G.R. No.

182836

October 13, 2009

CONTINENTAL STEEL MANUFACTURING CORPORATION, Petitioner,

vs.
HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAO and NAGKAKAISANG
MANGGAGAWA NG CENTRO STEEL CORPORATION-SOLIDARITY OF UNIONS IN THE
PHILIPPINES FOR EMPOWERMENT AND REFORMS (NMCSC-SUPER), Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the Decision1
dated 27 February 2008 and the Resolution2 dated 9 May 2008 of the Court of Appeals in CA-G.R. SP No.
101697, affirming the Resolution3 dated 20 November 2007 of respondent Accredited Voluntary Arbitrator
Atty. Allan S. Montao (Montao) granting bereavement leave and other death benefits to Rolando P.
Hortillano (Hortillano), grounded on the death of his unborn child.
The antecedent facts of the case are as follows:
Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental Steel) and a
member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-Solidarity of Trade Unions
in the Philippines for Empowerment and Reforms (Union) filed on 9 January 2006, a claim for Paternity
Leave, Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the Collective
Bargaining Agreement (CBA) concluded between Continental and the Union, which reads:
ARTICLE X: LEAVE OF ABSENCE
xxxx
Section 2. BEREAVEMENT LEAVEThe Company agrees to grant a bereavement leave with pay to any
employee in case of death of the employees legitimate dependent (parents, spouse, children, brothers and
sisters) based on the following:
2.1 Within Metro Manila up to Marilao, Bulacan - 7 days
2.2 Provincial/Outside Metro Manila - 11 days
xxxx
ARTICLE XVIII: OTHER BENEFITS
xxxx
Section 4. DEATH AND ACCIDENT INSURANCEThe Company shall grant death and accidental
insurance to the employee or his family in the following manner:
xxxx

4.3 DEPENDENTSEleven Thousand Five Hundred Fifty Pesos (Php11,550.00) in case of death of the
employees legitimate dependents (parents, spouse, and children). In case the employee is single, this benefit
covers the legitimate parents, brothers and sisters only with proper legal document to be presented (e.g. death
certificate).4
The claim was based on the death of Hortillanos unborn child. Hortillanos wife, Marife V. Hortillano, had a
premature delivery on 5 January 2006 while she was in the 38th week of pregnancy.5 According to the
Certificate of Fetal Death dated 7 January 2006, the female fetus died during labor due to fetal Anoxia
secondary to uteroplacental insufficiency.6
Continental Steel immediately granted Hortillanos claim for paternity leave but denied his claims for
bereavement leave and other death benefits, consisting of the death and accident insurance.7
Seeking the reversal of the denial by Continental Steel of Hortillanos claims for bereavement and other
death benefits, the Union resorted to the grievance machinery provided in the CBA. Despite the series of
conferences held, the parties still failed to settle their dispute,8 prompting the Union to file a Notice to
Arbitrate before the National Conciliation and Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE), National Capital Region (NCR).9 In a Submission Agreement dated 9 October 2006,
the Union and Continental Steel submitted for voluntary arbitration the sole issue of whether Hortillano was
entitled to bereavement leave and other death benefits pursuant to Article X, Section 2
and Article XVIII, Section 4.3 of the CBA.10 The parties mutually chose Atty. Montao, an Accredited
Voluntary Arbitrator, to resolve said issue.11
When the preliminary conferences again proved futile in amicably settling the dispute, the parties proceeded
to submit their respective Position Papers, 12 Replies,13 and Rejoinders14 to Atty. Montao.
The Union argued that Hortillano was entitled to bereavement leave and other death benefits pursuant to the
CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section 4.3 of the CBA did not
specifically state that the dependent should have first been born alive or must have acquired juridical
personality so that his/her subsequent death could be covered by the CBA death benefits. The Union cited
cases wherein employees of MKK Steel Corporation (MKK Steel) and Mayer Steel Pipe Corporation (Mayer
Steel), sister companies of Continental Steel, in similar situations as Hortillano were able to receive death
benefits under similar provisions of their CBAs.
The Union mentioned in particular the case of Steve L. Dugan (Dugan), an employee of Mayer Steel, whose
wife also prematurely delivered a fetus, which had already died prior to the delivery. Dugan was able to
receive paternity leave, bereavement leave, and voluntary contribution under the CBA between his union and
Mayer Steel.15 Dugans child was only 24 weeks in the womb and died before labor, as opposed to
Hortillanos child who was already 37-38 weeks in the womb and only died during labor.
The Union called attention to the fact that MKK Steel and Mayer Steel are located in the same compound as
Continental Steel; and the representatives of MKK Steel and Mayer Steel who signed the CBA with their
respective employees unions were the same as the representatives of Continental Steel who signed the
existing CBA with the Union.
Finally, the Union invoked Article 1702 of the Civil Code, which provides that all doubts in labor legislations
and labor contracts shall be construed in favor of the safety of and decent living for the laborer.

On the other hand, Continental Steel posited that the express provision of the CBA did not contemplate the
death of an unborn child, a fetus, without legal personality. It claimed that there are two elements for the
entitlement to the benefits, namely: (1) death and (2) status as legitimate dependent, none of which existed in
Hortillanos case. Continental Steel, relying on Articles 40, 41 and 4216 of the Civil Code, contended that
only one with civil personality could die. Hence, the unborn child never died because it never acquired
juridical personality. Proceeding from the same line of thought, Continental Steel reasoned that a fetus that
was dead from the moment of delivery was not a person at all. Hence, the term dependent could not be
applied to a fetus that never acquired juridical personality. A fetus that was delivered dead could not be
considered a dependent, since it never needed any support, nor did it ever acquire the right to be supported.
Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since neither of the
parties qualified the terms used in the CBA, the legally accepted definitions thereof were deemed
automatically accepted by both parties. The failure of the Union to have unborn child included in the
definition of dependent, as used in the CBA the death of whom would have qualified the parent-employee
for bereavement leave and other death benefits bound the Union to the legally accepted definition of the
latter term.
Continental Steel, lastly, averred that similar cases involving the employees of its sister companies, MKK
Steel and Mayer Steel, referred to by the Union, were irrelevant and incompetent evidence, given the
separate and distinct personalities of the companies. Neither could the Union sustain its claim that the grant
of bereavement leave and other death benefits to the parent-employee for the loss of an unborn child
constituted "company practice."
On 20 November 2007, Atty. Montao, the appointed Accredited Voluntary Arbitrator, issued a Resolution17
ruling that Hortillano was entitled to bereavement leave with pay and death benefits.
Atty. Montao identified the elements for entitlement to said benefits, thus:
This Office declares that for the entitlement of the benefit of bereavement leave with pay by the covered
employees as provided under Article X, Section 2 of the parties CBA, three (3) indispensable elements must
be present: (1) there is "death"; (2) such death must be of employees "dependent"; and (3) such dependent
must be "legitimate".
On the otherhand, for the entitlement to benefit for death and accident insurance as provided under Article
XVIII, Section 4, paragraph (4.3) of the parties CBA, four (4) indispensable elements must be present: (a)
there is "death"; (b) such death must be of employees "dependent"; (c) such dependent must be "legitimate";
and (d) proper legal document to be presented.18
Atty. Montao found that there was no dispute that the death of an employees legitimate dependent
occurred. The fetus had the right to be supported by the parents from the very moment he/she was conceived.
The fetus had to rely on another for support; he/she could not have existed or sustained himself/herself
without the power or aid of someone else, specifically, his/her mother. Therefore, the fetus was already a
dependent, although he/she died during the labor or delivery. There was also no question that Hortillano and
his wife were lawfully married, making their dependent, unborn child, legitimate.
In the end, Atty. Montao decreed:
WHEREFORE, premises considered, a resolution is hereby rendered ORDERING [herein petitioner
Continental Steel] to pay Rolando P. Hortillano the amount of Four Thousand Nine Hundred Thirty-Nine
Pesos (P4,939.00), representing his bereavement leave pay and the amount of Eleven Thousand Five
Hundred Fifty Pesos (P11,550.00) representing death benefits, or a total amount of P16,489.00

The complaint against Manuel Sy, however, is ORDERED DISMISSED for lack of merit.
All other claims are DISMISSED for lack of merit.
Further, parties are hereby ORDERED to faithfully abide with the herein dispositions.
Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on Certiorari,19 under
Section 1, Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 101697.
Continental Steel claimed that Atty. Montao erred in granting Hortillanos claims for bereavement leave
with pay and other death benefits because no death of an employees dependent had occurred. The death of a
fetus, at whatever stage of pregnancy, was excluded from the coverage of the CBA since what was
contemplated by the CBA was the death of a legal person, and not that of a fetus, which did not acquire any
juridical personality. Continental Steel pointed out that its contention was bolstered by the fact that the term
death was qualified by the phrase legitimate dependent. It asserted that the status of a child could only be
determined upon said childs birth, otherwise, no such appellation can be had. Hence, the conditions sine qua
non for Hortillanos entitlement to bereavement leave and other death benefits under the CBA were lacking.
The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaos Resolution dated 20
November 2007. The appellate court interpreted death to mean as follows:
[Herein petitioner Continental Steels] exposition on the legal sense in which the term "death" is used in the
CBA fails to impress the Court, and the same is irrelevant for ascertaining the purpose, which the grant of
bereavement leave and death benefits thereunder, is intended to serve. While there is no arguing with
[Continental Steel] that the acquisition of civil personality of a child or fetus is conditioned on being born
alive upon delivery, it does not follow that such event of premature delivery of a fetus could never be
contemplated as a "death" as to be covered by the CBA provision, undoubtedly an event causing loss and
grief to the affected employee, with whom the dead fetus stands in a legitimate relation. [Continental Steel]
has proposed a narrow and technical significance to the term "death of a legitimate dependent" as condition
for granting bereavement leave and death benefits under the CBA. Following [Continental Steels] theory,
there can be no experience of "death" to speak of. The Court, however, does not share this view. A dead fetus
simply cannot be equated with anything less than "loss of human life", especially for the expectant parents.
In this light, bereavement leave and death benefits are meant to assuage the employee and the latters
immediate family, extend to them solace and support, rather than an act conferring legal status or personality
upon the unborn child. [Continental Steels] insistence that the certificate of fetal death is for statistical
purposes only sadly misses this crucial point.20
Accordingly, the fallo of the 27 February 2008 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the present petition is hereby DENIED for lack of merit. The assailed
Resolution dated November 20, 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao is hereby
AFFIRMED and UPHELD.
With costs against [herein petitioner Continental Steel].21
In a Resolution22 dated 9 May 2008, the Court of Appeals denied the Motion for Reconsideration23 of
Continental Steel.

Hence, this Petition, in which Continental Steel persistently argues that the CBA is clear and unambiguous,
so that the literal and legal meaning of death should be applied. Only one with juridical personality can die
and a dead fetus never acquired a juridical personality.
We are not persuaded.
As Atty. Montao identified, the elements for bereavement leave under Article X, Section 2 of the CBA are:
(1) death; (2) the death must be of a dependent, i.e., parent, spouse, child, brother, or sister, of an employee;
and (3) legitimate relations of the dependent to the employee. The requisites for death and accident insurance
under Article XVIII, Section 4(3) of the CBA are: (1) death; (2) the death must be of a dependent, who could
be a parent, spouse, or child of a married employee; or a parent, brother, or sister of a single employee; and
(4) presentation of the proper legal document to prove such death, e.g., death certificate.
It is worthy to note that despite the repeated assertion of Continental Steel that the provisions of the CBA are
clear and unambiguous, its fundamental argument for denying Hortillanos claim for bereavement leave and
other death benefits rests on the purportedly proper interpretation of the terms "death" and "dependent" as
used in the CBA. If the provisions of the CBA are indeed clear and unambiguous, then there is no need to
resort to the interpretation or construction of the same. Moreover, Continental Steel itself admitted that
neither management nor the Union sought to define the pertinent terms for bereavement leave and other
death benefits during the negotiation of the CBA.
The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal definition of death
is misplaced. Article 40 provides that a conceived child acquires personality only when it is born, and Article
41 defines when a child is considered born. Article 42 plainly states that civil personality is extinguished by
death.
First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code on natural
persons, must be applied in relation to Article 37 of the same Code, the very first of the general provisions on
civil personality, which reads:
Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every natural
person and is lost only through death. Capacity to act, which is the power to do acts with legal effect, is
acquired and may be lost.
We need not establish civil personality of the unborn child herein since his/her juridical capacity and capacity
to act as a person are not in issue. It is not a question before us whether the unborn child acquired any rights
or incurred any obligations prior to his/her death that were passed on to or assumed by the childs parents.
The rights to bereavement leave and other death benefits in the instant case pertain directly to the parents of
the unborn child upon the latters death.
Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death. Moreover, while
the Civil Code expressly provides that civil personality may be extinguished by death, it does not explicitly
state that only those who have acquired juridical personality could die.
And third, death has been defined as the cessation of life.24 Life is not synonymous with civil personality.
One need not acquire civil personality first before he/she could die. Even a child inside the womb already has
life. No less than the Constitution recognizes the life of the unborn from conception,25 that the State must
protect equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior
to the child being delivered, qualifies as death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel itself
defines, a dependent is "one who relies on another for support; one not able to exist or sustain oneself
without the power or aid of someone else." Under said general definition,26 even an unborn child is a
dependent of its parents. Hortillanos child could not have reached 38-39 weeks of its gestational life without
depending upon its mother, Hortillanos wife, for sustenance. Additionally, it is explicit in the CBA
provisions in question that the dependent may be the parent, spouse, or child of a married employee; or the
parent, brother, or sister of a single employee. The CBA did not provide a qualification for the child
dependent, such that the child must have been born or must have acquired civil personality, as Continental
Steel avers. Without such qualification, then child shall be understood in its more general sense, which
includes the unborn fetus in the mothers womb.
The term legitimate merely addresses the dependent childs status in relation to his/her parents. In Angeles v.
Maglaya,27 we have expounded on who is a legitimate child, viz:
A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove the element of
lawful union and there is strictly no legitimate filiation between parents and child. Article 164 of the Family
Code cannot be more emphatic on the matter: "Children conceived or born during the marriage of the
parents are legitimate." (Emphasis ours.)
Conversely, in Briones v. Miguel,28 we identified an illegitimate child to be as follows:
The fine distinctions among the various types of illegitimate children have been eliminated in the Family
Code. Now, there are only two classes of children -- legitimate (and those who, like the legally adopted, have
the rights of legitimate children) and illegitimate. All children conceived and born outside a valid marriage
are illegitimate, unless the law itself gives them legitimate status. (Emphasis ours.)
It is apparent that according to the Family Code and the afore-cited jurisprudence, the legitimacy or
illegitimacy of a child attaches upon his/her conception. In the present case, it was not disputed that
Hortillano and his wife were validly married and that their child was conceived during said marriage, hence,
making said child legitimate upon her conception.1avvphi1
Also incontestable is the fact that Hortillano was able to comply with the fourth element entitling him to
death and accident insurance under the CBA, i.e., presentation of the death certificate of his unborn child.
Given the existence of all the requisites for bereavement leave and other death benefits under the CBA,
Hortillanos claims for the same should have been granted by Continental Steel.
We emphasize that bereavement leave and other death benefits are granted to an employee to give aid to, and
if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It
cannot be said that the parents grief and sense of loss arising from the death of their unborn child, who, in
this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents
whose child was born alive but died subsequently.
Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should
be interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in
enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be
interpreted in favor of labor.29 In the same way, the CBA and CBA provisions should be interpreted in favor
of labor. In Marcopper Mining v. National Labor Relations Commission,30 we pronounced:

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the
pendulum of judgment swings to and fro and the forces are equal on both sides, the same must be stilled in
favor of labor." While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be
resolved in favor of labor, it insists that what is involved-here is the amended CBA which is essentially a
contract between private persons. What petitioner has lost sight of is the avowed policy of the State,
enshrined in our Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise,
sworn to uphold.
In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA 451 (1990)], we categorically stated
that:
When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier
influence of the latter should be counter-balanced by sympathy and compassion the law must accord the
underprivileged worker.
Likewise, in Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)], we declared:
Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy.
IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27 February 2008 and Resolution dated
9 May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the Resolution dated 20
November 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao, which granted to Rolando P.
Hortillano bereavement leave pay and other death benefits in the amounts of Four Thousand Nine Hundred
Thirty-Nine Pesos (P4,939.00) and Eleven Thousand Five Hundred Fifty Pesos (P11,550.00), respectively,
grounded on the death of his unborn child, are AFFIRMED. Costs against Continental Steel Manufacturing
Corporation.
SO ORDERED.

G.R. No. 164774

April 12, 2006

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners,

vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.
DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of the employer banning spouses
from working in the same company violates the rights of the employee under the Constitution and the Labor
Code or is a valid exercise of management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals dated August 3, 2004 in
CA-G.R. SP No. 73477 reversing the decision of the National Labor Relations Commission (NLRC) which
affirmed the ruling of the Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading principally of paper
products. Josephine Ongsitco is its Manager of the Personnel and Administration Department while
Sebastian Chua is its Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.1
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee of the
company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the couple that should
they decide to get married, one of them should resign pursuant to a company policy promulgated in 1995,2
viz.:
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one of
them should resign to preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee, whom she
married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy, one must resign
should they decide to get married. Comia resigned on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated
that Zuiga, a married man, got Estrella pregnant. The company allegedly could have terminated her services
due to immorality but she opted to resign on December 21, 1999.6

The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no
money and property accountabilities in the company and that they release the latter of any claim or demand
of whatever nature.7
Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign
voluntarily; they were compelled to resign in view of an illegal company policy. As to respondent Estrella,
she alleges that she had a relationship with co-worker Zuiga who misrepresented himself as a married but
separated man. After he got her pregnant, she discovered that he was not separated. Thus, she severed her
relationship with him to avoid dismissal due to the company policy. On November 30, 1999, she met an
accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days.
She returned to work on December 21, 1999 but she found out that her name was on-hold at the gate. She
was denied entry. She was directed to proceed to the personnel office where one of the staff handed her a
memorandum. The memorandum stated that she was being dismissed for immoral conduct. She refused to
sign the memorandum because she was on leave for twenty-one (21) days and has not been given a chance to
explain. The management asked her to write an explanation. However, after submission of the explanation,
she was nonetheless dismissed by the company. Due to her urgent need for money, she later submitted a
letter of 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 Resolution11 dated August
8, 2002. They appealed to respondent court via Petition for Certiorari.
In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Labor Relations
Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows:
(1) Declaring illegal, the petitioners dismissal from employment and ordering private respondents to
reinstate petitioners to their former positions without loss of seniority rights with full backwages from
the time of their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners attorneys fees amounting to 10% of the award
and the cost of this suit.13
On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that:

1. x x x the subject 1995 policy/regulation is violative of the constitutional rights towards marriage
and the family of employees and of Article 136 of the Labor Code; and
2. x x x respondents resignations were far from voluntary.14
We affirm.
The 1987 Constitution15 states our policy towards the protection of labor under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
xxx
Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to
the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves
Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon
getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy "may
appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read together with
the first paragraph of the rule. The rule does not require the woman employee to resign. The employee
spouses have the right to choose who between them should resign. Further, they are free to marry persons
other than co-employees. Hence, it is not the marital status of the employee, per se, that is being

discriminated. It is only intended to carry out its no-employment-for-relatives-within-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 statutes20 in the United States prohibiting marital discrimination. Some state courts21 have been
confronted with the issue of whether no-spouse policies violate their laws prohibiting both marital status and
sex discrimination.
In challenging the anti-nepotism employment policies in the United States, complainants utilize two theories
of employment discrimination: the disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is discriminatory on its face. Nospouse employment policies requiring an employee of a particular sex to either quit, transfer, or be fired are
facially discriminatory. For example, an employment policy prohibiting the employer from hiring wives of
male employees, but not husbands of female employees, is discriminatory on its face.22
On the other hand, to establish disparate impact, the complainants must prove that a facially neutral policy
has a disproportionate effect on a particular class. For example, although most employment policies do not
expressly indicate which spouse will be required to transfer or leave the company, the policy often
disproportionately affects one sex.23
The state courts rulings on the issue depend on their interpretation of the scope of marital status
discrimination within the meaning of their respective civil rights acts. Though they agree that the term
"marital status" encompasses discrimination based on a person's status as either married, single, divorced, or
widowed, they are divided on whether the term has a broader meaning. Thus, their decisions vary.24
The courts narrowly25 interpreting marital status to refer only to a person's status as married, single,
divorced, or widowed reason that if the legislature intended a broader definition it would have either chosen
different language or specified its intent. They hold that the relevant inquiry is if one is married rather than to
whom one is married. They construe marital status discrimination to include only whether a person is single,
married, divorced, or widowed and not the "identity, occupation, and place of employment of one's spouse."
These courts have upheld the questioned policies and ruled that they did not violate the marital status
discrimination provision of their respective state statutes.
The courts that have broadly26 construed the term "marital status" rule that it encompassed the identity,
occupation and employment of one's spouse. They strike down the no-spouse employment policies based on
the broad legislative intent of the state statute. They reason that the no-spouse employment policy violate the
marital status provision because it arbitrarily discriminates against all spouses of present employees without
regard to the actual effect on the individual's qualifications or work performance.27 These courts also find the
no-spouse employment policy invalid for failure of the employer to present any evidence of business

necessity other than the general perception that spouses in the same workplace might adversely affect the
business.28 They hold that the absence of such a bona fide occupational qualification29 invalidates a rule
denying employment to one spouse due to the current employment of the other spouse in the same office.30
Thus, they rule that unless the employer can prove that the reasonable demands of the business require a
distinction based on marital status and there is no better available or acceptable policy which would better
accomplish the business purpose, an employer may not discriminate against an employee based on the
identity of the employees spouse.31 This is known as the bona fide occupational qualification exception.
We note that since the finding of a bona fide occupational qualification justifies an employers 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 rule39 is evidently not the valid reasonable
business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but
were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of
Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section,
could be detrimental to its business operations. Neither did petitioners explain how this detriment will
happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married
Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees
married to each other will be less efficient. If we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption of a perceived danger at the expense of an
employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are
free to marry persons other than co-employees. The questioned policy may not facially violate Article 136 of
the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it
could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the
questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company.40
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit
the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot
prudently draw inferences from the legislatures silence41 that married persons are not protected under our
Constitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to
present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid
exercise of management prerogative. Corollarily, the issue as to whether respondents Simbol and Comia
resigned voluntarily has become moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that her
resignation letter was written in her own handwriting. Both ruled that her resignation was voluntary and thus
valid. The respondent court failed to categorically rule whether Estrella voluntarily resigned but ordered that
she be reinstated along with Simbol and Comia.
Estrella claims that she was pressured to submit a resignation letter because she was in dire need of money.
We examined the records of the case and find Estrellas contention to be more in accord with the evidence.
While findings of fact by administrative tribunals like the NLRC are generally given not only respect but, at
times, finality, this rule admits of exceptions,42 as in the case at bar.
Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her alleged
immoral conduct. At first, she did not want to sign the termination papers but she was forced to tender her
resignation letter in exchange for her thirteenth month pay.
The contention of petitioners that Estrella was pressured to resign because she got impregnated by a married
man and she could not stand being looked upon or talked about as immoral43 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.
IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August 3,
2004 is AFFIRMED.1avvphil.net

SO ORDERED.

G.R. No. 111105 June 27, 1995

ROLANDO REVIDAD, PABLITO LALUNA, RAFAEL ANGELES, TEODORO ROSARIO, ROMEO
REVIDAD, JACINTO GRUTA, JOSE ESPAOL, FLORENTINO LOCSIN, ROGELIO
PARADERO, MARCELINO DEROTA, ARMANDO CABALES, BENJAMIN MONTESA and
RAYMOND VIDAL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC, GULF AND PACIFIC
COMPANY OF MANILA, INC., respondents.

REGALADO, J.:
This original action for certiorari seeks to nullify the decision rendered by public respondent National Labor
Relations Commission (NLRC) on July 14, 1993 1 which reversed the decision of the labor arbiter and
ordered the dismissal of herein petitioners' complaint for illegal dismissal.
It appears that sometime in March, 1988, private respondent Atlantic, Gulf and Pacific Company of Manila,
Inc. (hereafter, AG & P ) terminated the services of 178 employees, including herein petitioners, under a
redundancy program. As a consequence, a complaint for illegal dismissal with prayer for reinstatement was
filed by herein petitioners (except Jose Espaol) with public respondent and docketed in its Arbitration
Branch as NLRC-NCR Cases
Nos. 00-01-00489-89, 00-01-00515-89, 00-01-00643-89, 00-01-01143-89, and 00-03-01216-89. These cases
were subsequently decided in favor of petitioners, as a result of which they were reinstated on July 8, 1991
and assigned to the Batangas plant of private respondent.
The records show, however, that pursuant to Presidential Directive No. 0191 2 issued on July 25, 1991 by the
company's president and containing management's decision to lay off 40% of the employees due to financial
losses incurred from 1989-1990, AG & P implemented and effected, starting August 3, 1991, the temporary
lay-off of some 705 employees. By reason thereof, the AG & P United Rank and File Association (URFA, for
facility), which was the employees' union, staged a strike. 3
In a conciliation conference over the labor dispute held before the National Conciliation and Mediation
Board on August 13, 1991, the parties agreed to submit the legality of the lay-offs to voluntary arbitration.
Accordingly, the case was filed with Voluntary Arbitrator Romeo B. Batino, entitled "AG & P United Rank
and File Association vs. AG & P Company of Manila. Inc.," on the principal issue of whether the massive
lay-off, in the exercise of AG & P's management prerogative, constituted a violation of their existing
collective bargaining agreement which would be tantamount to an unfair labor practice. This issue was
eventually resolved by the voluntary arbitrator in a decision dated January 7, 1992 where it was held that AG
& P had the right to exercise its management prerogative to temporarily lay off its employees owing to the
unfavorable business climate being experienced by the company consequent to the financial reverses it
suffered from 1987 to 1991. 4
In the meantime, as found by public respondent in its decision, 5 the three labor unions then existing at AG &
P met on September 7, 1991 with the corporation's management officials at its Batangas plant in a conference
presided by Congressman Hernando B. Perez and wherein the Parties arrived at the following agreement:

1. The Company agrees to extend financial assistance to all temporarily laid off or to be laid off employees
the equivalent of two (2) months pay to be paid as follows: The first one month pay on September 15, 1991
and the second one month pay on or before December 10, 1991. The said financial assistance shall be
deductible from the employees' separation pay should they not be resolved by the company within the sixmonth lay off period or from cook benefit due them should they not be recalled.
2. The supervisors' claim that, the separation pay of supervisors should be computed on the basis of one
month pay for every year of service in accordance with precedent adopted by the Company for supervisors
who were terminated in the post. The Company agrees to consider this claim favorably should the
supervisors be able to establish with convincing proof that there is really such precedent in the Company.
3. There should be consultations between the Unions in BMFY and the Company before any temporary layoff of employees in BMFY should be effected and the parties agree that a dialogue to discuss such matters be
undertaken by them.
4. The LAKAS-NFL agree(s) to the understanding specified in paragraph 1 abovestated concerning the
financial assistance to be extended to those who were temporarily laid off or to be laid off in BMFY. It is
clear, however, that the financial assistance due on or before December 10, 1991 shall no longer be effected
regarding employees who might have been recalled in the meantime.
5-A-See page 3 of this agreement.
5. The temporarily laid off employees who might find jobs elsewhere during the period of lay-off will be
paid their separation pay in accordance with the CBA/Labor Code or existing Company Policy applicable.
6. The notice of Strike filed by the AG & P Supervisory Employees Union is hereby withdrawn from the
DOLE.
7. The pickets shall be lifted immediately by BMFY and AGPEC upon signing of this agreement.
8. There shall be no retaliatory charges by one against the other in relation to this labor dispute.
9. All non-laid off employees will report immediately to the Company on Monday, December 9, 1991.
5-A. The Lakas-NFL requests that employees belonging to LAKAS who were or may be temporarily laid off
and may not be recalled within six months from lay-off shall have the option to be paid their separation pay
or let their temporary lay-off status be extended up to the time when jobs would become available and their
services are needed by the Company.
10. All laid off employees will be given preference in hiring as long as they meet the qualifications requested
for the position or job opening. 6
On September 17, 1991, herein petitioners were served a notice of temporary lay-off, the text of which reads
as follows:
Pursuant to the agreement dated September 7, 1991 among Unions and AG & P, represented by Atty. Pedro
F. Perez, we regret to advi(s)e you that you are part of the employee(s) to be placed on Temporary Lay-off,
after exhausti(on) of your Vacation Leave credits if there is any.

Henceforth, you will be immediately placed on priority reserve list for both overseas and domestic
assignments and should the Company need your service, we will advise you accordingly.
Kindly present this letter to Finance Department to Mr. Sammy O. De Guzman to collect your temporary
financial assistance equivalent to two months basic pay as follows, one month on 15 September 1991 and
one month on 10 December 1991. If you will be recalled within the 6 month lay-off period, then the financial
assistance shall be deductible from your salary in six (6) equal installments semi-monthly. 7
Thereafter, petitioners received their respective financial assistance and they signed a pro forma
authorization in favor of AG & P to deduct from the separation pay due them the amount of financial
assistance received pursuant to the aforesaid agreement of September 7, 1991.
As earlier stated, it was on January 7, 1992 when the voluntary arbitrator rendered a decision finding
justification for the mass lay-off of the AG & P employees caused by financial reverses suffered by the
company.
On February 11, 1992, considering that petitioners were not being recalled by the AG & P management, they
filed a complaint for illegal dismissal and unfair labor practice against AG & P before respondent
commission where it was docketed as NLRC Case No. NCR-00-02-00996-92. On August 24, 1992, Labor
Arbiter Nieves V. de Castro rendered judgment 8 ordering the reinstatement of petitioners, with payment of
full back wages, on the ground that AG & P failed to substantiate the alleged losses it incurred in 1991 which
resulted in the retrenchment of its operations. The labor arbiter explicated in her aforesaid decision that while
it had been established that private respondent suffered serious losses from 1987 to 1990, it allegedly failed
to prove continuous losses in 1991 which would justify the temporary lay-off of herein petitioners, thus:
. . . . But respondent failed to submit any evidence to show that indeed it was continuously suffering from
serious losses in 1991. While it is well settled that AG & P suffered from serious losses from 1987 up to
1990, respondent failed to establish lawful basis for effecting another lay-off on September 17, 1991. And
even if the said lay-off was relative to an agreement between the Management and the Union existing thereat,
the same may only be given an imprimatur if and when the parties thereto have justifiable reasons therefor,
and provided further that it will not adversely affect the rights and interests of others.
Respondent cannot forever make use of the losses incurred in a specific period of time and which was the
basis of a previous lay-off as a ground (for) another lay-off every time or anytime it thought of terminating,
an employee or a batch of employees. 9
On appeal, public respondent NLRC reversed and set aside the decision of the labor arbiter, and dismissed
the complaint for illegal dismissal for lack of merit. In ruling that the order of reinstatement with payment of
backwages has no basis in fact and in law, public respondent declared that, contrary to the labor arbiter's
findings, there was only one lay-off, that is, the lay-off effected on September 17, 1991 the legality of which
had already been passed upon and upheld in the voluntary arbitration proceedings. Hence, this petition which
prays for the affirmance in toto of the labor arbiter's decision.
Petitioners argue that public respondent gravely abused its discretion and committed serious errors or law
when it held that
1. Petitioners' dismissal was valid because it was due to private respondent's serious losses when in fact there
is no evidence to justify this; moreover, the latter failed: (a) to serve on the Department of Labor and
Employment a written notice of termination at least one month before petitioners' dismissal; (b) to observe
fair and reasonable standards in effecting retrenchment; and (c) to show that it first instituted cost reduction
measures in other areas of production before undertaking retrenchment as a last resort and, therefore, their

dismissal is against the doctrine laid down in RCPI v. NLRC and Mendero, G.R. Nos. 101181-84, June 22,
1992.
2. It has no more basis to affirm the labor arbiter's decision for the reason that petitioners had received
monetary consideration for their dismissal when said consideration is short of what the parties' CBA or the
law accords to petitioners. 10
Petitioners contend that their lay-off on September 17, 1991 cannot be justified by the losses suffered by AG
& P from 1989 to 1990 since it had not been shown that such losses continued up to 1991; that their lay-off
was merely in retaliation to an adverse decision against AG & P rendered by the NLRC in an earlier case
involving the same parties, which resulted in the reinstatement of herein petitioners on July 8, 1991; that the
termination of petitioners' employment on September 17, 1991 could not have been the subject of the
voluntary arbitration proceedings before Voluntary Arbitrator Batino, contrary to the findings of public
respondent NLRC that there was only one lay-off, considering that the issue involved therein was the legality
of the mass lay-off of more than 705 employees of AG & P which, however, did not include herein
petitioners; and that if such allegation of AG & P were true, it could have easily invoked the voluntary
arbitration case as res judicata to the aforesaid illegal termination case subsequently filed by petitioners, but
which AG & P did not do.
Petitioners further contend that assuming arguendo that indeed there was only one lay-off, their temporary
lay-off supposedly due to retrenchment is illegal because: (a) AG & P failed to show that it incurred losses in
1991 to justify such termination; (b) no written notice of termination was submitted with the Department of
Labor and Employment one month before the date of the temporary lay-off; (c) AG & P failed to observe fair
and reasonable standards in effecting retrenchment; and (d) there is no showing that cost reduction measures
were undertaken before management resorted to retrenchment of employees. Finally, it is claimed that
petitioners merely received financial assistance which does not, however, bar them from questioning the
legality of their dismissal, aside from the fact that they have not been given their separation pay.
We find that the temporary lay-off of herein petitioners is valid and justified, and that by reason of
management's failure to recall them, their services shall be considered duly terminated and they shall be
entitled to separation pay equivalent to one month pay or at least one-half () month pay for every year of
service, whichever is higher. The financial assistance which petitioners have received shall be deducted from
the amount of separation pay they will receive, pursuant to Paragraph 1 of the September 7, 1991 agreement.
We are not, however, in accord with the findings of public respondent that the subject of voluntary arbitration
proceedings was the September 17, 1991 lay-off of herein petitioners, which allegedly was the one and only
lay-off effected by AG & P. Private respondent AG & P does not deny nor controvert the allegation in the
position paper submitted by the AG & P-URFA with the voluntary arbitrator that the AG & P management
started the actual implementation of the company's Presidential Directive No. 0191 on August 3, 1991 by
effecting the temporary lay-off of more than 705 employees. Thus, the lay-off of herein petitioners on
September 17, 1991 cannot be validly asserted as the only lay-off subject of the aforementioned voluntary
arbitration proceedings.
On the contrary, it is more logical to conclude from the evidence on record that there could have possibly
been not just one or two separate and unrelated terminations because what was actually involved here was a
continuing process or correlated series of temporary lay-offs implemented by private respondent on the basis
of its president's directive for retrenchment by reason of the financial reverses being suffered by the
company.
This fact may be clearly deduced from a reading of the position paper submitted by the AG & P-URFA with
the voluntary arbitrator 11 wherein it is categorically stated that as of the date thereof, that is, October 17,

1991, "the lay-off program has continued even as the parties agreed to submit its legality or illegality to
voluntary arbitration." The union's position paper merely echoed the sentiment expressed by its president,
Nicanor Melano, in a letter addressed to the AG & P Head of Employee Relations, Judge Pedro Reyes, dated
August 17, 1991, 12 in effect condemning management for continuously laying off employees despite the
pendency of the labor dispute before the voluntary arbitrator, and demanding that the company cease from
pursuing its retrenchment scheme.
Suppletorily, there was the agreement 13 of September 7, 1991 executed by and between AG & P, on the one
hand, and the three unions, on the other, which has been repeatedly adverted to. Said agreement was actually
an offshoot of the strike staged by the employees which was triggered by the implementation of the mass
lay-offs. A cursory perusal thereof indeed makes it quite clear that the crux of the negotiations between
management and its employees concerns the manner with which future possible lay-offs would be
implemented and the financial assistance to be extended to those employees already laid off or who may be
laid off. Thus, paragraph 3 of the agreement states that "(t)here should be consultations between the Unions
in BMFY and the Company before any temporary lay-off of employees in BMFY should be effected and the
parties agree that a dialogue to discuss such matters be undertaken by them." It is thereby unmistakable, from
the plain and simple wordings of the agreement, that the company would continue to exercise its
management prerogative to lay off employees as the need arises, but subject to the conditions imposed
therein.
The fact that the three unions which negotiated with management acquiesced to the aforequoted third
stipulation should be deemed an admission and recognition on their part that there would be a continuing
need to lay off employees as a consequence of the dwindling financial capacity of the company to maintain
its existing work force. It would have been quite absurd and unnatural for the union to have agreed to
additional lay-offs in the future if it did not unqualifiedly believe that there truly existed a persisting and
irreversible financial instability in the business concerns of AG & P.
Petitioners were temporarily laid off pursuant to this agreement which, not being contrary to law, morals and
public policy, is valid and binding between the parties. More importantly, it will be noted that the AG & PURFA did not as much as raise an objection nor file a protest against such lay-offs, as it would have been
wont to do had petitioners' assertions really been true. And, confirmatory thereof, herein petitioners never
raised the issue that the consultation requirement contained in the agreement was not resorted to or followed
before their lay-off was effected. It would, therefore, be safe to assure that such procedure had been
followed, thereby lending credence to the obvious fact that the services of petitioners were legally
terminated.
The bare allegation that the dismissal of petitioners was a retaliatory move by the company after the former
won in an earlier illegal termination case and by reason of which they were reinstated by the latter, without
any supporting evidence to prove bad faith or ill motive on the part of the company, cannot stand against and
is diametrically opposed to the findings in the voluntary arbitration proceedings. Voluntary Arbitrator Batino
declared in no uncertain terms, after an assiduous and painstaking evaluation of the documentary evidence
and position papers submitted by the parties, that the exercise of AG & P's management prerogative to lay off
employees was fair, reasonable and just and that it was neither oppressive, malicious, harsh, nor vindictive.
Worse, it was there stated that the union, to which herein petitioners belonged, never imputed bad faith or ill
motives in the selection of the employees to be temporarily laid off. This finding is totally contradictory to
the indefensible hypothesis invoked by petitioners which, from the very stare, was bound to fail considering
the circumstances obtaining in this case.
We are accordingly convinced, and so hold, that both the retrenchment program of private respondent and the
dismissal of petitioners were valid and legal.

First, it has been sufficiently and convincingly established by AG & P before the voluntary arbitrator that it
was suffering financial reverses. Even the rank and file union at AG & P did not contest the fact that
management had been undergoing financial difficulties for the past several years. Hence, the voluntary
arbitrator considered this as an admission that indeed AG & P was actually experiencing adverse business
conditions which would justify the exercise of its management prerogative to retrench in order to avoid the
not so remote possibility of the closure of the entire business which, in the opinion of the voluntary
arbitrator, would in the last analysis be adverse to both the management and the union.
Second, the voluntary arbitrator's conclusions were premised upon and substantiated by the audited financial
statements and the auditor's reports of AG & P for the years 1987 to 1991. 14 These, financial statements
audited by independent external auditors constitute the normal and reliable method of proof of the profit and
loss performance of a company. 15
Third, contrary to petitioners' asseverations, proof of actual financial losses incurred by the company is not a
condition sine qua non, for retrenchment. Retrenchment is one of the economic grounds to dismiss
employees, which is resorted to by an employer primarily to avoid or minimize business losses. 16 The law
recognizes this under Article 283 of the Labor Code which provides that:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or 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 workers
and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to 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 one (1)
whole year.
In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination of the
services of some employees is authorized to be undertaken by the employer sometime before the anticipated
losses are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the
employer to stay his hand and keep all his employees until after losses shall have in fact materialized. If such
an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as
unduly taking property from one man to be given to another.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient
legal warrant for the reduction of personnel. In the nature of things, the possibility of incurring losses is
constantly present, in greater or lesser degree, in the carrying on of business operations, since some, indeed
many, of the factors which impact upon the profitability or viability of such operations may be substantially
outside the control of the employer. 17
On the bases of these considerations, it follows that the employer bears the burden to prove his allegation of
economic or business reverses with clear and satisfactory evidence, it being in the nature of an affirmative
defense. 18 As earlier discussed, we are fully persuaded that the private respondent has been and is besieged
by a continuing downtrend in both its business operations and financial resources, thus amply justifying its
resort to drastic cuts in personnel and costs.

To the point of being plethoric, the explanation advanced by private respondent in its position paper
submitted to the voluntary arbitrator is highly enlightening and is here quoted in full:
Figure 1 shows, in bar graph form, the comparative Net Income or Net Loss of the Company from 1987 to
1990 as well as the projected Net Loss for 1991. The graph clearly illustrates the financial hemorrhage being
endured by the Company. The Net Incomes of 1968 and 1989 (P2.6 million and P5.8 million, respectively)
dwindles into insignificance beside the net Losses of 1987 and 1990 as well as the estimated Net Loss for
1991 (P35.4 million, P76.2 million and P250 million, respectively). Moreover, the P54.8 million Net Income
of 1989 is due solely to the dissolution of 2 subsidiaries which resulted in a "paper gain" of about P134
million. In other words, there was an actual loss of about 80 million but a paper gain of P54 million in 1989.
xxx xxx xxx
Figure 2, on the other hand, shows the dwindling number of projects being undertaken by the Company for
the past four years. As of August 1991, there are only 17 ongoing projects of the Company (as compared to
the 1987 peak of 67), 13 of which are mere carry-overs from the previous years. The projects being the main
source of the Company's revenues, the graph in Figure 2 further confirms the severe losses being suffered by
the Company.
xxx xxx xxx
With retained earnings at the financially comfortable level of more than P400 million, it may be suggested,
that the Company delay implementation of the decisions to streamline, centralize, retrench, and cut expenses
in general, in the hope that the situation of the Company's financial conditions proves that this suggestion is
not viable. Figure 3 proves this by showing, in bar graph form, a comparative study of the Company's
Working Capital for the period 1987 to 1990. The legend "Working Capital source" indicates the amount
generated by the Company during the fiscal year. "Working Capital use" indicates the amount used by the
Company during the fiscal year. And "Inc/Dec in Working Capital" indicates the increase or decrease in
Working Capital at fiscal year's end. It is readily seen from Figure 3 that, except for 1988, more working
capital was used than was generated for the period under study and the same is chronically being depleted.
This means that the Company is running out of money to pay for its bills.
xxx xxx xxx
Figure 4 plots the Current Ratio of the Company over time. "Current Ratio" is the ratio of a firm's Current
Assets to its Current Liabilities. It thus measures the firm's ability to immediately pay its current debts. The
rule of thumb prescribes a Current Ratio of 2, meaning, for every peso of short-term debt, there should be
two pesos of cash or "near-cash" available. Figure 4 clearly shows that as early as 1987, the Company is
below par. Worse, in 1990, the Current Ratio is less than 1. This means that it has more short-terms debts
than current assets. 19
We might as well make mention of the fact that as early as March 4, 1991, the President of AG & P had
issued Circular No. CEO-191, 20 addressed to all AG & P employees wherein they were apprised of the
financial difficulties of the company and of the decisions made by its board of directors aimed at arresting
any further dissipation of company resources. It informed the employees that "we simply no longer have the
resources required to fully support anything much beyond our mainline activities. We each must therefore
now make a choice to either stand solidly behind these critical moves poise ourselves for an eventual
collapse. According to private respondent AG & P, the decision was calculated to turn the company into a
lean and trim centralized organization, by shedding off marginal business activities, in the process availing of
the Company's Retirement Plan and retrenching personnel in the affected areas whenever necessary. The

circular is more than sufficient notice to AG & P employees, as well as herein petitioners, of the then
impending decision of the company to carry out its retrenchment program for the reasons therein stated.
Anent the mandatory written notice to be filed with the labor department one month before retrenchment, 21
we are of the considered opinion that the proceedings had before the voluntary arbitrator, where both parties
were given the opportunity to be heard and present evidence in their favor, constitute substantial compliance
with the requirement of the law. The purpose of this notice requirement is to enable the proper authorities to
ascertain whether the closure of the business is being done in good faith and is not just a pretext for evading
compliance with the just obligations of the employer to the affected employees. 22 In fact, the voluntary
arbitration proceedings more than satisfied the intendment of the law considering that the parties were
accorded the benefit of a hearing, 23 in addition to the right to present their respective position papers and
documentary evidence.
For that matter, hearing and investigation by the employer, where the reason for termination is retrenchment
due to financial reverses and not to an act attributable to the employee, is not even required because it is
considered a surplusage under existing jurisprudence. Hence, it has been held that:
. . . Where, as in the instant case, the ground for dismissal or termination of services does not relate to a
blameworthy act or omission on the part of the employee, there appears to us no need for an investigation
and hearing to be conducted by the employer who does not, to begin with, allege any malfeasance or nonfeasance on the part of the employee. In such case, there are no allegations which the employee should refute
and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent
would have had the right to be present, on the business and financial circumstances compelling retrenchment
and resulting in redundancy, would be to impose upon the employer an unnecessary and inutile hearing as a
condition for legality of termination.
This is not to say that the employee may not contest the reality or good faith character of the retrenchment or
redundancy asserted as grounds for termination of services. The appropriate forum for such controversion
would, however, be the Department of Labor and Employment and not an investigation or hearing to be held
by the employer itself. It is precisely for this reason that an employer seeking to terminate services of an
employee or employees because of "closure of business establishment and reduction of personnel," is legally
required to give written notice not only to the employee but also to the Department of Labor and
Employment at least one month before effectivity date of the termination. 24
At any rate, considering that the Office of the Voluntary Arbitrator is under the jurisdiction of the Department
of Labor and Employment, it would be superfluous to still require the service of notice with the latter when
proceedings have already been initiated with the former precisely to carry out the very purpose for which
said notice is intended.
In Lopez Sugar Corporation vs. Federation of Free Workers, et al., supra, this Court set out the general
standards in terms of which the acts of an employer in retrenching or reducing the number of its employees
must be appraised, to wit:
. . . . Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss
purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential
in character, the bona fide nature of the retrenchment would appear to be seriously in question. Secondly, the
substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively
and in good faith by the employer. There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the
employees retired or otherwise laid off. Because of the consequential nature of retrenchment, it must, thirdly,
be reasonably necessary and likely to effectively prevent the expected losses. The employer should have

taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor
costs. . . .
Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for
requiring this quantum of proof is apparent; any less exacting standard of proof would render too easy the
abuse of this ground for termination or services of employees. . . .
It is obvious from the preceding discussions that the aforequoted guidelines have been faithfully met by the
company.
As a final word, let it be reiterated herein what we have heretofore said, that the law in protecting the rights
of the laborer authorizes neither oppression nor self-destruction of the employer. While the Constitution is
committed to the policy of social justice and the protection of the working class, it should not be supposed
that every labor dispute will be automatically decided in favor of labor. Management also has its own rights,
which as such are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for
those with less privileges in life, the Supreme Court has inclined more often than not toward the worker and
upheld his cause with his conflicts with the employer. Such favoritism, however, has not blinded the Court to
rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and
applicable law and doctrine. 25

WHEREFORE, the decision appealed from is hereby AFFIRMED, with the modification that private
respondent Atlantic, Gulf and Pacific Company of Manila, Inc. is ORDERED to pay herein petitioners their
separation pay equivalent to one month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. The financial assistance which herein petitioners may have received shall be deducted
from the separation pay to which they are entitled.
SO ORDERED.

G.R. No. 75662 September 15, 1989

MERCURY DRUG CORPORATION, petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION, NLRC SHERIFF and CESAR E. LADISLA,
respondents.
Veronica G. de Vera for petitioner.
David B. Agoncillo for private respondent.

FERNAN, C.J.:
Petitioner assails in this petition for review on certiorari the Resolution dated July 24, 1986 of the National
Labor Relations Commission in NLRC Case No. RB-IV-19301-78-T denying petitioner's motion for
reconsideration of its decision dated April 30, 1986 which reversed the decision of Labor Arbiter Ceferina J.
Diosana and ordered the reinstatement of private respondent Cesar E. Ladisla to his former position with full
backwages.
Records show that private respondent Cesar E. Ladisla was employed by petitioner Mercury Drug
Corporation as a Stock Analyst at its Claro M. Recto Branch. He had been with the company for two years
and nine months when on August 15, 1977 he was apprehended by representatives of Mercury Drug while in
the act of pilfering company property consisting of three (3) bottles of Persantin and one (1) bottle of
Valoron at 100 tablets per bottle with a total value of P272.00. He admitted his guilt to the investigating
representatives of petitioner company and executed a handwritten admission. Said admission was repeated
verbally at the police station before the arresting officer as shown in the Booking Sheet and Arrest Report
which was signed and authenticated by Ladisla. 1 Thus, on August 19, 1977, petitioner, while simultaneously
placing private respondent on preventive suspension, filed before the Department of Labor an application for
the termination of private respondent's employment on grounds of dishonesty and breach of trust.
Private respondent opposed the aforesaid application for clearance to terminate his services alleging among
others, that his suspension and proposed dismissal were unfounded and baseless being premised on the
machinations and incriminatory acts of Ms. Leonora Suarez and Edgardo Imperial, Manager and Retail
Supervisor, respectively, of petitioner's Claro M. Recto Branch; and that he was not given the opportunity to
be heard nor allowed to explain his side before he was summarily suspended.
The parties were then required by the Arbitration Branch of the Department of Labor to file their respective
position papers. While the case was being heard by Labor Arbiter Ceferina J. Diosana petitioner filed a
criminal complaint for attempted qualified theft against private respondent before the Fiscal's Office of
Manila but this was dismissed by the court before the arraignment of the accused. However, the case was
refiled and docketed as Criminal Case No. 43096 before Judge Pedro A. Ramirez of the then Court of First
Instance, subsequently the Regional Trial Court of Manila, Branch XXX.
In a decision dated November 8, 1979. 2 Labor Arbiter Ceferina J. Diosana sustained the validity of private
respondent's dismissal and granted petitioner's application for clearance to terminate, the services of the
former. Private respondent appealed his aforesaid dismissal to the National Labor Relations Commission.

Pending resolution of the appeal, herein petitioner filed a Manifestation with said Commission notifying the
latter of the ongoing trial in Criminal Case No. 43096 against private respondent. On September 15, 1983,
judgment was rendered in Criminal Case No. 43096, finding private respondent accused guilty of the crime
of simple theft. 3 No appeal was taken from the decision in the subject criminal case, private respondent
having availed himself of the benefits of the Probation Law. He was eventually discharged from probation on
December 27, 1984, after complying with the terms and conditions thereof. 4
On April 30, 1986, public respondent National Labor Relations Commission reversed the decision of the
Labor Arbiter because it found no substantial evidence establishing the charge against private respondent
Ladisla stating thus:
WHEREFORE, the Decision appealed from is hereby set aside and a new one entered ordering respondent to
immediately reinstate him in (sic) his former position with full back wages.
SO ORDERED. 5
Petitioner filed a motion for reconsideration of the aforementioned decision, which was denied by public
respondent Commission in its resolution dated July 24, 1986. 6 Hence, this petition assailing the latter's
reversal of the labor arbiter's decision and its order for the reinstatement with full back wages of private
respondent.
Petitioner submits that it was serious legal error on the part of public respondent to order the reinstatement of
private respondent who was convicted of the crime of simple theft by Judge Pedro Ramirez in Criminal Case
No. 43096 filed by petitioner against said private respondent-employee involving the same facts obtaining in
the present case for termination. On the other hand, private respondent maintains that he was a victim of
revenge and incriminatory machinations as the charge of qualified theft of company property was a frameup.
We hold that public respondent National Labor Relations Commission committed a grave abuse of discretion
amounting to lack of jurisdiction in finding no substantial evidence to sustain the charge against private
respondent. This conclusion is in complete and utter disregard of the Regional Trial Court's conviction of
private respondent for the crime of simple theft which decision was rendered prior to its own assailed
decision. It must be remembered that proceedings in criminal cases such as that held in the subject criminal
case require proof beyond reasonable doubt to establish the guilt of the accused and findings of fact of the
trial court on this matter are generally accorded great weight by appellate courts most especially where no
appeal had been filed thereafter, thus rendering the said findings final. As mentioned earlier, private
respondent did not appeal from the decision of the lower court but instead availed himself of the benefits of
the probation law which was correspondingly granted by the Regional Trial Court.
Dismissal of a dishonest employee is to the best interest not only of management but also of labor. As a
measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring
employees. An employer cannot be compelled to continue in employment an employee guilty of acts
inimical to its interest, justifying loss of confidence in him. The law does not impose unjust situations on
either labor or management. 7 We therefore find justification in the termination of private respondent Cesar
E. Ladisla's employment by petitioner Mercury Drug Corporation.
Under Article 282(c) of the Labor Code, an employer may terminate an employment for "fraud or willful
breach by the employee of the trust reposed in him by his employer or his duly authorized representative."
Loss of confidence is established as a valid ground for the dismissal of an employee. The law does not
require proof beyond reasonable doubt of the employee's misconduct to invoke such a justification. It is
sufficient that there is some basis for the loss of trust or that the employer has reasonable grounds to believe

that the employee is responsible for the misconduct and his participation therein renders him unworthy of the
trust and confidence demanded of his position. 8
Private respondent's admission of his guilt as earlier stated, his subsequent conviction in Criminal Case No.
43096 and his acceptance of the same as implied in the absence of an appeal therefrom and his subsequent
application for probation established beyond reasonable doubt his guilt for the crime of simple theft. It was
this same act which gave rise to his conviction by the trial court that was the basis for the termination of his
employment by petitioner.
We have held that the eventual conviction of the employee who is prosecuted for his misconduct is not
indispensable to warrant his dismissal by his employer. 9 More specifically, an employee who has been
exonerated from a criminal charge of theft of gasoline on the basis of technicality may still be dismissed
from employment if the employer has ample reason to mistrust him. 10 If acquittal from the criminal charge
does not negate the existence of a ground for loss of trust and confidence, with more reason should
conviction for such criminal charge fortify said mistrust.
Anent private respondent's claim of summary suspension without being given the opportunity to be heard,
the Court takes note that, in addition to the fact that his suspension was merely preventive pending approval
by the Department of Labor of its application for clearance to terminate the services of private respondent,
the latter was given the chance to defend himself in several instances: at the Police Precinct No. III, Western
Police District, Metro Manila where he was brought for investigation or questioning immediately after the
occurrence of the alleged pilferage of medicines and where he was given the opportunity to state his
defenses, and thereafter, before the arbitration branch of the Department of Labor where he was required and
did submit his position paper.
The law in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer. 11 While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights, which, as such, are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for those with less privileges in life, the Supreme Court has
inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and applicable law and doctrine . 12
WHEREFORE, the assailed resolution of the National Labor Relations Commission is reversed and set aside
and the Labor Arbiter's decision of November 8, 1979 dismissing Cesar E. Ladisla as petitioner's stock
analyst is hereby reinstated. No costs.
SO ORDERED.

Caltex vs. Philippine Labor Organization

May 27, 1959 No. L-9915
Unreported Cases
Ponente: Paras, C.J.
Facts:
Hipdion del Rosario was hired by Caltex as labourer in its Pandacan Terminal. After two months he was
suspended for insubordination. Caltex filed a petition with the Industrial Court for authority to dismiss him.
After hearing, the court found del Rosario guilty of the acts complained of but believing that a permanent
dismissal was to severe a punishment, the court ordered his reinstatement with payment of backwages.
Caltex claims that the court committed a serious mistake of law and grave abuse of discretion in compelling
it to retain del Rosario in its employ and in substituting its judgment in determining the fitness and
qualification of a temporary employee to become permanent or regular.

Issues:
Whether or not del Rosarios discharge was proper.

Whether or not the court has a right to substitute Caltexs judgment in d

etermining the fitness and qualification of a temporary employee.

Held:
Del Rosarios discharge was proper. The acts of insubordination for which del Rosario was
found guilty consist of disorderly conduct and wilful disobedience which to note was committed in a very
short period of two months from the time of his hiring. Wilful disobedience is a
justifiable ground for an employees discharge.
Considering the period of time that del Rosario had been working for petitioner (Caltex) before his
suspension, it can be said that he was on temporary or trial basis. Caltex has the right to place him under this
condition to determine his fitness and competency.

G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

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

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