villavicencio on July 28, 1983,
or one day after the incident, Security Guards Liso and Olvez contradicted
Lariosa's bare claim that he had no intention to bring home the swabs and
that he had simply overlooked that he had earlier placed them inside his
bag after they were given to him by his shift supervisor while he was busy
at work. Guard Olvez stated that when he confronted Lariosa with the
swabs, the latter replied that they were for "home use." And when he
requested Lariosa to stay behind while he reported the matter to the
authorities, Lariosa refused and hurriedly left the premises and boarded a
passing jeepney. 6
From the records, it is likewise clear that Firestone did not act arbitrarily in
terminating Lariosa's services. On the contrary, there are transcripts to
prove that an investigation of the incident was promptly conducted in the
presence of the employee concerned, the union president and the security
guards who witnessed the attempted asportation. Records also belie the
allegation that Lariosa was shown his walking papers on the very day of the
incident. The letter of Ms. Villavicencio to Lariosa dated August 1, 1983
informing the latter of his dismissal effective August 2, 1983 conclusively
shows that he was discharged only on August 2, 1983, after an investigation
was held to ventilate the truth about the July 27 incident. 7 Thus, we cannot
agree with the NLRC's conclusion that even if Firestone had found
substantial proof of Lariosa's misconduct, it did not observe the statutory
requirements of due process.

There is no gainsaying that theft committed by an employee constitutes a

valid reason for his dismissal by the employer. Although as a rule this Court
leans over backwards to help workers and employees continue with their
employment or to mitigate the penalties imposed on them, acts of
dishonesty in the handling of company property are a different matter. 8

Thus, under Article 283 of the Labor Code, an employer may terminate an
employment for "serious misconduct" or for "fraud or willful breach by the
employee of the trust reposed in him by his employer or representative."

If there is sufficient evidence that an employee has been guilty of a breach

of trust or that his employer has ample reasons to distrust him, the labor
tribunal cannot justly deny to the employer the authority to dismiss such an
employee. 9

As a tire builder, Lariosa was entrusted with certain materials for use in his
job. On the day in question, he was given two bundles of wool flannel swabs
[ten pieces per bundle] for cleaning disks. He used four swabs from one
pack and kept the rest [sixteen pieces] in his "blue travelling bag." 10 Why
he placed the swabs in his personal bag, which is not the usual receptacle
for company property, has not been satisfactorily explained.

If Lariosa, by his own wrong-doing, could no longer be trusted, it would be

an act of oppression to compel the company to retain him, fully aware that
such an employee could, in the long run, endanger its very viability.

The employer's obligation to give his workers just compensation and

treatment carries with it the corollary right to expect from the workers
adequate work, diligence and good conduct. 11

In view of the foregoing, We rule that Firestone had valid grounds to

dispense with the services of Lariosa and that the NLRC acted with grave
abuse of discretion in ordering his reinstatement. However, considering that
Lariosa had worked with the company for eleven years with no known
previous bad record, the ends of social and compassionate justice would be
served if he is paid full separation pay but not reinstatement without
backages as decreed by the NLRC. 12

WHEREFORE, the petition is granted. The decision of the National Labor

Relations Commission dated December 28, 1984 is reversed and set aside.
Petitioner Firestone Tire and Rubber Company of the Philippines is directed
to pay its dismissed worker Carlos Lariosa the separation pay to which he
may be entitled under the law, or any collective bargaining agreement or
company rules or practice, whichever is higher.

SO ORDERED.
Farrol vs CA
[G.R. No. 133259. February 10, 2000]
WENIFREDO FARROL, petitioner, vs. The HONORABLE COURT OF
APPEALS and RADIO COMUNICATIONS of the PHILIPPINES INC.
(RCPI), respondents.
DECISION
YNARES_SANTIAGO, J.:
Petitioner Wenifredo Farrol was employed as station cashier at respondent
RCPIs Cotabato City station. On June 18, 1993, respondent RCPIs district
manager in Cotabato City informed their main office that "Peragram
funds"[1] from said branch were used for the payment of retirement benefits
of five employees. On October 1, 1993, petitioner verified as correct RCPIs
Field Auditors report that there was a shortage of P50,985.37 in their
branchs Peragram, Petty and General Cash Funds. Consequently, petitioner
was required by the Field Auditor to explain the cash shortage within 24
hours from notice.[2] The next day, petitioner paid to RCPI P25,000.00 of
the cash shortage.
On October 16, 1993, RCPI required petitioner to explain why he should not
be dismissed from employment.[3] Two days thereafter, petitioner wrote a
letter to the Field Auditor stating that the missing funds were used for the
payment of the retirement benefits earlier referred to by the branch
manager and that he had already paid P25,000.00 to RCPI. After making
two more payments of the cash shortage to RCPI, petitioner was informed
by the district manager that he is being placed under preventive
suspension.[4] Thereafter, he again paid two more sums on different dates
to RCPI leaving a balance of P6,995.37 of the shortage.
Respondent RCPI claims that it sent a letter to petitioner on November 22,
1993 informing him of the termination of his services as of November 20,
1993 due to the following reasons:
"a) Your allegation that part of your cash shortages was used for payment
of salaries/wages and retirement benefits is not true because these have
been accounted previously per auditors report;
"b) As Station Cashier you must be aware of our company Circular No. 63
which strictly requires the daily and up-to-date preparation of Statistical
Report and depositing of cash collections twice a day. But these procedures
- more particularly on depositing of cash collections twice a day - was
completely disregarded by you;
"c) Deliberate withholding of collections to hide shortages/malversation or
misappropriation in any form, as emphasized under Section No. 20 of our
Rules and Regulations, is penalized by immediate dismissal;
"d) The position of Station Cashier is one which requires utmost trust and
confidence.[5]
Unaware of the termination letter, petitioner requested that he be reinstated
considering that the period of his preventive suspension had expired.
Sometime in September 1995, petitioner manifested to RCPI his willingness
to settle his case provided he is given his retirement benefits. However,
RCPI informed petitioner that his employment had already been terminated
earlier as contained in the letter dated November 22, 1993. The conflict was
submitted to the grievance committee. Despite the lapse of more than two
years, the case remained unresolved before the grievance committee,
hence, it was submitted for voluntary arbitration.
After hearing, the Voluntary Arbitrator ruled that petitioner was illegally
dismissed from employment and ordered RCPI to pay him backwages,
separation pay, 13th month pay and sick leave benefits.[6] Aggrieved, RCPI
filed a petition for certiorari before the Court of Appeals (CA), which reversed
the ruling of the arbitrator and dismissed the complaint for illegal
dismissal.[7] Upon denial of petitioners motion for reconsideration by the
CA,[8] he filed the instant petition for review on certiorari on the grounds
that his dismissal was illegal because he was not afforded due process and
that he "cannot be held liable for the loss of trust and confidence reposed in
him" by RCPI.[9]
The Court is called upon to resolve the validity of petitioners dismissal. In
cases involving the illegal termination of employment, it is fundamental that
the employer must observe the mandate of the Labor Code, i.e., the
employer has the burden of proving that the dismissal is for a cause
provided by the law[10] and that it afforded the employee an opportunity
to be heard and to defend himself.[11]
Anent the procedural requirement, Book V, Rule XIV, of the Omnibus Rules
Implementing the Labor Code existing at the time petitioner was discharged
from work, outlines the procedure for termination of employment, to wit:
"Sec. 1. Security of tenure and due process. - No worker shall be dismissed
except for a just or authorized cause provided by law and after due process.
"Sec. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker
shall furnish him a written notice stating the particular acts or omissions
constituting the grounds for his dismissal. In cases of abandonment of work,
the notice shall be served at the workers last known address.
xxxxxxxxx

"Sec. 5. Answer and hearing. - The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period from
receipt of such notice. The employer shall afford the worker ample
opportunity to be heard and to defend himself with the assistance of his
representatives, if he so desires.
"Sec. 6. Decision to dismiss. - The employer shall immediately notify a
worker in writing of a decision to dismiss him stating clearly the reasons
therefor.
"Sec. 7. Right to contest dismissal. - Any decision taken by the employer
shall be without prejudice to the right of the worker to contest the validity
or legality of his dismissal by filing a complaint with the Regional Branch of
the Commission.
xxxxxxxxx
"Sec. 11. Report on dismissal. - The employer shall submit a monthly report
to the Regional Office having jurisdiction over the place of work all dismissals
effected by him during the month, specifying therein the names of the
dismissed workers, the reasons for their dismissal, the dates of
commencement and termination of employment, the positions last held by
them and such other information as may be required by the Ministry
(Department) for policy guidance and statistical purposes." (Underscoring
supplied).
As set forth in the foregoing procedures, the employer must comply with
the twin requirements of two notices and hearing.[12] The first notice is that
which apprises the employee of the particular acts or omissions for which
his dismissal is sought, and after affording the employee an opportunity to
be heard, a subsequent notice informing the latter of the employers decision
to dismiss him from work.[13]
As regards the first notice, RCPI simply required petitioner to "explain in
writing why he failed to account" for the shortage and demanded that he
restitute the same.[14] On the assumption that the foregoing statement
satisfies the first notice, the second notice sent by RCPI to petitioner does
not "clearly" cite the reasons for the dismissal, contrary to the requirements
set by the above-quoted Section 6 of Book V, Rule XIV of the Omnibus Rules.
A perusal of RCPIs dismissal notice reveals that it merely stated a conclusion
to the effect that the withholding was deliberately done to hide alleged
malversation or misappropriation without, however, stating the facts and
circumstances in support thereof. It further mentioned that the position of
cashier requires utmost trust and confidence but failed to allege the breach
of trust on the part of petitioner and how the alleged breach was committed.
On the assumption that there was indeed a breach, there is no evidence
that petitioner was a managerial employee of respondent RCPI. It should be
noted that the term "trust and confidence" is restricted to managerial
employees.[15] It may not even be presumed that when there is a shortage,
there is also a corresponding breach of trust. Cash shortages in a cashiers
work may happen, and when there is no proof that the same was
deliberately done for a fraudulent or wrongful purpose, it cannot constitute
breach of trust so as to render the dismissal from work invalid.
Assuming further that there was breach of trust and confidence, it appears
that this is the first infraction committed by petitioner. Although the
employer has the prerogative to discipline or dismiss its employee, such
prerogative cannot be exercised wantonly, but must be controlled by
substantive due process and tempered by the fundamental policy of
protection to labor enshrined in the Constitution.[16] Infractions committed
by an employee should merit only the corresponding sanction demanded by
the circumstances. The penalty must be commensurate with the act,
conduct or omission imputed to the employee[17] and imposed in
connection with the employers disciplinary authority.
RCPI alleged that under its rules, petitioners infraction is punishable by
dismissal. However, employers rules cannot preclude the State from
inquiring whether the strict and rigid application or interpretation thereof
would be harsh to the employee. Petitioner has no previous record in his
twenty-four long years of service - this would have been his first offense.
The Court thus holds that the dismissal imposed on petitioner is unduly
harsh and grossly disproportionate to the infraction which led to the
termination of his services. A lighter penalty would have been more just, if
not humane. In any case, petitioner paid back the cash shortage in his
accounts. Considering, however, that the latter is about to retire or may
have retired from work, it would no longer be practical to order his
reinstatement.
Accordingly, in lieu of reinstatement, the award of separation pay computed
at one-month salary for every year of service, with a fraction of at least six
(6) months considered as one whole year, is proper.[18] In the computation
of separation pay, the period wherein backwages are awarded must be
included.[19]
WHEREFORE, in view of the foregoing, the assailed decision of the Court of
Appeals is REVERSED and SET ASIDE and new one entered REINSTATING
the decision of the Voluntary Arbitrator subject to the MODIFICATION that
petitioners separation pay be recomputed to include the period within which
backwages are due. For this purpose, this case is REMANDED to the
Voluntary Arbitrator for proper computation of backwages, separation pay,
13th month pay, sick leave conversion and vacation leave conversion.
SO ORDERED.
PAL vs NLRC
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ISABEL P. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of
whether or not the formulation of a Code of Discipline among employees is
a shared responsibility of the employer and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its
1966 Code of Discipline. The Code was circulated among the employees and
was immediately implemented, and some employees were forthwith
subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association
(PALEA) filed a complaint before the National Labor Relations Commission
(NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the
following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by Management"
(Rollo, p. 41). In its position paper, PALEA contended that PAL, by its
unilateral implementation of the Code, was guilty of unfair labor practice,
specifically Paragraphs E and G of Article 249 and Article 253 of the Labor
Code. PALEA alleged that copies of the Code had been circulated in limited
numbers; that being penal in nature the Code must conform with the
requirements of sufficient publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss
the substance of the Code with PALEA; that employees dismissed under the
Code be reinstated and their cases subjected to further hearing; and that
PAL be declared guilty of unfair labor practice and be ordered to pay
damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an
employer to prescibe rules and regulations regarding employess' conduct in
carrying out their duties and functions, and alleging that by implementing
the Code, it had not violated the collective bargaining agreement (CBA) or
any provision of the Labor Code. Assailing the complaint as unsupported by
evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA
reffered to the requirements for negotiating a CBA which was inapplicable
as indeed the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E)
of the Labor Code was violated when PAL unilaterally implemented the Code,
and cited provisions of Articles IV and I of Chapter II of the Code as defective
for, respectively, running counter to the construction of penal laws and
making punishable any offense within PAL's contemplation. These provisions
are the following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the
rules and regulations of the company. Every employee is bound to comply
with all applicable rules, regulations, policies, procedures and standards,
including standards of quality, productivity and behaviour, as issued and
promulgated by the company through its duly authorized officials. Any
violations thereof shall be punishable with a penalty to be determined by
the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall be
cumulative. The penalty for an offense shall be determined on the basis of
his past record of offenses of any nature or the absence thereof. The more
habitual an offender has been, the greater shall be the penalty for the latest
offense. Thus, an employee may be dismissed if the number of his past
offenses warrants such penalty in the judgment of management even if each
offense considered separately may not warrant dismissal. Habitual offenders
or recidivists have no place in PAL. On the other hand, due regard shall be
given to the length of time between commission of individual offenses to
determine whether the employee's conduct may indicate occasional lapses
(which may nevertheless require sterner disciplinary action) or a pattern of
incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a
conference but they failed to appear at the scheduled date. Interpreting
such failure as a waiver of the parties' right to present evidence, the labor
arbiter considered the case submitted for decision. On November 7, 1986,
a decision was rendered finding no bad faith on the part of PAL in adopting
the Code and ruling that no unfair labor practice had been committed.
However, the arbiter held that PAL was "not totally fault free" considering
that while the issuance of rules and regulations governing the conduct of
employees is a "legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness, propriety and fairness."
She found Section 1 of the Code aforequoted as "an all embracing and all
encompassing provision that makes punishable any offense one can think of
in the company"; while Section 7, likewise quoted above, is "objectionable
for it violates the rule against double jeopardy thereby ushering in two or
more punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was
amply circulated." Noting that PAL's assertion that it had furnished all its
employees copies of the Code is unsupported by documentary evidence, she
stated that such "failure" on the part of PAL resulted in the imposition of
penalties on employees who thought all the while that the 1966 Code was
still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance
of the law excuses no one from compliance . . . finds application only after
it has been conclusively shown that the law was circulated to all the parties
concerned and efforts to disseminate information regarding the new law
have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as
follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New
Code of Discipline and remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the
body of the decision.
All other claims of the complainant union (is) [are] hereby, dismissed for
lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through
Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez and
Commissioner Maglaya concurring, found no evidence of unfair labor
practice committed by PAL and affirmed the dismissal of PALEA's charge.
Nonetheless, the NLRC made the following observations:
Indeed, failure of management to discuss the provisions of a contemplated
code of discipline which shall govern the conduct of its employees would
result in the erosion and deterioration of an otherwise harmonious and
smooth relationship between them as did happen in the instant case. There
is no dispute that adoption of rules of conduct or discipline is a prerogative
of management and is imperative and essential if an industry, has to survive
in a competitive world. But labor climate has progressed, too. In the
Philippine scene, at no time in our contemporary history is the need for a
cooperative, supportive and smooth relationship between labor and
management more keenly felt if we are to survive economically.
Management can no longer exclude labor in the deliberation and adoption
of rules and regulations that will affect them.
The complainant union in this case has the right to feel isolated in the
adoption of the New Code of Discipline. The Code of Discipline involves
security of tenure and loss of employment — a property right! It is time that
management realizes that to attain effectiveness in its conduct rules, there
should be candidness and openness by Management and participation by
the union, representing its members. In fact, our Constitution has
recognized the principle of "shared responsibility" between employers and
workers and has likewise recognized the right of workers to participate in
"policy and decision-making process affecting their rights . . ." The latter
provision was interpreted by the Constitutional Commissioners to mean
participation in "management"' (Record of the Constitutional Commission,
Vol. II).
In a sense, participation by the union in the adoption of the code if conduct
could have accelerated and enhanced their feelings of belonging and would
have resulted in cooperation rather than resistance to the Code. In fact,
labor-management cooperation is now "the thing." (pp. 3-4, NLRC Decision
ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the
sense that the New Code of Discipline should be reviewed and discussed
with complainant union, particularly the disputed provisions [.] (T)hereafter,
respondent is directed to furnish each employee with a copy of the appealed
Code of Discipline. The pending cases adverted to in the appealed decision
if still in the arbitral level, should be reconsidered by the respondent
Philippine Air Lines. Other dispositions of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents
with grave abuse of discretion in: (a) directing PAL "to share its
management prerogative of formulating a Code of Discipline"; (b) engaging
in quasi-judicial legislation in ordering PAL to share said prerogative with
the union; (c) deciding beyond the issue of unfair labor practice, and (d)
requiring PAL to reconsider pending cases still in the arbitral level (p. 7,
Petition; p. 8, Rollo.)
As stated above, the Principal issue submitted for resolution in the instant
petition is whether management may be compelled to share with the union
or its employees its prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no
law which mandated the sharing of responsibility therefor between employer
and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No.
6715, amending Article 211 of the Labor Code, that the law explicitly
considered it a State policy "(t)o ensure the participation of workers in
decision and policy-making processes affecting the rights, duties and
welfare." However, even in the absence of said clear provision of law, the
exercise of management prerogatives was never considered boundless.
Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that
management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25
[1989]), we upheld the company's right to implement a new system of
distributing its products, but gave the following caveat:
So long as a company's management prerogatives are exercised in good
faith for the advancement of the employer's interest and not for the purpose
of defeating or circumventing the rights of the employees under special laws
or under valid agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives
is not unlimited. It is circumscribed by limitations found in law, a collective
bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as
enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it
must be duly established that the prerogative being invoked is clearly a
managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they
are not purely business-oriented nor do they concern the management
aspect of the business of the company as in the San Miguel case. The
provisions of the Code clearly have repercusions on the employee's right to
security of tenure. The implementation of the provisions may result in the
deprivation of an employee's means of livelihood which, as correctly pointed
out by the NLRC, is a property right (Callanta, vs Carnation Philippines, Inc.,
145 SCRA 268 [1986]). In view of these aspects of the case which border
on infringement of constitutional rights, we must uphold the constitutional
requirements for the protection of labor and the promotion of social justice,
for these factors, according to Justice Isagani Cruz, tilt "the scales of justice
when there is doubt, in favor of the worker" (Employees Association of the
Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628
[1991] 635).
Verily, a line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the
employees. In treating the latter, management should see to it that its
employees are at least properly informed of its decisions or modes action.
PAL asserts that all its employees have been furnished copies of the Code.
Public respondents found to the contrary, which finding, to say the least is
entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining
agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive
right to make and enforce company rules and regulations to carry out the
functions of management without having to discuss the same with PALEA
and much less, obtain the latter's conformity thereto" (pp. 11-12,
Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on
the following provision of the agreement:
The Association recognizes the right of the Company to determine matters
of management it policy and Company operations and to direct its
manpower. Management of the Company includes the right to organize,
plan, direct and control operations, to hire, assign employees to work,
transfer employees from one department, to another, to promote, demote,
discipline, suspend or discharge employees for just cause; to lay-off
employees for valid and legal causes, to introduce new or improved methods
or facilities or to change existing methods or facilities and the right to make
and enforce Company rules and regulations to carry out the functions of
management.
The exercise by management of its prerogative shall be done in a just
reasonable, humane and/or lawful manner.
Such provision in the collective bargaining agreement may not be
interpreted as cession of employees' rights to participate in the deliberation
of matters which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of
discipline.
Indeed, industrial peace cannot be achieved if the employees are denied
their just participation in the discussion of matters affecting their rights.
Thus, even before Article 211 of the labor Code (P.D. 442) was amended by
Republic Act No. 6715, it was already declared a policy of the State, "(d) To
promote the enlightenment of workers concerning their rights and
obligations . . . as employees." This was, of course, amplified by Republic
Act No 6715 when it decreed the "participation of workers in decision and
policy making processes affecting their rights, duties and welfare." PAL's
position that it cannot be saddled with the "obligation" of sharing
management prerogatives as during the formulation of the Code, Republic
Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44;
Rollo, p. 212), cannot thus be sustained. While such "obligation" was not
yet founded in law when the Code was formulated, the attainment of a
harmonious labor-management relationship and the then already existing
state policy of enlightening workers concerning their rights as employees
demand no less than the observance of transparency in managerial moves
affecting employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of
Discipline considering the nature of its business cannot be overemphasized.
In fact, its being a local monopoly in the business demands the most
stringent of measures to attain safe travel for its patrons. Nonetheless,
whatever disciplinary measures are adopted cannot be properly
implemented in the absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are restive on account, of
their being left out in the determination of cardinal and fundamental matters
affecting their employment.

WHEREFORE, the petition is DISMISSED and the questioned decision

AFFIRMED. No special pronouncement is made as to costs.

SO ORDERED.
Star Paper Corp vs Simbol
Petitioner Star Paper Corporation (the company) is a corporation engaged
in trading principally of paper products. Josephine Ongsitco is its Manager
of the Personnel and Administration Department while Sebastian Chua is its
Star paper corporation, G.R. No. 164774 Managing Director.

JOSEPHINE ONGSITCO & The evidence for the petitioners show that respondents Ronaldo D. Simbol
(Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were
SEBASTIAN CHUA, all regular employees of the company.[1]

Petitioners, Present: Simbol was employed by the company on October 27, 1993. He met Alma
Dayrit, also an employee of the company, whom he married on June 27,
1998. Prior to the marriage, Ongsitco advised the couple that should they
decide to get married, one of them should resign pursuant to a company
PUNO, J., Chairman, policy promulgated in 1995,[2] viz.:

SANDOVAL-GUTIERREZ, 1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of relationship, already employed by the
CORONA, AZCUNA, and company

-versus- GARCIA, JJ.

2. In case of two of our employees (both singles [sic], one male
and another female) developed a friendly relationship during the course of
their employment and then decided to get married, one of them should
Promulgated: resign to preserve the policy stated above.[3]

RONALDO D. SIMBOL, April 12, 2006

WILFREDA N. COMIA & Simbol resigned on June 20, 1998 pursuant to the company policy.[4]

LORNA E. ESTRELLA, Comia was hired by the company on February 5, 1997. She met Howard
Comia, a co-employee, whom she married on June 1, 2000. Ongsitco
Respondents. likewise reminded them that pursuant to company policy, one must resign
should they decide to get married. Comia resigned on June 30, 2000.[5]
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a
DECISION co-worker. Petitioners stated that Zuiga, a married man, got Estrella
pregnant. The company allegedly could have terminated her services due to
PUNO, J.: immorality but she opted to resign on December 21, 1999.[6]

We are called to decide an issue of first impression: whether the policy of The respondents each signed a Release and Confirmation Agreement. They
the employer banning spouses from working in the same company violates stated therein that they have no money and property accountabilities in the
the rights of the employee under the Constitution and the Labor Code or is company and that they release the latter of any claim or demand of
a valid exercise of management prerogative. whatever nature.[7]

At bar is a Petition for Review on Certiorari of the Decision of the Court of

Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the Respondents offer a different version of their dismissal. Simbol and Comia
decision of the National Labor Relations Commission (NLRC) which affirmed allege that they did not resign voluntarily; they were compelled to resign in
the ruling of the Labor Arbiter. view of an illegal company policy. As to respondent Estrella, she alleges that
she had a relationship with co-worker Zuiga who misrepresented himself as
a married but separated man. After he got her pregnant, she discovered
that he was not separated. Thus, she severed her relationship with him to
avoid dismissal due to the company policy. On November 30, 1999, she met
an accident and was advised by the doctor at the Orthopedic Hospital to
recuperate for twenty-one (21) days. She returned to work on December
21, 1999 but she found out that her name was on-hold at the gate. She was
denied entry. She was directed to proceed to the personnel office where one
of the staff handed her a memorandum. The memorandum stated that she
was being dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21) days and has
not been given a chance to explain. The management asked her to write an
explanation. However, after submission of the explanation, she was
nonetheless dismissed by the company. Due to her urgent need for money,
she later submitted a letter of resignation in exchange for her thirteenth
month pay.[8]
Respondents later filed a complaint for unfair labor practice, constructive
dismissal, separation pay and attorneys fees. They averred that the
aforementioned company policy is illegal and contravenes Article 136 of the
Labor Code. They also contended that they were dismissed due to their
union membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the
complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. This management
prerogative is quite broad and encompassing for it covers hiring, work
assignment, working method, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. Except as provided for or limited
by special law, an employer is free to regulate, according to his own
discretion and judgment all the aspects of employment.[9] (Citations
omitted.)
On appeal to the NLRC, the Commission affirmed the decision of the Labor
Arbiter on January 11, 2002. [10]
Respondents filed a Motion for Reconsideration but was denied by the NLRC
in a Resolution[11] dated August 8, 2002. They appealed to respondent
court via Petition for Certiorari.
In its assailed Decision dated August 3, 2004, the Court of Appeals reversed
the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 2002 (sic)[12] Decision of
the National Labor Relations Commission is hereby REVERSED and SET
ASIDE and a new one is entered as follows:
(1) Declaring illegal, the petitioners dismissal from employment and
ordering private respondents to reinstate petitioners to their former
positions without loss of seniority rights with full backwages from the time
of their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners attorneys fees
amounting to 10% of the award and the cost of this suit.[13]
On appeal to this Court, petitioners contend that the Court of Appeals erred
in holding that:
1. x x x the subject 1995 policy/regulation is violative of the constitutional
rights towards marriage and the family of employees and of Article 136 of
the Labor Code; and
2. x x x respondents resignations were far from voluntary.[14]
We affirm.
The 1987 Constitution[15] states our policy towards the protection of labor
under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.
xxx
Article XIII, Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely contractual.
They are so impressed with public interest that labor contracts must yield
to the common good. Therefore, such contracts are subject to the special
laws on labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living for the laborer.
The Labor Code is the most comprehensive piece of legislation protecting
labor. The case at bar involves Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall
not get married, or to stipulate expressly or tacitly that upon getting married
a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee
merely by reason of her marriage.
Respondents submit that their dismissal violates the above provision.
Petitioners allege that its policy may appear to be contrary to Article 136 of
the Labor Code but it assumes a new meaning if read together with the first
paragraph of the rule. The rule does not require the woman employee to
resign. The employee spouses have the right to choose who between them
should resign. Further, they are free to marry persons other than co-
employees. Hence, it is not the marital status of the employee, per se, that
is being discriminated. It is only intended to carry out its no-employment-
for-relatives-within-the-third-degree-policy which is within the ambit of the
prerogatives of management.[16]
It is true that the policy of petitioners prohibiting close relatives from
working in the same company takes the nature of an anti-nepotism
employment policy. Companies adopt these policies to prevent the hiring of
unqualified persons based on their status as a relative, rather than upon
their ability.[17] These policies focus upon the potential employment
problems arising from the perception of favoritism exhibited towards
relatives.
With more women entering the workforce, employers are also enacting
employment policies specifically prohibiting spouses from working for the
same company. We note that two types of employment policies involve
spouses: policies banning only spouses from working in the same company
(no-spouse employment policies), and those banning all immediate family
members, including spouses, from working in the same company (anti-
nepotism employment policies).[18]
Unlike in our jurisdiction where there is no express prohibition on marital
discrimination,[19] there are twenty state statutes[20] in the United States
prohibiting marital discrimination. Some state courts[21] have been
confronted with the issue of whether no-spouse policies violate their laws
prohibiting both marital status and sex discrimination.
In challenging the anti-nepotism employment policies in the United States,
complainants utilize two theories of employment discrimination: the
disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an
employee of a particular sex to either quit, transfer, or be fired are facially
discriminatory. For example, an employment policy prohibiting the employer
from hiring wives of male employees, but not husbands of female
employees, is discriminatory on its face.[22]
On the other hand, to establish disparate impact, the complainants must
prove that a facially neutral policy has a disproportionate effect on a
particular class. For example, although most employment policies do not
expressly indicate which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex.[23]
The state courts rulings on the issue depend on their interpretation of the
scope of marital status discrimination within the meaning of their respective
civil rights acts. Though they agree that the term marital status
encompasses discrimination based on a person's status as either married,
single, divorced, or widowed, they are divided on whether the term has a
broader meaning. Thus, their decisions vary.[24]
The courts narrowly[25] interpreting marital status to refer only to a
person's status as married, single, divorced, or widowed reason that if the
legislature intended a broader definition it would have either chosen
different language or specified its intent. They hold that the relevant inquiry
is if one is married rather than to whom one is married. They construe
marital status discrimination to include only whether a person is single,
married, divorced, or widowed and not the identity, occupation, and place
of employment of one's spouse. These courts have upheld the questioned
policies and ruled that they did not violate the marital status discrimination
provision of their respective state statutes.
The courts that have broadly[26] construed the term marital status rule that
it encompassed the identity, occupation and employment of one's spouse.
They strike down the no-spouse employment policies based on the broad
legislative intent of the state statute. They reason that the no-spouse
employment policy violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees without regard to
the actual effect on the individual's qualifications or work performance.[27]
These courts also find the no-spouse employment policy invalid for failure
of the employer to present any evidence of business necessity other than
the general perception that spouses in the same workplace might adversely
affect the business.[28] They hold that the absence of such a bona fide
occupational qualification[29] invalidates a rule denying employment to one
spouse due to the current employment of the other spouse in the same
office.[30] Thus, they rule that unless the employer can prove that the
reasonable demands of the business require a distinction based on marital
status and there is no better available or acceptable policy which would
better accomplish the business purpose, an employer may not discriminate
against an employee based on the identity of the employees spouse.[31]
This is known as the bona fide occupational qualification exception.
We note that since the finding of a bona fide occupational qualification
justifies an employers no-spouse rule, the exception is interpreted strictly
and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory
practice.[32] To justify a bona fide occupational qualification, the employer
must prove two factors: (1) that the employment qualification is reasonably
related to the essential operation of the job involved; and, (2) that there is
a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.[33]
The concept of a bona fide occupational qualification is not foreign in our
jurisdiction. We employ the standard of reasonableness of the company
policy which is parallel to the bona fide occupational qualification
requirement. In the recent case of Duncan Association of Detailman-PTGWO
and Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,[34] we passed on the
validity of the policy of a pharmaceutical company prohibiting its employees
from marrying employees of any competitor company. We held that Glaxo
has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from
competitors. We considered the prohibition against personal or marital
relationships with employees of competitor companies upon Glaxos
employees reasonable under the circumstances because relationships of
that nature might compromise the interests of Glaxo. In laying down the
assailed company policy, we recognized that Glaxo only aims to protect its
interests against the possibility that a competitor company will gain access
to its secrets and procedures.[35]
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was
also at issue in the 1997 case of Philippine Telegraph and Telephone
Company v. NLRC.[36] In said case, the employee was dismissed in
violation of petitioners policy of disqualifying from work any woman worker
who contracts marriage. We held that the company policy violates the right
against discrimination afforded all women workers under Article 136 of the
Labor Code, but established a permissible exception, viz.:
[A] requirement that a woman employee must remain unmarried could be
justified as a bona fide occupational qualification, or BFOQ, where the
particular requirements of the job would justify the same, but not on the
ground of a general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job
performance.[37] (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the existence of
a reasonable business necessity. The burden was successfully discharged in
Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar
Petitioners sole contention that the company did not just want to have two
(2) or more of its employees related between the third degree by affinity
and/or consanguinity[38] is lame. That the second paragraph was meant to
give teeth to the first paragraph of the questioned rule[39] is evidently not
the valid reasonable business necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after
they were found fit for the job, but were asked to resign when they married
a co-employee. Petitioners failed to show how the marriage of Simbol, then
a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither
did petitioners explain how this detriment will happen in the case of Wilfreda
Comia, then a Production Helper in the Selecting Department, who married
Howard Comia, then a helper in the cutter-machine. The policy is premised
on the mere fear that employees married to each other will be less efficient.
If we uphold the questioned rule without valid justification, the employer
can create policies based on an unproven presumption of a perceived danger
at the expense of an employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee
marries a co-employee, but they are free to marry persons other than co-
employees. The questioned policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate effect and under the disparate
impact theory, the only way it could pass judicial scrutiny is a showing that
it is reasonable despite the discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate business concern in imposing
the questioned policy cannot prejudice the employees right to be free from IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No.
arbitrary discrimination based upon stereotypes of married persons working 73477 dated August 3, 2004 is AFFIRMED.
together in one company.[40]

Lastly, the absence of a statute expressly prohibiting marital discrimination SO ORDERED.

in our jurisdiction cannot benefit the petitioners. The protection given to
labor in our jurisdiction is vast and extensive that we cannot prudently draw
inferences from the legislatures silence[41] that married persons are not
protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present undisputed
proof of a reasonable business necessity, we rule that the questioned policy
is an invalid exercise of management prerogative. Corollarily, the issue as
to whether respondents Simbol and Comia resigned voluntarily has become
moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling
on the singular fact that her resignation letter was written in her own
handwriting. Both ruled that her resignation was voluntary and thus valid.
The respondent court failed to categorically rule whether Estrella voluntarily
resigned but ordered that she be reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because
she was in dire need of money. We examined the records of the case and
find Estrellas contention to be more in accord with the evidence. While
findings of fact by administrative tribunals like the NLRC are generally given
not only respect but, at times, finality, this rule admits of exceptions,[42]
as in the case at bar.

Estrella avers that she went back to work on December 21, 1999 but was
dismissed due to her alleged immoral conduct. At first, she did not want to
sign the termination papers but she was forced to tender her resignation
letter in exchange for her thirteenth month pay.

The contention of petitioners that Estrella was pressured to resign because

she got impregnated by a married man and she could not stand being looked
upon or talked about as immoral[43] is incredulous. If she really wanted to
avoid embarrassment and humiliation, she would not have gone back to
work at all. Nor would she have filed a suit for illegal dismissal and pleaded
for reinstatement. We have held that in voluntary resignation, the employee
is compelled by personal reason(s) to dissociate himself from employment.
It is done with the intention of relinquishing an office, accompanied by the
act of abandonment. [44] Thus, it is illogical for Estrella to resign and then
file a complaint for illegal dismissal. Given the lack of sufficient evidence on
the part of petitioners that the resignation was voluntary, Estrellas dismissal
is declared illegal.
Duncan Association of Detailman vs Glaxo Wellcome Phil., Inc.
[G.R. No. 162994. September 17, 2004]
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC.
respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional
overtones, involving the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor
company.
This is a Petition for Review on Certiorari assailing the Decision[1] dated
May 19, 2003 and the Resolution dated March 26, 2004 of the Court of
Appeals in CA-G.R. SP No. 62434.[2]
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo
Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24,
1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees to study and abide by existing company rules;
to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug
companies and should management find that such relationship poses a
possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee
is expected to inform management of any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug
companies. If management perceives a conflict of interest or a potential
conflict between such relationship and the employees employment with the
company, the management and the employee will explore the possibility of
a transfer to another department in a non-counterchecking position or
preparation for employment outside the company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines
Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals[3] (Astra), a competitor of Glaxo. Bettsy
was Astras Branch Coordinator in Albay. She supervised the district
managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship with
Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy
gave rise to a conflict of interest. Tecsons superiors reminded him that he
and Bettsy should decide which one of them would resign from their jobs,
although they told him that they wanted to retain him as much as possible
because he was performing his job well.
Tecson requested for time to comply with the company policy against
entering into a relationship with an employee of a competitor company. He
explained that Astra, Bettsys employer, was planning to merge with Zeneca,
another drug company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsys separation from her company,
the potential conflict of interest would be eliminated. At the same time, they
would be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem.
In September 1999, Tecson applied for a transfer in Glaxos milk division,
thinking that since Astra did not have a milk division, the potential conflict
of interest would be eliminated. His application was denied in view of Glaxos
least-movement-possible policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao
City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its
decision, but his request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought
the matter to Glaxos Grievance Committee. Glaxo, however, remained firm
in its decision and gave Tescon until February 7, 2000 to comply with the
transfer order. Tecson defied the transfer order and continued acting as
medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his
salary, but was not issued samples of products which were competing with
similar products manufactured by Astra. He was also not included in product
conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered
Tecson a separation pay of one-half () month pay for every year of service,
or a total of P50,000.00 but he declined the offer. On November 15, 2000,
the National Conciliation and Mediation Board (NCMB) rendered its Decision
declaring as valid Glaxos policy on relationships between its employees and
persons employed with competitor companies, and affirming Glaxos right to
transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals
assailing the NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review on the ground that the NCMB did not err in rendering
its Decision. The appellate court held that Glaxos policy prohibiting its
employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives.[4]
Tecson filed a Motion for Reconsideration of the appellate courts Decision,
but the motion was denied by the appellate court in its Resolution dated
March 26, 2004.[5]
Petitioners filed the instant petition, arguing therein that (i) the Court of
Appeals erred in affirming the NCMBs finding that the Glaxos policy
prohibiting its employees from marrying an employee of a competitor
company is valid; and (ii) the Court of Appeals also erred in not finding that
Tecson was constructively dismissed when he was transferred to a new sales
territory, and deprived of the opportunity to attend products seminars and
training sessions.[6]
Petitioners contend that Glaxos policy against employees marrying
employees of competitor companies violates the equal protection clause of
the Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees
right to marry.[7]
They also argue that Tecson was constructively dismissed as shown by the
following circumstances: (1) he was transferred from the Camarines Sur-
Camarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2)
he suffered a diminution in pay, (3) he was excluded from attending
seminars and training sessions for medical representatives, and (4) he was
prohibited from promoting respondents products which were competing with
Astras products.[8]
In its Comment on the petition, Glaxo argues that the company policy
prohibiting its employees from having a relationship with and/or marrying
an employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that
Tecsons reassignment from the Camarines Norte-Camarines Sur sales area
to the Butuan City-Surigao City and Agusan del Sur sales area does not
amount to constructive dismissal.[9]
Glaxo insists that as a company engaged in the promotion and sale of
pharmaceutical products, it has a genuine interest in ensuring that its
employees avoid any activity, relationship or interest that may conflict with
their responsibilities to the company. Thus, it expects its employees to avoid
having personal or family interests in any competitor company which may
influence their actions and decisions and consequently deprive Glaxo of
legitimate profits. The policy is also aimed at preventing a competitor
company from gaining access to its secrets, procedures and policies.[10]
It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor
companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is
based on valid grounds.[11]
According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra,
posed a real and potential conflict of interest. Astras products were in direct
competition with 67% of the products sold by Glaxo. Hence, Glaxos
enforcement of the foregoing policy in Tecsons case was a valid exercise of
its management prerogatives.[12] In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but
to ask his wife to resign from Astra instead.[13]
Glaxo also points out that Tecson can no longer question the assailed
company policy because when he signed his contract of employment, he
was aware that such policy was stipulated therein. In said contract, he also
agreed to resign from respondent if the management finds that his
relationship with an employee of a competitor company would be
detrimental to the interests of Glaxo.[14]
Glaxo likewise insists that Tecsons reassignment to another sales area and
his exclusion from seminars regarding respondents new products did not
amount to constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from
the Camarines Sur-Camarines Norte sales area to the Butuan City-Surigao
City and Agusan del Sur sales area. Glaxo asserts that in effecting the
reassignment, it also considered the welfare of Tecsons family. Since
Tecsons hometown was in Agusan del Sur and his wife traces her roots to
Butuan City, Glaxo assumed that his transfer from the Bicol region to the
Butuan City sales area would be favorable to him and his family as he would
be relocating to a familiar territory and minimizing his travel expenses.[15]
In addition, Glaxo avers that Tecsons exclusion from the seminar concerning
the new anti-asthma drug was due to the fact that said product was in direct
competition with a drug which was soon to be sold by Astra, and hence,
would pose a potential conflict of interest for him. Lastly, the delay in
Tecsons receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was
delivered to his new sales area instead of Naga City because the supplier
thought he already transferred to Butuan).[16]
The Court is tasked to resolve the following issues: (1) Whether the Court
of Appeals erred in ruling that Glaxos policy against its employees marrying
employees from competitor companies is valid, and in not holding that said
policy violates the equal protection clause of the Constitution; (2) Whether
Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being
questioned by petitioners provides:
10. You agree to disclose to management any existing or future relationship
you may have, either by consanguinity or affinity with co-employees or
employees of competing drug companies. Should it pose a possible conflict
of interest in management discretion, you agree to resign voluntarily from
the Company as a matter of Company policy.
[17]
The same contract also stipulates that Tecson agrees to abide by the existing
company rules of Glaxo, and to study and become acquainted with such
policies.[18] In this regard, the Employee Handbook of Glaxo expressly
informs its employees of its rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest
that may run counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would
impair their effective job performance.
d. To consult with Management on such activities or relationships that may
lead to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or
affinity with co-employees of competing drug companies are expected to
disclose such relationship to the Management. If management perceives a
conflict or potential conflict of interest, every effort shall be made, together
by management and the employee, to arrive at a solution within six (6)
months, either by transfer to another department in a non-counter checking
position, or by career preparation toward outside employment after Glaxo
Wellcome. Employees must be prepared for possible resignation within six
(6) months, if no other solution is feasible.[19]
No reversible error can be ascribed to the Court of Appeals when it ruled
that Glaxos policy prohibiting an employee from having a relationship with
an employee of a competitor company is a valid exercise of management
prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo
only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth.[20] Indeed, while our laws
endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided
in favor of the workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair
play.[21]
As held in a Georgia, U.S.A case,[22] it is a legitimate business practice to
guard business confidentiality and protect a competitive position by even-
handedly disqualifying from jobs male and female applicants or employees
who are married to a competitor. Consequently, the court ruled than an
employer that discharged an employee who was married to an employee of
an active competitor did not violate Title VII of the Civil Rights Act of
1964.[23] The Court pointed out that the policy was applied to men and
women equally, and noted that the employers business was highly
competitive and that gaining inside information would constitute a
competitive advantage.
The challenged company policy does not violate the equal protection clause
of the Constitution as petitioners erroneously suggest. It is a settled
principle that the commands of the equal protection clause are addressed
only to the state or those acting under color of its authority.[24] Corollarily,
it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct,
however, discriminatory or wrongful.[25] The only exception occurs when
the state[26] in any of its manifestations or actions has been found to have
become entwined or involved in the wrongful private conduct.[27]
Obviously, however, the exception is not present in this case. Significantly,
the company actually enforced the policy after repeated requests to the
employee to comply with the policy. Indeed, the application of the policy
was made in an impartial and even-handed manner, with due regard for the
lot of the employee.
In any event, from the wordings of the contractual provision and the policy
in its employee handbook, it is clear that Glaxo does not impose an absolute
prohibition against relationships between its employees and those of
competitor companies. Its employees are free to cultivate relationships with
and marry persons of their own choosing. What the company merely seeks
to avoid is a conflict of interest between the employee and the company that
may arise out of such relationships. As succinctly explained by the appellate
court, thus:
The policy being questioned is not a policy against marriage. An employee
of the company remains free to marry anyone of his or her choosing. The
policy is not aimed at restricting a personal prerogative that belongs only to
the individual. However, an employees personal decision does not detract
the employer from exercising management prerogatives to ensure
maximum profit and business success. . . [28]
The Court of Appeals also correctly noted that the assailed company policy
which forms part of respondents Employee Code of Conduct and of its
contracts with its employees, such as that signed by Tecson, was made
known to him prior to his employment. Tecson, therefore, was aware of that
restriction when he signed his employment contract and when he entered
into a relationship with Bettsy. Since Tecson knowingly and voluntarily
entered into a contract of employment with Glaxo, the stipulations therein
have the force of law between them and, thus, should be complied with in
good faith.[29] He is therefore estopped from questioning said policy.
The Court finds no merit in petitioners contention that Tecson was
constructively dismissed when he was transferred from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del
Sur sales area, and when he was excluded from attending the companys
seminar on new products which were directly competing with similar
products manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when continued employment
becomes impossible, unreasonable, or unlikely; when there is a demotion in
rank or diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee.[30] None of
these conditions are present in the instant case. The record does not show
that Tecson was demoted or unduly discriminated upon by reason of such
transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales
area:
. . . In this case, petitioners transfer to another place of assignment was
merely in keeping with the policy of the company in avoidance of conflict of
interest, and thus validNote that [Tecsons] wife holds a sensitive
supervisory position as Branch Coordinator in her employer-company which
requires her to work in close coordination with District Managers and Medical
Representatives. Her duties include monitoring sales of Astra products,
conducting sales drives, establishing and furthering relationship with
customers, collection, monitoring and managing Astras inventoryshe
therefore takes an active participation in the market war characterized as it
is by stiff competition among pharmaceutical companies. Moreover, and this
is significant, petitioners sales territory covers Camarines Sur and
Camarines Norte while his wife is supervising a branch of her employer in
Albay. The proximity of their areas of responsibility, all in the same Bicol
Region, renders the conflict of interest not only possible, but actual, as
learning by one spouse of the others market strategies in the region would
be inevitable. [Managements] appreciation of a conflict of interest is
therefore not merely illusory and wanting in factual basis[31]
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations
Commission,[32] which involved a complaint filed by a medical
representative against his employer drug company for illegal dismissal for
allegedly terminating his employment when he refused to accept his
reassignment to a new area, the Court upheld the right of the drug company
to transfer or reassign its employee in accordance with its operational
demands and requirements. The ruling of the Court therein, quoted
hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical
representative is expected to travel. He should anticipate reassignment
according to the demands of their business. It would be a poor drug
corporation which cannot even assign its representatives or detail men to
new markets calling for opening or expansion or to areas where the need
for pushing its products is great. More so if such reassignments are part of
the employment contract.[33]
As noted earlier, the challenged policy has been implemented by Glaxo
impartially and disinterestedly for a long period of time. In the case at bar,
the record shows that Glaxo gave Tecson several chances to eliminate the
conflict of interest brought about by his relationship with Bettsy. When their
relationship was still in its initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his employment with the
company and on the companys interests. After Tecson married Bettsy, Glaxo
gave him time to resolve the conflict by either resigning from the company
or asking his wife to resign from Astra. Glaxo even expressed its desire to
retain Tecson in its employ because of his satisfactory performance and
suggested that he ask Bettsy to resign from her company instead. Glaxo
likewise acceded to his repeated requests for more time to resolve the
conflict of interest. When the problem could not be resolved after several
years of waiting, Glaxo was constrained to reassign Tecson to a sales area
different from that handled by his wife for Astra. Notably, the Court did not
terminate Tecson from employment but only reassigned him to another area
where his home province, Agusan del Sur, was included. In effecting
Tecsons transfer, Glaxo even considered the welfare of Tecsons family.
Clearly, the foregoing dispels any suspicion of unfairness and bad faith on
the part of Glaxo.[34]

WHEREFORE, the Petition is DENIED for lack of merit. Costs against

petitioners.

SO ORDERED.
Union of Nestle Workers CDO Factory vs Nestle Philippines
[G.R. No. 148303. October 17, 2002]
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY (UNWCF
for brevity), represented by its President YURI P. BERTULFO and
officers, namely, DEXTER E. AGUSTIN, DANTE S. SEAREZ, EDDIE P.
OGNIR, JEFFREY C. RELLIQUETE, ENRIQUITO B. BUAGAS, EDWIN P.
SALVAA, RAMIL B. MONSANTO, JERRY A. TABILIRAN, ARNOLD A.
TADLAS, REYQUE A. FACTURA, NAPOLEON S. GALERINA, JR.,
TOLENTINO T. MICABALO and EDDIE O. MACASOCOL, petitioners,
vs.
NESTLE PHILPPINES, INC., represented by its President JUAN B.
SANTOS, RUDY P. TRILLANES, Factory Manager, Cagayan de Oro City
Branch and FRANCIS L. LACSON, Cagayan de Oro City Human
Resources Manager, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] challenging the Decision of
the Court of Appeals dated December 28, 2000 and its Resolution dated
April 19, 2001 in CA GR-SP No. 56656, Union of Nestle Workers Cagayan de
Oro Factory, et al. vs. Nestle Philippines, Inc. et al.
On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted Policy No. HRM
1.8, otherwise known as the Drug Abuse Policy. Pursuant to this policy, the
management shall conduct simultaneous drug tests on all employees from
different factories and plants. Thus, on August 17, 1999, drug testing
commenced at the Lipa City factory, then followed by the other factories
and plants.
However, there was resistance to the policy in the Nestle Cagayan de Oro
factory. Out of 496 employees, only 141 or 28.43% submitted themselves
to drug testing. On August 20, 1999, the Union of Nestle Workers Cagayan
de Oro Factory and its officers, petitioners, wrote Nestle challenging the
implementation of the policy and branding it as a mere subterfuge to defeat
the employees constitutional rights. Nestle claimed that the policy is in
keeping with the governments thrust to eradicate the proliferation of drug
abuse, explaining that the company has the right: (a) to ensure that its
employees are of sound physical and mental health and (b) to terminate the
services of an employee who refuses to undergo the drug test.
On August 23, 1999, petitioners filed with the Regional Trial Court (RTC),
Branch 40, Cagayan de Oro City, a complaint for injunction with prayer for
the issuance of a temporary restraining order against Nestle, Rudy P.
Trillanes, Factory Manager of the Cagayan de Oro City Branch, and Francis
L. Lacson, Cagayan de Oro City Human Resources Manager (respondents
herein), docketed as Civil Case No. 99-471.
On August 24, 1999, the RTC issued a temporary restraining order enjoining
respondents from proceeding with the drug test. Forthwith, they filed a
motion to dismiss the complaint on the ground that the RTC has no
jurisdiction over the case as it involves a labor dispute or enforcement of a
company personnel policy cognizable by the Voluntary Arbitrator or Panel of
Voluntary Arbitrators. Petitioners filed their opposition, contending that the
RTC has jurisdiction since the complaint raises purely constitutional and
legal issues.
On September 8, 1999, the RTC dismissed the complaint for lack of
jurisdiction, thus:
This Court originally is of the honest belief that the issue involved in the
instant case is more constitutional than labor. It was convinced that the
dispute involves violation of employees constitutional rights to self-
incrimination, due process and security of tenure. Hence, the issuance of
the Temporary Restraining Order.
However, based on the pleadings and pronouncements of the parties, a close
scrutiny of the issues would actually reveal that the main issue boils down
to a labor dispute. The company implemented a new drug abuse policy
whereby all its employees should undergo a drug test under pain of penalty
for refusal. The employees who are the union members questioned the
implementation alleging that: can they be compelled to undergo the drug
test even against their will, which violates their right against self-
incrimination? At this point, the issue seems constitutional. But if we go
further and ask the reason for their refusal to undergo the drug test, the
answer is because the policy was formulated and implemented without
proper consultation with the union members. So that, the issue here boils
down to a labor dispute between an employer and employees.
xxxxxxxxx
Clearly, in the case at bar, the constitutional issue is closely related or
intertwined with the labor issue, so much so that this Court is inclined to
believe that it has no jurisdiction but the NLRC.[2]
Petitioners filed a motion for reconsideration but was denied, prompting
them to file with this Court a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure, as amended. They alleged that in dismissing their
complaint for lack of jurisdiction, the RTC gravely abused its discretion.
On November 24, 1999, this Court referred the petition to the Court of
Appeals for consideration and adjudication on the merits or any other action
as it may deem appropriate.

On December 28, 2000, the Appellate Court rendered its Decision[3]
dismissing the petition, thus:
Settled is the rule that the remedy against a final order is an appeal, and
not a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure. The party aggrieved does not have the option to substitute the
special civil action of certiorari under Rule 65 for the remedy of appeal. The
existence and availability of the right of appeal are antithetical to the
availment of the special civil action of certiorari. And while the special civil
action of certiorari may be resorted to even if the remedy of appeal is
available, it must be shown that the appeal is inadequate, slow, insufficient
and will not promptly relieve a party from the injurious effects of the order
complained of, or where the appeal is ineffective.
Inasmuch as only questions of law are raised by petitioners in assailing the
Order of respondent Judge dismissing their complaint for injunction, the
proper remedy, therefore, is appeal to the Supreme Court by petition for
review on certiorari in accordance with Rule 45 of the 1997 Rules of Civil
Procedure. Other than the bare, stereotyped allegation in the petition that
there is no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law available to the petitioner herein whose right has
been violated, petitioners have not justified their resort to Rule 65 of the
1997 Rules of Civil Procedure.
xxxxxxxxx
It is noteworthy that petitioners have not disputed the allegations in
paragraph 28 of private respondents Comment on the petition that drug
testing of the entire workforce of Nestle Cagayan de Oro factory, including
herein petitioners, submitted themselves to the drug test required by
management and was confirmed free from illegal drug abuse. In view
thereof, the instant petition, which prays for an injunction of the drug test
of the Nestle Cagayan de Oro factory workers, had become moot and
academic. The remedy of injunction could no longer be entertained because
the act sought to be prevented had been consummated.
Petitioners sought reconsideration but to no avail. Hence this petition for
review on certiorari.
Petitioners raise the following issues for our resolution:
I. Whether the Regional Trial Court has jurisdiction over petitioners suit for
injunction; and
II. Whether petitioners resort to certiorari under Rule 65 is in order.
On the first issue, we hold that petitioners insistence that the RTC has
jurisdiction over their complaint since it raises constitutional and legal issues
is sorely misplaced. The fact that the complaint was denominated as one for
injunction does not necessarily mean that the RTC has jurisdiction. Well-
settled is the rule that jurisdiction is determined by the allegations in the
complaint.[4]
The pertinent allegations of petitioners amended complaint read:
xxxxxxxxx
5. Plaintiffs are aggrieved employees of the Nestle Philippines, Inc. who are
subjected to the new policy of the management for compulsory Drug Test,
without their consent and approval;
xxxxxxxxx
8. That the said policy was implemented last August 1, 1999, and the Union
was only informed last August 20, 1999, during a meeting held on that day,
that all employees who are assigned at the CDO Factory will be compulsorily
compelled to undergo drug test, whether they like it or not, without even
informing the Union on this new policy adopted by the Management and no
guidelines was set pertaining to this drug test policy.
9. That there was no consultation made by the management or even
consultation from the employees of this particular policy, as the nature of
the policy is punitive in character, as refusal to submit yourself to drug test
would mean suspension from work for four (4) to seven (7) days, for the
first refusal to undergo drug test and dismissal for second refusal to undergo
drug test, hence, they were not afforded due process x x x;
xxxxxxxxx
12. That it is not the question of whether or not the person will undergo the
drug test but it is the manner how the drug test policy is being implemented
by the management which is arbitrary in character.
xxxxxxxxx
16. That the exercise of management prerogative to implement the said
drug test, even against the will of the employees, is not absolute but subject
to the limitation imposed by law x x x;[5]
It is indubitable from the foregoing allegations that petitioners are not per
se questioning whether or not the person will undergo the drug test or the
constitutionality or legality of the Drug Abuse Policy. They are assailing the
manner by which respondents are implementing the policy. According to
them, it is arbitrary in character because: (1) the employees were not
consulted prior to its implementation; (2) the policy is punitive inasmuch as
an employee who refuses to abide with the policy may be dismissed from
the service; and (3) such implementation is subject to limitations provided WHEREFORE, the instant petition for review on certiorari is DENIED. The
by law which were disregarded by the management. Decision of the Court of Appeals dated December 28, 2000 and its Resolution
dated April 19, 2001 in CA GR-SP No. 56656 are affirmed.
Is the complaint, on the basis of its allegations, cognizable by the RTC?
SO ORDERED.
Respondent Nestles Drug Abuse Policy states that (i)llegal drugs and use of
regulated drugs beyond the medically prescribed limits are prohibited in the
workplace. Illegal drug use puts at risk the integrity of Nestle operations
and the safety of our products. It is detrimental to the health, safety and
work-performance of employees and is harmful to the welfare of families
and the surrounding community.[6] This pronouncement is a guiding
principle adopted by Nestle to safeguard its employees welfare and ensure
their efficiency and well-being. To our minds, this is a company personnel
policy. In San Miguel Corp. vs. NLRC,[7] this Court held:

Company personnel policies are guiding principles stated in broad, long-

range terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal with matter affecting
efficiency and well-being of employees and include, among others, the
procedure in the administration of wages, benefits, promotions, transfer and
other personnel movements which are usually not spelled out in the
collective agreement.

Considering that the Drug Abuse Policy is a company personnel policy, it is

the Voluntary Arbitrators or Panel of Voluntary Arbitrators, not the RTC,
which exercises jurisdiction over this case. Article 261 of the Labor Code, as
amended, pertinently provides:

Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary

Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall
have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies x x x. (Emphasis supplied)

With respect to the second issue raised by petitioners, what they should
have interposed is an appeal to the Court of Appeals, not a petition for
certiorari which they initially filed with this Court, since the assailed RTC
order is final.[8] Certiorari is not a substitute for an appeal.[9] For certiorari
to prosper, it is not enough that the trial court committed grave abuse of
discretion amounting to lack or excess of jurisdiction, as alleged by
petitioners. The requirement that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law must likewise be
satisfied.[10] We must stress that the remedy of appeal was then available
to petitioners, but they did not resort to it. And while this Court in
exceptional instances allowed a partys availment of certiorari instead of
appeal, we find that no such exception exists here.
GTE Directories vs Sanchez
G.R. No. 76219 May 27, 1991
GTE DIRECTORIES CORPORATION, petitioner,
vs.
HON. AUGUSTO S. SANCHEZ and GTE DIRECTORIES CORPORATION
EMPLOYEES UNION, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Ignacio P. Lacsina for respondent Union.
NARVASA, J.:
GTE Directories Corporation (hereafter, simply GTE) is a foreign corporation
engaged in the Philippines in the business of publishing the PLDT (Philippine
Long Distance Telephone Company) telephone directories for Metro Manila
and several provinces.
The record shows that initially, the practice was for its sales representatives
to be given work assignments within specific territories by the so-called
"draw method." These sales territories were so plotted or mapped out as to
have "an equal number of advertisers as well as . . . revenue. . ." Within
these territories, the sales representatives therein assigned were given
quotas; i.e., they had to "achieve a certain amount of revenue or
advertisements sold, decreased, increased or cancelled within a given period
of time."
A territory was not fully released to the salesperson for handling at one time,
but assigned in increments or partial releases of account. Now, increments
were given by the so-called "Grid System," grids (divisions or sections)
within each territory usually numbering five (i.e., Grids I to V). Each grid
was assigned a fixed closing dated. At such closing date, a salesperson
should have achieved a certain amount of the revenue target designated for
his grid; otherwise, he loses the forthcoming grid or forfeits the remaining
grids not yet received. The Grid System was installed for the following
reasons: (1) to give all salespersons an opportunity to contact advertisers
within a reasonable period; (2) to assure GTE that it will get its share of
advertising budget from clients as early as possible; and (3) to ensure an
even flow of work throughout the company.
This practice was observed from 1980 until sometime in June, 1984 when
GTE realized that competition among media for a share of the advertising
revenue had become so keen as to require quick reaction. GTE therefore
launched an aggressive campaign to get what it considered to be its rightful
share of the advertising budget of its clientele before it could be allocated
to other media (newspaper, television, radio, etc.) It adopted a new strategy
by which:
(1) all its sales representatives were required, as in the past, to achieve
specified revenue targets (advertisements sold) within pre-determined
periods;
(2) in cases of cancelled revenue accounts or advertisements, it required all
its salespersons to re-establish contact and renew the same within a fixed
period;
(3) if the cancelled revenue accounts were not renewed within the assigned
period, said accounts were declared, for a set period, OPEN TERRITORY to
all sales representatives including the one who reported the cancellation;
(4) if not renewed during said open territory period, said cancelled accounts
were deemed no longer "open territory," and the same could be referred for
handling to contractual salespersons and/or outside agencies.
A new "Sales Evaluation and Production Policy" was thereafter drawn up.
GTE informed all its sales representatives of the new policy in a
Memorandum dated October 12, 1984. The new policy was regarded as an
improvement over the previous Sales Production Policy, which solely
considered quota attainment and handling in the Sales Report for the
purpose of evaluating performance.
It appears that the new policy did not sit well with the union. It demanded
that it be given 15 days "to raise questions or objections to or to seek
reconsideration of the sales and administrative practices issued by the
Company on June 14, 1984." This, GTE granted, and by letter dated October
26, 1984, the union submitted its proposals for "revisions, corrections and
deletions of some policies incorporated in the Sales Administrative Practices
issued on June 14, 1984 including the new policies recently promulgated by
Management."
GTE next formulated a new set of "Sales Administrative Practices," pursuant
to which it issued on July 9, 1985, a memorandum requiring all Premise
Sales Representatives (PSRs) to submit individual reports reflecting target
revenues as of deadlines, set at August 2, 1985. This was superseded by
another memorandum dated July 16, 1985, revising the previous schedules
on the basis of "the consensus reached after several discussions with your
DSMs, as well as, most of you," and pointing out that "the amount required
on the 1st deadline (P30,000) . . . has been reduced further (to P20,000)
having taken into consideration that most of your accounts you have already
on hand are with your respective "prep artists""
On August 5, 1985, GTE's Sales Manager sent another Memorandum to "all
premise sales personnel." That memorandum observed that most of them
had omitted to submit reports regarding "the target of P20,000.00 revenue
handled on . . . (the) first Grid deadline of August 2, 1985" notwithstanding
that "several consultations/discussions . . . (had) been held with your DSMs,
as well as yourselves in different and separate occasions," and "these
schedules/targets were drawn up by no less than you, collectively," and
notwithstanding that "this has been a practice of several years." It closed
with the expressed expectation that the sales reports would be submitted
"no later than 2:00 P.M. reflecting P20,000.00 revenue handled, as per
memo re: Grid Deadlines dated July 16, 1985."
But as before, the sales representatives did not submit the reports. Instead
their union, GTE Directories Corporation Employees Union (hereafter, simply
the union), sent a letter to the Sales Manager dated August 5, 1985.1 The
letter stated that in fact "only one out of nineteen sales representatives met
the P20,000 revenue handled on our first grid deadline of August 2;" that
the schedule was not "drawn (up) as a result of an agreement of all
concerned" since GTE had failed to get "affirmative responses" from
"clustered groups of SRs;" that the union could not "Comprehend how
cancelling non-cancelling accounts help production;" and that its members
would fail "expectations of cancelling . . . non-cancelling accounts" since it
"would result to further reduction of our pay which (they) believe is the
purpose of your discriminate and whimsical memo."
The following day, on August 6, 1985, the union filed in behalf of the sales
representatives, a notice of strike grounded on alleged unfair labor practices
of GTE consisting of the following:
1. Refusal to bargain on unjust sales policies particularly on the failure to
meet the 75% of the average sales production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
In due course, the Bureau of Labor Relations undertook to conciliate the
dispute.
On the same day, August 6, 1985, GTE sent still another memorandum to
sixteen (16) of its premise sales representatives, this time through its
Director for Marketing & Sales, requiring submission of "individual reports
reflecting target revenues as of grid deadlines . . . not later than 4:00 P.M.
. . ."2 No compliance was made. GTE thereupon suspended its sales
representatives "without pay effective August 12, 1985 for five (5) working
days" and warned them that their failure to submit the requisite reports by
August 19, 1985 would merit "more drastic disciplinary actions." Still, no
sales representative complied with the requirement to submit the reports
("list of accounts to be cancelled"). So, by memorandum of the Marketing
Director dated August 19, 1985, all the sales representatives concerned
were suspended anew "effective August 20, 1985 until you submit the . . .
(report)."
Finally, GTE gave its sales representatives an ultimatum. By memorandum
dated August 23, 1985, individually addressed to its sales representatives,
GTE required them, for the last time, to submit the required reports ("list of
accounts to be cancelled") within twenty-four (24) hours from receipt of the
memorandum; otherwise, they would be terminated "for cause." Again not
one sales representatives submitted a report. Instead, on August 29, 1985,
the Union President sent an undated letter to GTE (addressed to its Director
for Marketing & Sales) acknowledging receipt of the notice of their
suspension on August 19, 1985 in view of their "continued refusal to submit
the list of accounts to be cancelled," professing surprise at being "served
with a contradictory notice, giving us this time 24 hours to submit the
required list, without the suspension letter, which we consider as still in
force, being first recalled or withdrawn," asking that they be informed which
of the two directives should be followed, and reserving their "right to take
such action against you personally for your acts of harassment and
intimidation which are clearly designed to discourage our legitimate union
activities in protesting management's continious (sic) unfair labor
practices."
Consequently, by separate letters dated August 29, 1985 individually
received, GTE terminated the employment of the recalcitrant sales
representatives, numbering fourteen, with the undertaking to give them
"separation pay, upon proper clearance and submission of company
documents, material etc., in . . . (their) possession." Among those dismissed
were the union's president and third vice president, and several members
of its board of directors. On September 2, 1985, the union declared a strike
in which about 60 employees participated.
During all this time, conciliation efforts were being exerted by the Bureau of
Labor Relations, including attempts to prevent the imposition of sanctions
by GTE on its employees, and the strike itself. When these proved futile,
Acting Labor Minister Vicente Leogardo, Jr. issued an Order dated December
6, 1985 assuming jurisdiction over the dispute. The order made the
following disposition, to wit:
WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute
at G.T.E. Directories, pursuant to Article 264 (g) of the Labor Code of the
Philippines, as amended. Accordingly, all striking workers including those
who were dismissed during the conciliation proceedings, except those who
have already resigned, are hereby directed to return to work and the
management of G.T.E. Directories to accept all returning employees under
the same terms and conditions prevailing previous to the strike notice and
without prejudice to the determination of the obligation and rights of the
parties or to the final outcome of this dispute. The Bureau of Labor Relations
is hereby directed to hear the dispute and submit its recommendations
within 15 days upon submission of the case for resolution.

All concerned including the military and police authorities are hereby
requested to assist in the implementation of this Order."
The Acting Secretary opined that the dispute "adversely affects the national
interest," because:
1) GTE, a "100% foreign owned" company, had, as publisher of "PLDT's
Metro Manila and provincial directories . . . earned a total of P127,038,463
contributing close to P10 million in income tax alone to the Philippine
government," and that "major contribution to the national economy . . .
(was) being threatened because of the strike;" and
2) "top officers of the union were dismissed during the conciliation process
thereby compounding the dispute,"
Reconsideration of this Order was sought by GTE by motion filed on
December 16, 1985, on the ground that—
1) "the basis for assumption of jurisdiction is belied by the facts and records
of the case and hence, unwarranted;"
2) "national interest is not adversely affected to warrant assumption of
jurisdiction by (the) Office of the Minister of Labor and Employment;" and
3) "assumption of jurisdiction by the . . . Minister . . . without prior
consultation with the parties violates the company's right to due process of
law."
GTE however reiterated its previously declared "position that with or without
the order now being questioned, it will accept all striking employees back to
work except the fourteen (14) premise sales representatives who were
dismissed for cause prior to the strike."
By Resolution of then Labor Minister Blas Ople dated January 20, 1986,
GTE's motion for reconsideration was denied. The order noted inter alia that
GTE had "accepted back to work all the returning workers except fourteen
(14) whom it previously dismissed insisting that they were legally dismissed
for violation of company rules and, therefore, are not included and may not
be reinstated on the basis of a return-to-work order," and that "they were
dismissed for their alleged failure to comply with the reportorial requirement
under the Sales and Administrative Practices in effect since 1981 but which
for the present is the subject of negotiations between the parties." The Order
then —
1) adverted to the "general rule (that) promulgations of company policies
and regulations are basic management prerogatives although the principle
of collective bargaining encompasses almost all relations between the
employer and its employees which are best threshed out through
negotiations, . . . (and that) it is recognized that company policies and
regulations are, unless shown to be grossly oppressive or contrary to law,
generally binding and valid on the parties until finally revised or amended
unilaterally or preferably through negotiations or by competent authorities;"
2) affirmed the "recognized principle of law that company policies and
regulations are, unless shown to be grossly oppressive or contrary to law,
generally binding (and) valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiations or
by competent authorities;" and
3) closed by pointing out that "as a basic principle, the matter of the
acceptability of company policies and rules is a proper subject of collective
negotiations between the parties or arbitration if necessary."
In a clarificatory Order dated January 21, 1986, Minister Ople reiterated the
proposition that "promulgations of company policies and regulations are
basic management prerogatives," and that "unless shown to be grossly
oppressive or contrary to law," they are "generally binding and valid on the
parties and must be complied with until finally revised or amended
unilaterally or preferably, through negotiations or by competent
authorities."
Adjudication of the dispute on the merits was made on March 31, 1986 by
Order of Minister Ople's successor, Augusto Sanchez. The Order —
1) pointed out "that the issue central to the labor dispute revolves around
compliance with existing company policies, rules and regulations specifically
the sales evaluation and production policy which was amended by the
October 12, 1984 memorandum and the grid schedule;"
2) declared that because fourteen (14) sales representatives — who after
reinstatement pursuant to the order of January 20, 1986 had been placed
"on forced leave with pay —"were actually dismissed for failure to comply
with the reporting requirements under the "Sales Administration Practices"
which was (sic) then the subject of negotiations between the parties at the
Bureau of Labor Relations," it was only fair that they 'be reinstated . . .with
back wages since they were terminated from employment based on a policy
. . . still being negotiated to avoid precisely a labor-management dispute
from arising" therefrom;"
3) pronounced the union's action relative to the allegedly illegal dismissal of
one Brian Pineda to be "barred by extinctive prescription" in accordance with
the CBA then in force; and
4) on the foregoing premises adjudicated the dispute as follows:
1. The union and management of G.T.E. Directories Corporation are directed
to negotiate and effect a voluntary settlement on the questioned Grid
schedule, the Sales Evaluation and Production Policy;
2. Management is ordered to reinstate the fourteen (14) employees with full
back wages from the time they were dismissed up to the time that they
were on forced leave with pay."
Both the Union and GTE moved for reconsideration of the Order.
The Union contended that:
1) GTE should have been adjudged guilty of unfair labor practice and other
unlawful acts;
2) its strike should have been declared lawful;
3) GTE's so-called "bottom-third" policy, as well as all sales and
administrative practices related thereto, should have been held illegal; and
4) GTE should have been commanded: (a) to pay all striking employees
their usual salaries, allowances, commission and other emoluments
corresponding to the period of their strike; (b) to release to its employees
the 8-days pay increase unlawfully withheld from them; (c) to lift the
suspension imposed on Brian Pineda and restore to him the pay withheld
corresponding to the suspension period; (d) to pay the sales representatives
all their lost income corresponding to the period of their suspensions, and
dismissal, including commissions that they might have earned
corresponding to their one-week forced leave.
GTE for its part, argued that the termination of the employment of its
fourteen (14) premise sales representatives prior to the strike should have
been upheld. It also filed an opposition to the union's motion for
reconsideration.
The motions were resolved in a "Decision" handed down by Minister Sanchez
on June 6, 1986. The Minister stated that he saw no need to change his
rulings as regards Pineda's suspension, the question on GTE's sales and
administrative policies, and the matter of back wages. However, as regards
"the other issues raised by the union," the Minister agreed "with the
company that these were not adequately threshed out in the earlier
proceedings . . . (for) (w)hile it is true that the union had already presented
evidence to support its contention, the company should be given the
opportunity to present its own evidence." Accordingly, he directed the
Bureau of Labor Relations to hear said "other issues raised by the union and
to submit its findings and recommendations thereon within 20 days from
submission of the case for decision."
Again GTE moved for reconsideration; again it was rebuffed. The Labor
Minister denied its motion by Order dated October 1, 1986. In that order,
the Minister, among other things—
1) invoked Section 6, Rule XIII of the Rules and Regulations Implementing
the Labor Code, pertinently reading as follows:
During the proceedings, the parties shall not do any act which may disrupt
or impede the early settlement of the dispute. They are obliged, as part of
their duty to bargain collectively in good faith, to participate fully and
promptly in the conciliation proceedings called by the Bureau or the Regional
Office.
and pointed out that "in dismissing 14 salesmen . . . for alleged violations
of the reportorial requirements of its sales policies which was then the
subject of conciliation proceedings between them, (GTE) acted evidently in
bad faith; hence the status quo prior to their dismissal must be restored . .
. (and) their reinstatement with backwages is in order up to the time they
were on forced leave. . . ;"
2) declared that because he had "ordered the parties to negotiate and effect
a voluntary settlement of the questioned Grid Schedule, the Sales
Evaluation and Productions Policy, it would be unripe and premature for us
to rule on the legality or illegality on the company's sales policies at this
instance;"
3) opted, however, to himself resolve "the so-called 'other issues"' which he
had earlier directed the Bureau of Labor Relations to first hear and resolve
(in the Decision of June 6, 1986, supra), i.e., GTE's liability for unfair labor
practice, the legality of the strike and the strikers' right to be paid their
wages while on strike, his ruling thereon being as follows:
While the company, in merely implementing its challenged sales policies did
not ipso facto commit an unfair labor practice, it did so when it in mala fide
dismissed the fourteen salesmen, all union members, while conciliation
proceedings were being conducted on disputes on its very same policies,
especially at that time when a strike notice was filed on the complaint of the
union alleging that said sales policies are being used to bust the union; thus
precipitating a lawful strike on the part of the latter. A strike is legal if it was
provoked by the employer's failure to abide by the terms and conditions of
its collective bargaining agreement with the union, by the discrimination
employed by it with regard to the hire and tenure of employment, and the
dismissal of employees due to union activities as well as the company's
refusal to bargain collectively in good faith (Cromwell Commercial Co., Inc.
vs. Cromwell Employees and Laborers Union, 19 SCRA 398). The same rule
applies if employer was guilty of bad faith delay in reinstating them to their
position (RCPI vs. Phil. Communications Electronics & Electricity Workers
Federation, 58 SCRA 762).
While as a rule strikers are not entitled to backpay for the strike period (J.P.
Heilbronn Co. vs. NLU, 92 Phil. 575) strikers may be properly awarded
backwages where the strike was precipitated by union busting activities of
the employer (Davao Free Workers, Front, et al. vs, CIR, 60 SCRA 408), as
in the case at bar. . . .
The Minister accordingly annulled and set aside his order for the Bureau of
Labor Relations to conduct hearings on said issues since he had already
resolved them, and affirmed his Order of March 31, 1986—"directing Union
and Management to negotiate a voluntary settlement on the company sales
policies and reinstating the fourteen employees with full backwages from
the time they were dismissed up to the time they were on forced leave with
pay" — "but with the modification that management . . . (was) directed to
give the striking workers strike duration pay for the whole period of the
strike less earnings."
GTE thereupon instituted the special civil action of certiorari at bar praying
for invalidation, because rendered with grave abuse of discretion, of the
Labor Minister's orders—
1) commanding "reinstatement of the fourteen dismissed employees, and
2) "finding . . . (it) guilty of unfair labor practice and directing (it) to pay
strike duration pay to striking workers."
It seems to the Court that upon the undisputed facts on record, GTE had
cause to dismiss the fourteen (14) premise sales representatives who had
repeatedly and deliberately, not to say defiantly, refused to comply with its
directive for submission of individual reports on specified matters. The
record shows that GTE addressed no less than (six) written official
communications to said premise sales representatives embodying this
requirement, to wit:
1) Memorandum of July 9, 1985 pursuant to GTE's "Sales Administrative
Practices" — superseded by a memorandum dated July 16, 198 — requiring
submission of individual reports by August 2, 1985;
2) Memorandum of August 5, 1985, requiring submission of the reports by
2:00 P.M.;
3) Memorandum of August 6, 1985, for submission of requisite reports not
later than 4:00 P.M. of that day, with a warning of "appropriate disciplinary
action;"
4) Letter of August 9, 1985 imposing suspension without pay for five (5)
working days and extending the period for submission of reports to August
19, 1985;
5) Letter of August 19, 1985 suspending the sales representatives until their
submission of the required reports;
6) Letter dated August 28, 1985 giving the sales representatives "a last
chance to comply with . . . (the) directive within 24 hours from receipt . .
.;" with warning that failure to comply would result in termination of
employment.
The only response of the sales representatives to these formal directives
were:
1) a letter by their Union to GTE's Sales Manager dated August 5, 1985 in
which the requirement was criticized as not being the "result of an
agreement of all concerned," and as incomprehensible, "discriminate and
whimsical;"
2) a strike notice filed with the Ministry of Labor on August 6, 1985; and
3) an undated letter sent to GTE's Director for Marketing & Sales on August
29, 1985, drawing attention to what it deemed contradictory directives, and
reserving the right to take action against the manager for "acts of
harassment and intimidation . . . clearly designed to discourage our
legitimate union activities in protesting management's continuous unfair
labor practices."
The basic question then is whether or not the effectivity of an employer's
regulations and policies is dependent upon the acceptance and consent of
the employees thereby sought to be bound; or otherwise stated, whether or
not the union's objections to, or request for reconsideration of those
regulations or policies automatically suspend enforcement thereof and
excuse the employees' refusal to comply with the same.
This Court has already had occasion to rule upon a similar issue. The issue
was raised in a 1989 case, G.R. No. 53515, San Miguel Brewery Sales Force
Union (PTGWO) v. Ople.3 In that case, the facts were briefly as follows:
In September 1979, the company introduced a marketing scheme known as
the "Complementary distribution system" (CDS) whereby its beer products
were offered for sale directly to wholesalers through San Miguel's sales
offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice
in the Ministry of Labor, with a notice of strike on the ground that the CDS
was contrary to the existing marketing scheme whereby the Route Salesmen
were assigned specific territories within which to sell their stocks of beer,
and wholesalers had to buy beer products from them, not from the
company. It was alleged that the new marketing scheme violates . . . (a
provision) of the collective bargaining agreement because the introduction
of the CDS would reduce the take-home pay of the salesmen and their truck
helpers for the company would be unfairly competing with them."
The Labor Minister found nothing to suggest that the employer's unilateral
action of inaugurating a new sales scheme "was designed to discourage
union organization or diminish its influence;" that on the contrary, it was
"part of its overall plan to improve efficiency and economy and at the same
time gain profit to the highest;" that the union's "conjecture that the new
plan will sow dissatisfaction from its rank is already a prejudgment of the
plan's viability and effectiveness, . . . like saying that the plan will not work
out to the workers' (benefit) and therefore management must adopt a new
system of marketing." The Minister accordingly dismissed the strike notice,
although he ordered a slight revision of the CDS which the employer
evidently found acceptable.
This Court approved of the Minister's findings, and declared correct his
holding that the CDS was "a valid exercise of management prerogatives,"4
viz.:
Except as limited by special laws, an employer is free to regulate, according
to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place and manner of
work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of work. . . . (NLU vs. Insular
La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR, 21 SCRA 226,
235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 ed., p. 44.)
(Emphasis ours.)
The Court then closed its decision with the following pronouncements:5
Every business enterprise endeavors to increase its profits. In the process,
it may adopt or devise means designed towards that goal. In Abbott
Laboratories vs. NLRC, 154 SCRA 713, We ruled:
. . . Even as the law is solicitous of the welfare of the employees, it must
also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good
faith for the advancement of the employer's interest and not for the purpose
of defeating or circumventing the rights of the employees under special laws
or under valid agreements, this Court will uphold them (LVN, Pictures
Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery
and Garments Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA
110). . . .
In the case at bar, it must thus be conceded that its adoption of a new "Sales
Evaluation and Production Policy" was within its management prerogative to
regulate, according to its own discretion and judgment, all aspects of
employment, including the manner, procedure and processes by which
particular work activities should be done. There were, to be sure, objections
presented by the union, i.e., that the schedule had not been "drawn (up) as
a result of an agreement of all concerned," that the new policy was
incomprehensible, discriminatory and whimsical, and "would result to
further reduction" of the sales representatives' compensation. There was,
too, the union's accusation that GTE had committed unfair labor practices,
such as—
1. Refusal to bargain on unjust sales policies particularly on the failure to
meet the 75% of the average sales production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
This Court fails to see, however, how these objections and accusations
justify the deliberate and obdurate refusal of the sales representatives to
obey the management's simple requirement for submission by all Premise
Sales Representatives (PSRs) of individual reports or memoranda requiring
reflecting target revenues—which is all that GTE basically required — and
which it addressed to the employees concerned no less than six (6) times.
The Court fails to see how the existence of objections made by the union
justify the studied disregard, or wilful disobedience by the sales
representatives of direct orders of their superior officers to submit reports.
Surely, compliance with their superiors' directives could not have foreclosed
their demands for the revocation or revision of the new sales policies or
rules; there was nothing to prevent them from submitting the requisite
reports with the reservation to seek such revocation or revision.
To sanction disregard or disobedience by employees of a rule or order laid
down by management, on the pleaded theory that the rule or order is
unreasonable, illegal, or otherwise irregular for one reason or another,
would be disastrous to the discipline and order that it is in the interest of
both the employer and his employees to preserve and maintain in the
working establishment and without which no meaningful operation and
progress is possible. Deliberate disregard or disobedience of rules, defiance
of management authority cannot be countenanced. This is not to say that
the employees have no remedy against rules or orders they regard as unjust
or illegal. They may object thereto, ask to negotiate thereon, bring
proceedings for redress against the employer before the Ministry of Labor.
But until and Unless the rules or orders are declared to be illegal or improper
by competent authority, the employees ignore or disobey them at their peril.
It is impermissible to reverse the process: suspend enforcement of the
orders or rules until their legality or propriety shall have been subject of
negotiation, conciliation, or arbitration.
These propositions were in fact adverted to in relation to the dispute in
question by then Minister Blas Ople in his Order dated January 21, 1986, to
the effect among others, that "promulgations of company policies and
regulations are basic management prerogatives" and that it is a "recognized
principle of law that company policies and regulations are, unless shown to
be grossly oppressive or contrary to law, generally binding (and) valid on
the parties and must be complied with until finally revised or amended
unilaterally or preferably through negotiations or by competent authorities."
Minister Sanchez however found GTE to have "acted evidently in bad faith"
in firing its 14 salespersons "for alleged violations of the reportorial
requirements of its sales policies which was then the subject of conciliation
proceedings between them;"6 and that "(w)hile the company, in merely
implementing its challenged sales policies did not ipso facto commit an
unfair labor practice, it did so when it in mala fide dismissed the fourteen
salesmen, all union members, while conciliation proceedings were being
conducted on disputes on its very same policies, especially at that time when
a strike notice was filed on the complaint of the union alleging that said sales
policies are being used to bust the union; thus precipitating a lawful strike
on the part of the latter." No other facts appear on record relevant to the
issue of GTE's dismissal of the 14 sales representatives. There is no proof
on record to demonstrate any underhanded motive on the part of GTE in
formulating and imposing the sales policies in question, or requiring the
submission of reports in line therewith. What, in fine, appears to be the
Minister's thesis is that an employer has the prerogative to lay down basic
policies and rules applicable to its employees, but may not exact compliance
therewith, much less impose sanctions on employees shown to have violated
them, the moment the propriety or feasibility of those policies and rules, or
their motivation, is challenged by the employees and the latter file a strike
notice with the Labor Department — which is the situation in the case at
bar.
When the strike notice was filed by the union, the chain of events which
culminated in the termination of the 14 sales persons' employment was
already taking place, the series of defiant refusals by said sales
representatives to comply with GTE's requirement to submit individual
reports was already in progress. At that time, no less than three (3) of the
ultimate six (6) direct orders of the employer for the submission of the
reports had already been disobeyed. The filing of the strike notice, and the
commencement of conciliation activities by the Bureau of Labor Relations
did not operate to make GTE's orders illegal or unenforceable so as to excuse
continued non-compliance therewith. It does not follow that just because
the employees or their union are unable to realize or appreciate the
desirability of their employers' policies or rules, the latter were laid down to
oppress the former and subvert legitimate union activities. Indeed, the
overt, direct, deliberate and continued defiance and disregard by the
employees of the authority of their employer left the latter with no
alternative except to impose sanctions. The sanction of suspension having
proved futile, termination of employment was the only option left to the
employer.
To repeat, it would be dangerous doctrine indeed to allow employees to
refuse to comply with rules and regulations, policies and procedures laid
down by their employer by the simple expedient of formally challenging their
reasonableness or the motives which inspired them, or filing a strike notice
with the Department of Labor and Employment, or, what amounts to the
same thing, to give the employees the power to suspend compliance with
company rules or policies by requesting that they be first subject of
collective bargaining, It would be well nigh impossible under these
circumstances for any employer to maintain discipline in its establishment.
This is, of course, intolerable. For common sense teaches, as Mr. Justice
Gregorio Perfecto once had occasion to stress7 that:
Success of industries and public services is the foundation upon which just
wages may be paid. There cannot be success without efficiency. There
cannot be efficiency without discipline. Consequently, when employees and
laborers violate the rules of discipline they jeopardize not only the interest
of the employer but also their own. In violating the rules of discipline they
aim at killing the hen that lays the golden eggs. Laborers who trample down
the rules set for an efficient service are, in effect, parties to a conspiracy,
not only against capital but also against labor. The high interest of society
and of the individuals demand that we should require everybody to do his
duty. That demand is addressed not only to employer but also to employees.
Minister Sanchez decided the dispute in the exercise of the jurisdiction
assumed by his predecessor in accordance with Article 263 (g) of the Labor
Code,8 providing in part as follows:
(g) When in his opinion there exists a labor dispute causing or likely to cause
strikes or lockouts adversely affecting the national interest, such as may
occur in but not limited to public utilities, companies engaged in the
generation or distribution of energy, banks, hospitals, and export-oriented
industries, including those within export processing zones, the Minister of
Labor and Employment shall assume jurisdiction over the dispute and decide
it or certify the same to the Commission for compulsory arbitration. . . .
Even that assumption of jurisdiction is open to question.
The production and publication of telephone directories, which is the
principal activity of GTE, can scarcely be described as an industry affecting
the national interest. GTE is a publishing firm chiefly dependent on the
marketing and sale of advertising space for its not inconsiderable revenues.
Its services, while of value, cannot be deemed to be in the same category
of such essential activities as "the generation or distribution of energy" or
those undertaken by "banks, hospitals, and export-oriented industries." It
cannot be regarded as playing as vital a role in communication as other
mass media. The small number of employees involved in the dispute, the
employer's payment of "P10 million in income tax alone to the Philippine
government," and the fact that the "top officers of the union were dismissed
during the conciliation process," obviously do not suffice to make the dispute
in the case at bar one "adversely affecting the national interest."

WHEREFORE, the petition is GRANTED, and as prayed for, the Order dated
October 1, 1986 of the public respondent is NULLIFIED and SET ASIDE.

SO ORDERED.