X.

Post Employment (Digests)

B. Termination of Employment

normal increases which complainant would have received during the period
of her separation.

CITYTRUST BANKING CORPORATION V NLRC (RUIZ)

258 SCRA 621
MENDOZA; July 11, 1996

- In connection with the computation of the award in her favor, private

respondent sought the production of the bank's payrolls for 1974-1981.
Her motion was opposed by petitioner which offered instead P74,344.00,
the total amount of backwages as computed by the socio-economic analyst
of the Department of Labor, plus P9,040.00 in transportation allowance
and P1,050.00 mid-year bonus for 1974.
- Private respondent refused the offer, hence the NLRC directed the analyst
to compute the award on the basis of the payrolls from 1974 to 1981.
Petitioner appealed to the NLRC en banc, but its petition was dismissed, on
the ground that the order appealed from was interlocutory.
- Petitioner filed a petition for Certiorari and Prohibition with this Court,
assailing the dismissal of its appeal. The petition was at first dismissed for
lack of merit. Petitioner's motion for reconsideration was also dismissed.
On July 21, 1986 this Court modified its decision and petitioner was
ordered to pay private respondent "backwages limited to three years
without qualification or deduction at the salary rate of private respondent
at the time of dismissal."
- The Labor Arbiter issued an alias writ of execution after finding that the
amount corresponded to the amount found due private respondent in the
decision of the NLRC and the resolution of this Court, consisting of salary
differentials and other fringe benefits which were not paid to her from the
time that she was reinstated on August 14, 1978 as manager of the
Auditing Department.
- Petitioner moved to quash the alias writ of execution. As its motion was
denied, it filed a petition for Injunction in the NLRC en banc to stop the
implementation of the alias writ of execution and prayed for a
recomputation of the monetary award pursuant to this Court's resolution of
July 21, 1986. Its petition was, however, denied, as was its motion for
reconsideration, in the resolutions of the NLRC. Hence, this petition.
ISSUE: WON private respondent is entitled to only three years of
backwages and no more
HELD: NO
- Private respondent is, in addition, entitled to reinstatement without loss
of seniority rights. Art. 280 of the Labor Code provides:
ART. 280. Security of Tenure. In cases of regular employment, an
employer shall not terminate the services of an employee except for a
just cause or when authorized by this title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and to his backwages computed
from the time his compensation was withheld from him up to the time of
his reinstatement. (emphasis supplied)
- Backwages are for earnings which a worker has lost due to his illegal
dismissal. Private respondent was illegally dismissed from November 8,
1974 to August 13, 1978. In its May 28, 1985 Report, the socio-economic
analyst computed private respondent's backwages for this period but he
erroneously considered as backwages private respondent's salary
differential from August 14, 1978 to October 31, 1984. On August 14,
1978, private respondent had already been reinstated, albeit to a lower

NATURE: Special civil action in the Supreme Court. Certiorari

FACTS
- Private respondent Ruiz was the internal auditor of petitioner Citytrust
Banking Corporation. She was designated manager of the Quiapo branch
of the bank, but she refused the appointment on the ground that it was a
demotion. As a consequence, she was suspended and, upon clearance
given by the Department of Labor, she was terminated on November 8,
1974.
- Private respondent filed a complaint for illegal dismissal. She was
ordered reinstated as branch manager, the NLRC urging her to accept the
position, otherwise her refusal would be considered a ground for her loss of
employment. Private respondent appealed to the Minister of Labor (now
Secretary of Labor and Employment) but again she lost. Both parties then
appealed to the Office of the President, which ordered petitioner to
reinstate private respondent to her former position as internal auditor and
to pay her backwages from the time her compensation was withheld up to
the time of her reinstatement.
- Petitioner moved for a reconsideration on the ground that the position of
internal auditor had been abolished (although the position of resident
inspector was created in its stead), and therefore in lieu of reinstatement,
it should only be made to pay private respondent's separation pay. The
Office of the President modified its decision and ordered petitioner to
reinstate private respondent to a substantially equivalent position without
loss of seniority rights and to grant her the benefits and privileges to which
she would be entitled had she not been dismissed.
- Subsequently, petitioner reinstated private respondent as manager of the
Auditing Department. Private respondent accepted the appointment but
questioned her reinstatement to that position on the ground that it was not
substantially equivalent to the position of resident inspector (the position
created in place of internal auditor). She also questioned the award of
backwages as the report of the socio-economic analyst allegedly did not
include backwages from April 1974 to June 1974 when she was on leave
with pay and vacation and sick leave in 1974 and other fringe benefits to
which she was entitled before her termination.
- Labor Arbiter Apolinario N. Lumabao issued an order holding that the
position of manager of the Auditing Department was not substantially
equivalent to that of resident inspector. possible as it appears (that) the
position is already filled up (,) to relocate complainant to a substantially
equivalent position with all the emoluments and privileges of a Resident
Inspector. Respondent is hereby further ordered to pay.
- The NLRC affirmed the Labor Arbiter's order with modification by ordering
the following to be added to the award: (a) Her vacation and sick leave
privilege during the period of her separation in accordance with the
disposition hereinbefore stated in the body of this Resolution, and (b)the

paying position as manager of the Auditing Department. Hence the award

of backwages should be up to August 13, 1978 only. What she was entitled
to receive after that date was the difference between the salary of internal
auditor (resident inspector) and that of manager of the Auditing
Department to which she was actually appointed. This position, as already
noted, was found to be not a substantially equivalent position to that of
internal auditor or resident inspector.
- The resolution of July 21, 1986 of this Court, which limited the award of
backwages, referred to the backwages for the period November 8, 1974 to
August 13, 1978 as component of the relief granted by law to those who
are illegally dismissed. The Court at that time limited the award of
backwages to three years without qualification and deduction to avoid
delays incident to the determination of the earnings of the laid-off
employees during the pendency of the case and of deducting them from
the backwages later awarded.
- The second component of the relief granted under then Art. 280 of the
Labor Code was reinstatement either to their former position or if, this was
not possible, to a substantially equivalent position. Reinstatement
contemplates a restoration to a position from which one has been removed
or separated so that the employee concerned may resume the functions of
the position he already held. Private respondent was the internal auditor of
petitioner at the time of her dismissal. Since this position had been
replaced by the position of resident inspector, private respondent should
have been appointed resident inspector. The position of manager of the
Auditing Department to which she was appointed was not a substantially
equivalent position, as found by the Labor Arbiter in his order of February
26, 1979 and later by the NLRC.
- The order to reinstate an employee to a former position or to a
substantially equivalent position is a positive mandate of the law with
which strict compliance is required. This is an affirmation that those
deprived of a recognized and protected interest should be made whole so
that the employer will not profit from his misdeeds.
- Since private respondent retired from the bank on March 1, 1991,
reinstatement is now academic.
She should therefore be paid the
difference in pay of a resident inspector and a manager of the Auditing
Department from August 14, 1978 up to March 1, 1991.
Disposition Petition dismissed.
COLEGIO DE SAN JUAN DE LETRAN V ASSN OF EMPLOYEES AND
FACULTY OF LETRAN
340 SCRA 587
KAPUNAN; September 18, 2000
NATURE: Petition for review on certiorari
FACTS: - Private respondent Ambas, the newly elected president of the
Association of Employees and Faculty of Letran (Union) wanted to continue
the renegotiation of its CBA with petitioner Colegio de San Juan de Letran
(Letran) for the last 2 years of the CBAs 5 year lifetime. However,
petitioner claimed the CBA was already prepared for signing by the parties.
The CBA was submitted to a referendum by the union members, who
rejected it.

- Petitioner accused the union officers of bargaining in bad faith before the
NLRC which decided in favor of petitioner but was later reversed on appeal
with the NLRC.
- The Union notified the National Conciliation and Mediation Board (NCMB)
of its intention to strike on the grounds of petitioners refusal to bargain.
Later, the parties agreed to disregard the unsigned CBA and start
negotiating a new 5 year CBA for which the Union submitted its proposals.
Ambas protested a recent changing of her schedule and petitioner sent the
Union a letter dismissing Ambas for alleged insubordination after which the
Union amended its notice of strike to include the said dismissal.
- Both parties again discussed the ground rules for the CBA renegotiation
but petitioner stopped the negotiations after purportedly receiving
information that a new group of employees (ACEC) filed a petition for
certification election, giving rise to the issue of majority representation of
the employees.
- The Union finally went on strike and the Sec. of Labor and Employment
assumed jurisdiction, ordering those on strike to return to work and for
petitioner to accept them under the same terms before the strike. All were
readmitted except Ambas. The Sec. issued an order declaring petitioner
guilty of unfair labor practice and directing the reinstatement of Ambas
with backwages. Letrans MFR was denied and the CA affirmed the Sec.s
decision, hence this petition.
ISSUES:
1. WON petitioner is guilty of unfair labor practice by refusing to bargain
with the union
2. WON the termination of the Ambas amounts to an interference of the
employees right to self-organization
HELD
1. YES
- Petitioner is guilty of unfair labor practice by its stern refusal to bargain in
good faith with respondent union.
- Article 252 defines collective bargaining as the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement. The Union, in sending its
proposals during the 2nd CBA negotiations, kept up its end of the bargain
while Letran devised ways and means to prevent the negotiation.
- Letran also failed to make a timely reply to the Unions proposals (no
counter-proposal a month later), violating Article 250 which requires such a
reply within 10 days upon receipt of a written notice of said proposals.
Letrans refusal to reply is an indication of bad faith, showing a lack of
sincere desire to negotiate.
- In a last ditch effort, Letran suspended the bargaining process on the
ground that it allegedly received information that ACEC had filed a petition
for certification election. The mere filing of a petition for certification
election does not ipso facto justify the suspension of negotiations when
there is no legitimate representation issue raised; also, such an action for
intervention had already prescribed.
2. YES
- While we recognize the right of the employer to terminate the services of
an employee for just cause, the dismissal of employees must be made

within the parameters of law and pursuant to the tenets of equity and fair
play and must be exercised in good faith. It must not amount to interfering
with, restraining or coercing employees in the exercise of their right to selforganization as it would amount to unlawful labor practice under Article
248.
-It would appear that Letran terminated Ambas in order to strip the union
of a leader who would fight for her co-workers rights at the bargaining
table and frustrate their desire to form a new CBA. The charge of
insubordination was a mere ploy to give a color of legality to the action to
dismiss her. Management may have the prerogative to discipline its
employees for insubordination but when it interferes with employees right
to self-organization, it amounts to union-busting which is a prohibited act.
Disposition petition is DENIED for lack of merit
SALVADOR V PHILIPPINE MINING SERVICE CORP
395 SCRA 729
PUNO; January 22, 2003
FACTS
- JOSE V. SALVADOR was first employed by respondent in 1981. He rose
from the ranks and assumed the position of Plant Inspection Foreman in
1991. He was tasked to: (1) supervise plant equipment and facility
inspection; (2) confirm actual defects; (3) establish inspection standards
and frequency; (4) analyze troubles and recommend counter measures;
and (5) prepare weekly/monthly inspection schedule.[3]
- As early as March 1, 1985, respondent instituted the shift boss scheme
whereby the foreman from the Plant Section and the foreman from the
Mining Section rotate as shift boss throughout their night shift to oversee
and supervise both the mining and plant operations. The shift boss was
entrusted with the care, supervision and protection of the entire plant.
- Aside from his employment with respondent, petitioner co-owned and
managed LHO-TAB Enterprises, with his partner Ondo Alcantara. They were
engaged in the manufacture and sale of hollow blocks. On September 29,
1997, petitioners employment relation with respondent was tainted with
charges of pilferage and violation of company rules and policy, resulting to
loss of confidence. Respondents evidence disclose that on September 29,
1997, at about 9:30 a.m., Koji Sawa, respondents Assistant Resident
Manager for Administration, was on his way back to his office in the plant.
He and his driver, Roberto Gresones, saw petitioner operating respondents
payloader, scooping fine ore from the stockpile and loading it on his private
cargo truck. As the truck was blocking the access road leading to the
stockyards gate, Sawas car stopped near the stockpile and the driver
blew the horn thrice. Petitioner did not hear him because of the noise
emanating from his operation of the payloader. Sawas driver found a
chance to pass through when the payloader maneuvered to get another
scoop from the fine ore stockpile.
- As it was contrary to respondents standard operating procedure for the
plant foreman to operate the payloader, Sawa went to the administration
office to check the delivery receipt covering the loading operation of
petitioner that morning. However, sales-in-charge Eduardo Guangco was in

the wharf, overseeing the loading of respondents product. Hence, it was

only in the afternoon that Sawa was able to verify the delivery receipt
covering petitioners loading transaction. The delivery receipt showed that
it was dolomite spillage that was purchased by buyer Ondo Alcantara, not
the fine ore that he saw petitioner loading on his truck. The receipt also
showed it was not the respondent but Alcantara, the buyer, who was
responsible for loading the spillage he purchased from the plant.
- On the basis of the foregoing facts PMSC terminated Salvador for
pilferage of company property. Labor Arbiter and NLRC ruled in favor of
Salvador but CA reversed. Hence, this recourse.
ISSUES: 1. WON the charge of pilferage against petitioner was supported
by substantial evidence to warrant his dismissal from the service
2. WON the employer was well within its rights in imposing a harsh penalty
considering the length of the employees service
HELD
1. YES
Ratio The settled rule in administrative and quasi-judicial proceedings is
that proof beyond reasonable doubt is not required in determining the
legality of an employers dismissal of an employee, and not even a
preponderance of evidence is necessary as substantial evidence is
considered sufficient. Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds, equally reasonable,
might conceivably opine otherwise. Thus, substantial evidence is the least
demanding in the hierarchy of evidence.
Reasoning
- The Labor Code provides that an employer may terminate the services of
an employee for just cause and this must be supported by substantial
evidence. In the case at bar, our evaluation of the evidence of both parties
indubitably shows that petitioners dismissal for loss of trust and
confidence was duly supported by substantial evidence.
2. NO
Ratio As a general rule, employers are allowed wider latitude of discretion
in terminating the employment of managerial employees as they perform
functions which require the employers full trust and confidence.
Reasoning
- To be sure, length of service is taken into consideration in imposing the
penalty to be meted an erring employee. However, the case at bar involves
dishonesty and pilferage by petitioner which resulted in respondents loss
of confidence in him. Unlike other just causes for dismissal, trust in an
employee, once lost is difficult, if not impossible, to regain. Moreover,
petitioner was not an ordinary rank-and-file employee. He occupied a high
position of responsibility. As foreman and shift boss, he had over-all control
of the care, supervision and operations of respondents entire plant. It
cannot be over-emphasized that there is no substitute for honesty for
sensitive positions which call for utmost trust. Fairness dictates that
respondent should not be allowed to continue with the employment of
petitioner who has breached the confidence reposed on him.
- In the case at bar, respondent has every right to dismiss petitioner, a
managerial employee, for breach of trust and loss of confidence as a
measure of self-preservation against acts patently inimical to its interests.

Indeed, in cases of this nature, the fact that petitioner has been employed
with the respondent for a long time, if to be considered at all, should be
taken against him, as his act of pilferage reflects a regrettable lack of
loyalty which he should have strengthened, instead of betrayed.
Disposition The petition is DENIED.
SANTOS V SAN MIGUEL CORPORATION
399 SCRA 172
SANDOVAL-GUTIERREZ; March 14, 2003
NATURE: Petition for review on certiorari
FACTS
Petitioner Carmelita Santos was appointed Finance Director of
respondent SMCs Beer Division for Luzon Operations.
On September 15, 1987, SMC issued a Memorandum prohibiting the
encashment of personal checks at respondent's Plants and Sales Offices.
Thereafter, SMC noticed that petitioner encashed her 3 personal checks in
various Metro Manila Sales Offices.
SMC commenced an audit investigation. Petitioner received from
respondent an inter-office memorandum requiring her to explain in writing
why no disciplinary action should be taken against her in view of her
unauthorized encashment of her 3 personal checks at respondent's sales
offices.
Petitioner admitted that she encashed three personal checks at
respondent's sales offices but claimed that such act was not irregular since
all personnel in respondent's Beer Division were allowed to encash their
personal checks at any sales office upon clearance from the region
management concerned. She stated that her encashment of personal
checks had prior clearance. She further clarified that only two of the three
checks she encashed were dishonored for insufficiency of funds, but she
promptly funded the checks upon receipt of notice of such dishonor,
thereby causing no damage to respondent.
- Meanwhile, the audit results revealed that, aside from petitioner's
reported encashment of 3 personal checks, she had previously encashed
50 personal checks in varying amounts, which were not endorsed by the
Sales Operations Manager or the Region Finance Officer. Additionally,
petitioner encashed 2 other personal checks. After receiving such report,
SMC formed an Investigating Panel to conduct a full-blown investigation.
- The Investigating Panel found the encashment by petitioner of her
personal checks with the region/sales offices as highly irregular
transactions to the detriment of the Company. It recommended that Santos
be terminated from employment.
- In a memorandum, SMC adopted the findings of the Investigating Panel
and informed petitioner of her termination from employment for abuse of
position as Finance Director, engaging in highly irregular transactions to
the detriment of the company and employer's loss of trust and confidence.
- The complaint filed by petitioner against SMC for illegal dismissal was
dismissed by the Labor Arbiter for lack of merit. The NLRC reversed the
Labor Arbiters decision. Upon an MR filed by SMC, the NLRC dismissed the
complaint filed by Santos. Hence, this recourse.

ISSUE: WON SMC dismissed the petitioner from employment without just
cause
HELD: NO
- Under the Labor Code, a valid dismissal from employment requires that:
(1) the dismissal must be for any of the causes expressed in Article 282 of
the Labor Code and (2) the employee must be given an opportunity to be
heard and to defend himself.Article 282(c) of the same Code provides that
"willful breach by the employee of the trust reposed in him by his
employer" is a cause for the termination of employment by an employer.
This ground should be duly established. Substantial evidence is sufficient
as long as such loss of confidence is well-founded or if the employer has
reasonable ground to believe that the employee concerned is responsible
for the misconduct and her act rendered her unworthy of the trust and
confidence demanded of her position. It must be shown, though, that the
employee concerned holds a position of trust. The betrayal of this trust is
the essence of the offense for which an employee is penalized.
- Petitioner argues that her position as Finance Director of respondent's
Beer Division is not one of trust but one that is merely functional and
advisory in nature. She possesses no administrative control over the plants
and region finance officers, including cashiers. She reports to two
superiors. Petitioner's argument is misplaced. As Finance Director, she is in
charge of the custody, handling, care and protection of respondent's funds.
The encashment of her personal checks and her private use of such funds,
albeit for short periods of time, are contrary to the fiduciary nature of her
duties.
- Moreover, petitioner has functional control over all the plant and region
finance officers, including cashiers, within the Luzon Operations Area. In
fact, she is the highest ranking managerial employee for the finance
section of the Luzon Beer Division Operations. Obviously, her position is a
factor in abetting the encashment of her personal checks.
- Indeed, there is substantial ground for respondent's loss of confidence in
petitioner. She does not deny encashing her personal checks at
respondent's sales offices and diverting for her own private use the latter's
resources. The audit investigation accounted for all the checks she
encashed, some of which were dishonored for insufficiency of funds. The
Investigating Panel concluded that petitioner not only encashed her
personal checks at respondent's sales offices, but also used company
funds to temporarily satisfy her insufficient accounts. This Court has held
that misappropriation of company funds, although the shortages had been
fully restituted, is a valid ground to terminate the services of an employee
of the company for loss of trust and confidence.
- Petitioner contends that there is a prolonged practice of other payroll
personnel, including persons in managerial levels, who encashed personal
checks but remained unpunished by respondent. She asserts that her
administrative superiors even encouraged her to encash her checks at the
nearest sales office since her appearance at the bank for encashment
would entail undue digression from her daily work routine.
- Prolonged practice of encashing personal checks among respondent's
payroll personnel does not excuse or justify petitioner's misdeeds. Her
willful and deliberate acts were in gross violation of respondent's policy
against encashment of personal checks of its personnel, embodied in its

Memorandum. She cannot feign ignorance of such memorandum as she is

duty-bound to keep abreast of company policies related to financial
matters within the corporation. Equally unmeritorious are her claims that
the acts complained of are regular, being with the knowledge and consent
of her superiors, Francisco Gomez de Liano and Ben Jarmalala, and that she
is being charged because she resisted the sexual advances of her superior.
Suffice it to state that she could have proved these matters during the
investigation had she attended the proceedings.
SECOND DIVISION [G.R. No. 142007. March 28, 2001.]
MANUEL C. FELIX, petitioner, vs. ENERTECH SYSTEMS INDUSTRIES,
INC. and COURT OF APPEALS, respondents.
Manuel C. Felix worked as a welder/fabricator in Enertech System
Industries, Incorporated. He and his three other co-employees were
assigned to install a smokestack at the Big J Feedmills in Sta. Monica,
Bulacan. Their work was estimated to be completed within seven days, but
it actually took them about two weeks to finish. During the entire period,
they accomplished their daily time records by indicating they worked eight
hours per day and on the basis of their wages were computed. On August
17, 1994, they receive notice from Enertech requiring them to explain that
based on the report to their office, they reported to work to Big J jobsite at
around eleven o'clock in the morning and they were leaving the site at two
o'clock in the afternoon which constitutes Abandonment of Work which in
violation of the Company Code on Employees Discipline. This complaint
was further supported by an interview conducted to the owner and the
engineer of Big J Feedmills and the affidavits of the co-employee of Felix.
After investigation, Enertech sent Felix a memorandum terminating his
employment on the grounds of dishonesty and insubordination. Felix filed a
case of illegal dismissal before the Arbitration Branch of the National Labor
Relations Commission (NLRC). The labor arbiter ruled that Felix was
illegally dismissed, hence, it ordered his reinstatement and payment of
backwages and proportionate 13th month pay for 1994. Pending appeal in
the NLRC, a writ of execution was issued directing Enertech to reinstate
Felix either physically or in the payroll. Enertech then filed an omnibus
motion which prayed that the writ of execution be recalled and that a new
order be issued allowing it to pay Felix's separation pay in lieu of
reinstatement. Subsequently, the NLRC rendered a decision reversing the
labor arbiter's decision. It was affirmed by the Court of Appeals. Hence,
Felix filed the instant petition alleging, among others, that the omnibus
motion filed by Enertech should be treated as admission of its liability.
Well-settled is the rule that the findings of fact of quasi-judicial agencies,
like the NLRC, are accorded not only respect but at times even finality if
such findings are supported by substantial evidence. For this reason, we
find petitioner's dismissal to be in order. Falsification of time cards
constitutes serious misconduct and dishonesty or fraud, which are just
causes for the termination of employment under Art. 282 (a) and (c) of the
Labor Code.
Further, respondent appears merely to have been mistaken about the
options open to it upon promulgation of the labor arbiter's decision. As to

the question of whether separation pay in lieu of his reinstatement may be

awarded to petitioner, it is settled that such can be done only upon finality
of judgment, that is, when the judgment is no longer appealable, hence
final and executory, and where reinstatement can no longer be effected, as
when the position previously held by the employee no longer exists or
when strained relations result in the loss of trust and confidence. Rather,
with the labor arbiter's decision still pending appeal in the NLRC, what is
applicable is Art. 223 of the Labor Code. If at all, therefore, respondent
should have reinstated petitioner in the payroll, instead of offering him
separation pay. Be that as it may, the omnibus motion filed by respondent
cannot be construed as an admission of its liability for reinstatement.

Christopher Manebo vs NLRC

SECOND DIVISION [G.R. No. 146741. February 27, 2002.]

NATIONAL BOOKSTORE, INC., and ALFREDO C. RAMOS, petitioners,
vs. COURT OF APPEALS SPECIAL EIGHTH DIVISION, NATIONAL
LABOR RELATIONS COMMISSION, MARIETTA M. YMASA and EDNA L.
GABRIEL, respondents.
SYNOPSIS
Private respondents Marietta M. Ymasa as Cash Custodian and Edna L.
Gabriel as Head Cashier of the petitioner National Bookstore were
dismissed from the service for gross neglect of duty and loss of confidence
because of the loss of company funds that took place on June 28, 1992 at
the SM North Edsa Branch of petitioner. They filed a complaint for illegal
dismissal before the labor arbiter. The latter ruled in their favor by
ratiocinating that the documentary and testimonial evidence presented by
the parties showed that although private respondents were afforded due
process before being dismissed, their dismissal was not founded on valid
and justifiable grounds as provided under Art. 282 of the Labor Code, as
amended. The said decision was affirmed by the National Labor Relations
Commission (NLRC), with modification by deleting the award of damages
and attorney's fees. Likewise, the Court of Appeals affirmed the NLRC
decision. Hence, this petition.
The petition was without merit. The onus of proving that the dismissal of
the employee was for a valid and authorized cause rests on the employer
and failure to discharge the same would mean that the dismissal was not
justified and, therefore, illegal. Significantly, in order to constitute a just
cause for the employee's dismissal, the neglect of duties must not only be
gross but also habitual. Thus, the single or isolated act of negligence does
not constitute a just cause for the dismissal of the employee. Verily,
assuming arguendo that private respondents were negligent, although this
Court found otherwise, it could only be a single or an isolated act that
cannot be categorized as habitual, hence, not a just cause for their

dismissal. On the other hand, loss of trust and confidence to be a valid

ground for dismissal must be based on a willful breach of trust and founded
on clearly established facts. The Labor Arbiter, the NLRC and the Court of
Appeals were unanimous in declaring that there was no willful breach of
confidence in the instant case as petitioners failed to establish with
certainty the facts upon which it could be based. Indeed, petitioner
National Bookstore lost some funds, but its claim that private respondents
were responsible therefor was not supported by any substantial evidence.

JGB and Associates, Inc. vs. NLRC, G.R No. 10939, March 7, 1996
FACTS
- On February 25, 1990, before the expiration of his contract of
employment, private respondent was given notice by his employer that his
employment was terminated for the reason that his performance both in
productivity and efficiency was below average. The termination of his
employment took effect on the same day. He was immediately scheduled
to depart Saudi Arabia and on February 28, 1990, three days after his
dismissal, he found himself already in the Philippines.
- On March 12, 1990, private respondent filed with the POEA a complaint
against JGB and Associates, Inc., Tariq Hajj Architects and Country Bankers
Insurance Corporation, alleging illegal dismissal and seeking payment of
salaries corresponding to the unexpired portion of his employment
contract, salary differential, refund of S.R. 1,000 which was withheld from
him for telephone bills, moral damages and attorneys fees.
- Petitioner averred that private respondent was dismissed for neglect of
duties and performance below par. Petitioner also alleged that although no
prior notice of dismissal was given to private respondent, he was given in
lieu thereof a notice pay equivalent to one month salary.
HELD
- Gross negligence connotes want of care in the performance of ones
duties.[2] Habitual neglect implies repeated failure to perform ones duties
for a period of time, depending upon the circumstances. On the other
hand, fraud and willful neglect of duties imply bad faith on the part of the
employee in failing to perform his job to the detriment of the employer and
the latters business.
- None of these causes is stated in the two letters of the employer as
reasons for dismissing private respondent. None of the reasons there
stated even approximates any of the causes provided in the contract of
employment for the termination of employment by the employer.
- Indeed, the grounds given for private respondents dismissal are nothing
but general, vague and amorphous allegations. As the NLRC noted, the
letters do not state particular acts which show that private respondent was
indeed negligent and that his performance was below par. Nor did
petitioner show the tangible financial loss which it claimed it suffered as a
result of private respondents alleged neglect of duty.

CATHEDRAL SCHOOL OF TECHNOLOGY V NLRC (VALLEJERA)

214 SCRA 551
October 13, 1992
NATURE: Petition for certiorari of a decision of NLRC.
FACTS
- Starting as an aspirant to the Congregation of the Religious of Virgin Mary
(RVM), VALLEJERA worked on a volunteer basis as a library aide of CST, an
educational institution run by the RVM sisters. Eventually she became a
regular employee of CST, again as library aide.
- It was around such regular employment, however, that trouble developed.
The sisters began receiving complaints from students and employees
about VALLEJERA's difficult personality and sour disposition at work. On one
occasion, VALLEJERA was summoned to the Office of the Directress by
SISTER APOLINARIA, shortly after the resignation of the school's Chief
Librarian on account of irreconcilable differences with VALLEJERA, for the
purpose of clarifying the matter. SR APOLINARIA also informed VALLEJERA
of the negative reports received by her office regarding the latter's
frictional working relationship with co-workers and students and reminded
VALLEJERA about the proper behavior in the interest of peace and harmony
in the school library. VALLEJERA resented the observations about her
actuations and was completely unreceptive to the advice given by her
superior. She reacted violently to SR APOLINARIA and angrily offered to
resign, repeatedly saying, "OK, I will resign. I will resign." Thereafter,
without waiting to be dismissed from the meeting, she stormed out of the
office.
- On separate occasions thereafter, CST and SR APOLINARIA (PETITIONERS,
for brevity) sent people to convince VALLEJERA to settle her differences
with the former. VALLEJERA remained adamant in her refusal to submit to
authority. Eventually, SR APOLINARIA, by letter, informed VALLEJERA to look
for another job as the school had decided to accept her resignation.
VALLEJERA filed a complaint for illegal dismissal. An issue arose as to
whether there was lawful cause for her dismissal.
ISSUE: WON there was there lawful cause for VALLEJERAs dismissal
HELD: YES
Ratio
The reason for which VALLEJERAs services were terminated,
namely, her unreasonable behavior and unpleasant deportment in dealing
with the people she closely works with, is analogous to the other "just
causes" enumerated under ART.282, Labor Code.
- PETITIONERS' averments on VALLEJERAs disagreeable character as
"quarrelsome, bossy, unreasonable and very difficult to deal with," are
supported by testimonies of several co-employees and students of CST. In
fact, her overbearing personality caused the chief librarian to resign,
Furthermore, the complaints about her objectionable behavior were
confirmed by her reproachable actuations during her meeting with SR
APOLINARIA, when VALLEJERA, upon being advised of the need to improve
her working relations with others, obstreperously reacted and
unceremoniously walked out on her superior, and arrogantly refused to
subsequently clear up matters or to apologize therefor. To make matters

worse, she ignored the persons sent by PETITIONERS to intervene in an

effort to bring the matter to a peaceful resolution. The conduct she
exhibited on that occasion smacks of sheer disrespect and defiance of
authority and assumes the proportion of serious misconduct or
insubordination, any of which constitutes just cause for dismissal from
employment.
- As CST is run by a religious order, it is but expected that good behavior
and proper department, especially among the ranks of its own employees,
are major considerations in the fulfillment of its mission. Under the
circumstances, the sisters cannot be faulted for deciding to terminate
VALLEJERA whose presence "has become more a burden rather than a joy"
and had proved to be disruptive of the harmonious atmosphere of the
school.
Disposition NLRC decision that VALLEJERA was illegally dismissed, SET
ASIDE.
APARENTE SR V NLRC (COCA-COLA BOTTLERS PHIL)
331 SCRA 82
DE LEON JR; April 27, 2000
FACTS
- Rolando Aparante, Sr. was first employed by private respondent CocaCola Bottlers Phils., Inc. (CCBPI), General Santos City Plant as assistant
mechanic in April 1970. He rose through the ranks to eventually hold the
position of advertising foreman until his termination on May 12, 1988 for
alleged violation of company rules and regulations. His monthly salary at
the time of his termination was P5,600.
- On November 9, 1987, Aparante drove CCBPI's advertising truck to install
a panel sign. He sideswiped Marilyn Tejero, a ten-year old girl. He brought
Tejero to Heramil Clinic for first aid treatment. As the girl suffered a 2 cm
fracture on her skull which was attributed to the protruding bolt on the
truck's door, she was subsequently transferred to the General Santos City
Doctor's Hospital where she underwent surgical operation. She stayed in
the hospital for about a month.
- Five days after the accident, he reported the incident to CCBPI. At about
the same time, he submitted himself to the police authorities at Polomolok,
South Cotabato for investigation where it was discovered that he had no
driver's license at the time of the accident. In view thereof, FGU Insurance
Corporation, an insurer of CCBPI's vehicles, did not reimburse the latter for
the expenses it incurred in connection with Tejero's hospitalization a total
amount of P19,534.45.
- CCBPI conducted an investigation of the incident where Aparente was
given the opportunity to explain his side and to defend himself.
On May 12, 1988, Aparente was dismissed for having violated the company
rules and regulations particularly Sec. 12 of Rule 005-858 for blatant
disregard of established control procedures resulting in company damages.
- The Labor Arbiter ordered his reinstatement without back wages. The
NLRC affirmed but reversed its ruling upon motion of CCBPI. It declared the
dismissal as one for just cause and effected after observance of due
process.

ISSUES
1. WON the NLRC erred in holding that CCBPI afforded petitioner due
process
2. WON the NLRC erred in upholding the dismissal despite its initial finding
that the CCBPI had implicitly tolerated petitioners driving without a license
3. WON the infraction committed by petitioner warrants the penalty of
dismissal despite the fact that it was his first offense during his 18 long
years of satisfactory and unblemished service
HELD
1. NO
Ratio The essence of due process does not necessarily mean or require a
hearing but simply a reasonable opportunity or a right to be heard or as
applied to administrative proceedings, an opportunity to explain one's side.
In labor cases, the filing of position papers and supporting documents fulfill
the requirements of due process.
Reasoning
- Aparente was fully aware that he was being investigated for his
involvement in the vehicular accident that took place on November 9,
1987. It was also known to him that as a result of the accident, the victim
suffered a 2 cm fracture on her skull which led to the latter's surgical
operation and confinement in the hospital for which CCBPI incurred
expenses amounting to P19,534.45 which FGU Insurance Corporation
refused to reimburse upon finding that he was driving without a valid
driver's license. Thus, being aware of all these circumstances and the
imposable sanctions under CCBPI's Code of Disciplinary Rules and
Regulations, he should have taken it upon himself to present evidence to
lessen his culpability.
2. NO
Reasoning
- According to Aparente, he informed the company that he had lost his
license five months before the accident. Notwithstanding such fact, the
company allowed him to continue driving the vehicle assigned to him.
Thus, he shifts the blame to the company, claiming that it should have
simply ordered him to desist from driving the vehicle once it was informed
of the loss of his license. His contention is belied by his very own admission
in his position papers filed before the Labor Arbiter and the NLRC that the
company had in fact prohibited him from driving immediately after he lost
his license, and had requested him to secure a new license. However,
through misrepresentations, he led CCBPI to believe that he had procured
another driver's license. Thus, he was permitted to drive again.
3. YES
Ratio The law warrants the dismissal of an employee without making any
distinction between a first offender and a habitual delinquent where the
totality of the evidence was sufficient to warrant his dismissal. In
protecting the rights of the laborer, the law authorizes neither oppression
nor self-destruction of the employer.
Reasoning
- Company policies and regulations, unless shown to be grossly oppressive
or contrary to law, are generally valid and binding on the parties and must
be complied with until finally revised or amended, unilaterally or preferably

through negotiation, by competent authority. The Court has upheld a

company's management prerogatives so long as they 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.
- First, Aparente's dismissal is justified by Company rules and regulations. It
is true that his violation of company rules is his first offense. Nonetheless,
the damage caused to private respondent amounted to more than P5,000,
thus, the penalty of discharge is properly imposable as provided by CCBPI's
Code of Disciplinary Rules and Regulations.
- Second, Article 282, in order that an employer may dismiss an employee
on the ground of willful disobedience, there must be concurrence of at
least two requisites: The employee's assailed conduct must have been
willful or intentional, the willfulness being characterized by a wrongful and
perverse attitude; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge. We have found these requisites to be
present in the case at bar. The evidence clearly reveals the willful act of
Aparente in driving without a valid driver's license, a fact that he even tried
to conceal during the investigation conducted by CCBPI. Such misconduct
should not be rewarded with re-employment and back wages, for to do so
would wreak havoc on the disciplinary rules that employees are required to
observe.
- In the instant case, we find the award to petitioner of separation pay by
way of financial assistance equivalent to 1/2 month's pay for every year of
service equitable. Although meriting termination of employment,
petitioner's infraction is not as reprehensible or unscrupulous as to warrant
complete disregard for the fact that this is his first offense in an
employment that has spanned 18 long years.
Disposition Decision of the NLRC is AFFIRMED.
RAMOS V NLRC
298 SCRA 225
PUNO; October 21, 1998
NATURE: Petition for certiorari to annul NLRC decision
FACTS
- In 1978, Elizabeth Ramos was employed by United States Embassy
Filipino Employees Credit Cooperative (USECO)
- In 1993, the USECO Board created an Audit and Inventory Committee to
determine whether USECO has a sound financial management and control
mechanism.
- The committee found anomalies in USECOs lending transactions.
Petitioner and her co-employees, Luz Coronel and Nanette Legaspi, were
called to shed light on some items in the Audit Committee Report, such as
unrecorded loans, fabricated ledger, falsification of documents,
accommodations of payroll checks, encashment of check/CPAs, resigned
members, unrecorded loan of resigned members and withdrawal of more
than the deposits.
- During the meeting, Beth admitted her serious offense in regard to

falsification of documents. When asked by the Board to explain how

recently resigned members and other resigned employees in the past were
able to secure loans, Beth replied that she just wanted to help members
without regard to existing policies.
- In her written explanation, Beth said that the loans are approved based
on prerogatives of individuals in authority. She said that, it is unfortunate
that the USECU Staff had to resort to creating dummy records. But since
the loans are duly acknowledged by the borrowers in other legitimate
documents, it is readily apparent that the records were made simply to
accommodate those borrowers beyond the authorized limits, but never,
never to defraud USECU.
- Ramos was preventively suspended for 30 days. Later, petitioner was
placed on forced leave with pay, pending the completion of the
investigation.
- USECO commissioned an external auditing firm to examine the
irregularities discovered in its lending practices. The auditor confirmed the
irregularities and also discovered shortages in bank deposits.
- USECO dismissed the petitioner for loss of trust and confidence. Petitioner
countered with a complaint for illegal dismissal, illegal suspension,
underpayment of salary, moral damages and attorneys fees.
- Labor Arbiter sustained the suspension and dismissal of petitioner but
ordered the payment of her unpaid salary.
ISSUES
1. WON there is just cause for petitioners suspension and dismissal
2. WON the NLRC committed grave abuse of discretion in granting private
respondents second motion for reconsideration
HELD
1. YES
- Position of petitioner as Management Assistant requires a high degree of
trust and confidence.
- Loss of confidence is a valid ground for dismissal of an employee. In the
case at bar, USECO proved that its loss of confidence on petitioner has a
rational basis. The findings of the labor arbiter on this factual issue are
supported by the evidence.
- Petitioner's explanation that the "loan practices" were made for the
benefit of the borrowing members and not to defraud USECO cannot
exonerate her. Her unsound practices endangered the financial condition
of USECO because of the possibility that the loans could not be collected at
all.
- Petitioner was not denied due process before she was suspended and
later dismissed. The records show that petitioner was called by the USECO
Board of Directors and confronted with the findings of the Audit, and
Inventory Committee showing the irregularities she committed. She was
asked to explain in writing these irregularities. Petitioner submitted her
written explanation. Thus, petitioner cannot complain that she did not
understand the charges against her. She is educated and she immediately
explained her side. Due process simply demands an opportunity to be
heard and this opportunity was not denied her.
2. NO
- Section 14 of the Rules of the NLRC provides:
Section. 14. Motions for Reconsideration.--Motions for reconsideration of

any order, resolution or decision of the Commission shall not be

entertained except when based on palpable or patent errors, provided
that the motion is under oath and filed within ten (10) calendar days
from receipt of the order, resolution or decision, with proof of service that
a copy of the same has been furnished, within the reglementary period,
the adverse party, and provided further that only one such motion from
the same party shall be entertained.
- The NLRC initially reversed the ruling of the labor arbiter on the grounds
that: (1) petitioner was denied procedural due process and (2) the criminal
case for estafa filed against her has been dismissed by the Manila
Prosecutor's Office for insufficiency of evidence, particularly, for lack of
proof that the USECO was damaged by the acts attributed to petitioner.
- As discussed above, petitioner was not denied due process.
- Similarly, it is a well established rule that the dismissal of the criminal
case against an employee shall not necessarily be a bar to his
dismissal from employment on the ground of loss of trust and
confidence. The NLRC corrected these patent errors when it granted
private respondent's second motion for reconsideration.
Disposition Petition dismissed for lack of merit.
GLOBE TELECOM INC V FLORENDO
390 SCRA 201
September 27, 2002
NATURE: Petition for review on certiorari of a decision of CA.
FACTS
- FLORENDO, a Senior Account Manager of Globe, filed a complaint for
constructive dismissal against Globe with some key officials [GLOBE et al.,
for brevity] and FLORENDOs immediate superior Cacholo Santos [SANTOS,
for brevity]. FLORENDO complained that SANTOS never submitted her
performance evaluation report thereby depriving her of salary increases
and incentives which other employees of the same rank had been
receiving; reduced her to a house-to-house selling agent (i.e. a direct sales
agent) of company products ("handyphone") despite her rank as supervisor
of company dealers and agents; never supported her in the sales programs
she presented; and, withheld all her other benefits.
- GLOBE et al., on the other hand, claimed that FLORENDO abandoned her
work; that her complaint rested on a purely private disagreement with her
immediate superior, and that she filed the complaint without consulting
the companys grievance process.
ISSUE: WON FLORENDO can be constructively dismissed from service
HELD: YES
Ratio Constructive dismissal exists where there is cessation of work
because "continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay."
All these are discernible in FLORENDOs situation. She was singularly
edged out of employment by the undesirable treatment she received from
her superior, who discriminated against her without reason . (See above for
SANTOS acts against FLORENDO.) And although FLORENDO continued to
have the rank of a supervisor, her functions were reduced to a mere direct

sales agent. This was tantamount to a demotion . She might not have
suffered any diminution in her basic salary but GLOBE et al. did not dispute
her allegation that she was deprived of all benefits due to another of her
rank and position, benefits which she apparently used to receive .
- Far from blaming SANTOS alone, FLORENDO also attributes her degraded
state to GLOBE et al. She cited GLOBE et al.'s indifference to her plight as
she was twice left out in a salary increase, without GLOBE et al. giving her
any reason. It eludes belief that GLOBE et al. were entirely in the dark as
the salary increases were granted across-the-board to all employees
except FLORENDO. It is highly improbable that the exclusion of FLORENDO
had escaped GLOBE et al.'s notice. The absence of an evaluation report
from SANTOS should have been looked into by GLOBE et al. for proper
action. If a salary increase was unwarranted, then it should have been
sufficiently explained by GLOBE et al. to FLORENDO. And despite GLOBE et
al.s claim that FLORENDO did not brought her problem against SANTOS to
the company's grievance machinery, it remains uncontroverted that
FLORENDO had inquired from GLOBE et al. why her other benefits had
been withheld and sought clarification for her undeserved treatment but
GLOBE and SANTOS remained mum.
- Thus, the dispute was not a mere private spat between FLORENDO and
her superior; the case overflowed into the realm of FLORENDO's
employment. And at the very least, GLOBE et al. were negligent in
supervising all of their employees.
- In constructive dismissal, the employer has the burden of proving that the
transfer and demotion of an employee are for just and valid grounds such
as genuine business necessity. The transfer must not involve a demotion in
rank or a diminution of salary and other benefits. If the employer cannot
overcome this burden of proof, the employee's demotion shall be
tantamount to unlawful constructive dismissal. The award of back wages in
the instant case is justified upon the finding of illegal dismissal.
Disposition CA decision that FLORENDO abandoned her work, SET ASIDE.
GLOBE et al. to pay FLORENDO full back wages from the time she was
constructively dismissed until her reinstatement, and to cause immediate
reinstatement of FLORENDO to her former position, without loss of
seniority rights and other benefits.
SECOND DIVISION [G.R. No. 156963. November 11, 2004.]
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE CO.,
petitioner, vs. ANGELITA S. GRAMAJE, respondent.
SYNOPSIS
The respondent herein was employed by the petitioner as Assistant Vice
President and Head of the Pension Department and in concurrent capacity
as Trust Officer of Philam Savings Bank, a Philam Life subsidiary. Later, the
respondent was offered to leave her position without any explanation from
the management. She declined the offer, but was ordered to be transferred
to the legal department. She again declined to follow the order explaining
that she had been and would be more effective to her present position
than in the legal department. However, while on official sick leave, she
received a message on her pager that another officer was appointed to
handle her position at the pension department and that the office itself
was physically transferred to another place. When she returned, she found

out that her name was no longer on the official list of Philamlife employees.
Thereafter, she filed a case for illegal or constructive dismissal against
petitioner. The labor arbiter found that the respondent was not illegally
dismissed. The NLRC affirmed the decision of the labor arbiter. On appeal,
the Court of Appeals reversed the decision and ordered the petitioner to
pay respondent separation pay in lieu of reinstatement, plus other benefits
accruing to her. Hence, this petition. The issue to be resolved herein was
whether the respondent was constructively dismissed or was her transfer a
legitimate exercise of management prerogative.
The Supreme Court affirmed the decision of the Court of Appeals.
According to the Court, bad faith and discrimination on the part of the
petitioner were profusely perceived from its actions. The managerial
prerogatives are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.

PHIL AIRLINES INC V NLRC (CASTRO)

292 SCRA 40
ROMERO; July 8, 1998
NATURE: Appeal from a decision of the NLRC affirming the decision of the
LA
FACTS
- Private Respondent Edilberto Castro, an employee (manifesting clerk) of
PAL was apprehended by govt. authorities while about to board a flight to
H.K. Castro and co-employee Arnaldo Olfindo were found to be in
possession of P39,850 and P6,000 respectively, in violation of Central Bank
(CB) Circular 265, as amended by CB Circular 383, 1 in relation to Section
34 of R.A. 265, as amended.
- Upon knowledge of this incident, PAL required respondent to explain
within 24 hrs why he should not be charged administratively. He failed to
comply and was placed on preventive suspension effective March 27, 1984
for grave misconduct. An investigation was later conducted wherein
respondent admitted ownership of the confiscated money but denied any
knowledge of CB Circular 265. Respondent, through the PAL Employees
Association (PALEA) then sought not only the dismissal of his case but also
prayed for his reinstatement.
- 3 years and 6 months after his suspension, PAL issued a resolution finding
respondent guilty of the offense charged but nonetheless reinstated the
latter explaining that the period within which he was out of work shall
serve as penalty for suspension. Upon reinstatement, respondent filed a
claim against PAL for backwages and salary increases granted under the
CBA covering the period of his suspension which the latter, however,
denied on account that under the existing CBA, an employee under
suspension is not entitled to CBA salary increases granted during the
period covered by his penalty.
- Labor Arbiter De Vera rendered a decision in favor of Castro; limiting his
suspension to 1 month; ordering PAL to pay his salaries, benefits, and other
privileges from April 26, 1984 up to Sept. 18, 1987 and to pay his salary
increases accruing during the period aforesaid. Moral damages and

exemplary damages were likewise awarded. On appeal, the NLRC affirmed

the LA decision but deleted the award of moral and exemplary damages,
hence, this petition.
ISSUE: WON an employee who has been preventively suspended beyond
the maximum 30-day period is entitled to backwages and salary increases
granted under the CBA during his period of suspension
HELD: YES
- The rules are rather clear under Secs. 3 and 4, Rule XIV of the Omnibus
Rules Implementing the Labor Code:
Sec.3. Preventive suspension. The employer can place the worker
concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the
employer or of his co-workers
Sec.4. Period of suspension. No preventive suspension shall last longer
than 30 days. The employer shall thereafter reinstate the worker in his
former or in a substantially equivalent position or the employer may
extend the period of suspension provided that during the period of
extension, he pays the wages and other benefits due to the workers. In
such case, the worker, shall not be bound to reimburse the amount paid
to him during the extension if the employer decides, after completion of
the hearing, to dismiss the worker.
Reasoning
- It is undisputed that the period of suspension of respondent lasted for 3
years and 6 months. PAL, therefore, committed a serious transgression
when it manifestly delayed the determination of respondents culpability in
the offense charged. The provisions of the rules are explicit and direct;
hence, there is no reason to further elaborate on the same.
- PAL faults the LA and the NLRC for allegedly equating preventive
suspension as remedial measure with suspension as penalty for
administrative offenses. This argument is inaccurate. As held in Beja Sr. v
CA: Imposed during the pendency of an administrative investigation,
preventive suspension is not a penalty in itself. It is merely a measure of
precaution so that the employee who is charged may be separated, for
obvious reasons, from the scene of his alleged misfeasance while the same
is being investigated. While the former may be imposed on a respondent
during the investigation of the charges against him, the latter is the
penalty which may only be meted upon him at the termination of the
investigation or the final disposition of the case. A cursory reading of the
records reveals no reason to ascribe grave abuse of discretion against the
NLRC; its decision was grounded upon petitioners manifest indifference to
the plight of its suspended employee and its consequent violation of the
Implementing Rules of the Labor Code.
- As the NLRC correctly ruled: The long period of preventive suspension
could even be considered constructive dismissal because were it not for his
letters demanding his reinstatement, PAL by its inaction appeared to have
no plan to employ respondent back to work. The manifest inaction of PAL
over the pendency of the administrative charge is indeed violative of
Castros security of tenure because without any justifiable cause and due
process, his employment would have gone into oblivion.
- PAL contends that when respondent consented to the resolution that the
entire period of suspension shall constitute his penalty for the offense

charged, the latter is thereby estopped to question the validity of said

suspension. We concur with the labor arbiter when he ruled that the
ensuing conformity by respondent does not cure petitioner's blatant
violation of the law, and the same is therefore null and void- We do not
question the right of the petitioner to discipline its erring employees and to
impose reasonable penalties pursuant to law and company rules and
regulations. Having this right, however, should not be confused with the
manner in which that right must be exercised. Thus, the exercise by an
employer of its rights to regulate all aspects of employment must be in
keeping with good faith and not be used as a pretext for defeating the
rights of employees under the laws and applicable contracts. Petitioner
utterly failed in this respect.
Disposition Petition is DISMISSED for lack of merit. Assailed decision is
AFFIRMED.

DOLE PHILIPPINES INC V NLRC (BARRANCO)

365 SCRA 124
KAPUNAN; September 13, 2001
NATURE: Certiorari
FACTS
- Dole Philippines, Inc., is a corporation organized and existing under
Philippine laws. It is engaged in the business of growing, canning,
processing and manufacturing pineapples and other allied products. The
other petitioners were Dole corporate officers at the time the cases were
instituted
- Private respondents were Doles employees of different ranks and
positions.
- In 1990 and 1991, DOLE carried out a massive manpower reduction and
restructuring program aimed at reducing the total workforce and the
number of positions in the companys table of organization.
- Dole intimates that the 1990-1991 reduction was a continuation of
previous efforts to restructure its organization.
- Previously, in 1982, Dole reduced its manpower by 509 workers but
prolonged collective bargaining negotiations, which ended in 1990,
prevented the company from proceeding with its restructuring
- Among the factors considered by the company in undertaking the
reduction program was the high absenteeism rate, which in 1989
accounted for 16% of total man hours. The high absenteeism rate
translated to higher paid sick leaves, higher operating costs for medical
facilities, and higher transportation costs due to under-filled and late hauls.
- Dole also cites the exacerbation of operating cost problems due to
factors beyond [its] control, i.e., the Gulf War, oil price increases,
mandated wage increases, the 9% import levy, power rate hikes, [and]
increased land rentals, existing at that time.
- Furthermore, the bloody December 1989 coup detat shook investor
confidence and put in doubt the continued economic progress of the
country.

- Pursuant to its restructuring efforts, Dole abolished the positions of

foremen, bargaining capataces and foreladies. Employees occupying these
positions were either promoted or were dismissed on grounds of
redundancy.
- To address the surplus of manpower relative to its operations, Dole also
decided to reduce the number of employees company-wide. In 1990, the
company offered a Special Voluntary Resignation (SVR) program of which
many employees, including a number of private respondents, availed.
- Upon approval of the applications, notices of termination were sent to the
employees who availed of the SVR.
- After receiving the benefits, said employee-applicants executed a
Release stating that the employee had no claims against Dole in
connection with his or her employment. Subsequently, the dismissed
employees executed another Release of Claim in favor of Dole.
- A total of 2,357 hourly and monthly salaried employees were separated
from Dole during this period.
- After assessing the outcome of the SVR, Dole found that it could still do
with lesser employees, and proceeded to dismiss more of them in March
1991.
- Overall, 2,792 employees were separated under the SVR Program.
- In Oct. 1991, complaints for illegal dismissal were filed against Dole by De
Lara et al.
- LA Solano dismissed the complaints for lack of merit; their dismissal was
valid.
- NLRC reversed the LA and ordered reinstatement. Denied DOLEs MR.
ISSUE: WON DOLES redundancy program is valid and if so, won the
dismissal of the respondent employees are valid as well
HELD: YES
- Redundancy is one of the authorized causes for the dismissal of an
employee.
- The lack of notice to the DOLE does not render the redundancy program
void.
Reasoning
- Wiltshire File Co. Inc., vs. NLRC: x x x redundancy in an employers
personnel force necessarily or even ordinarily refers to duplication of work.
That no other person was holding the same position that private
respondent held prior to the termination of his services, does not show that
his position had not become redundant. Indeed, in any well-organized
business enterprise, it would be surprising to find duplication of work and
two (2) or more people doing the work of one person. We believe that
redundancy, for purposes of the Labor Code, exists where the services of
an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant
where it is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
- The characterization of an employees services as no longer necessary or
sustainable, and, therefore, properly terminable, is an exercise of business
judgment on the part of the employer. The wisdom or soundness of such

characterization or decision is not subject to discretionary review provided,

that violation of law or arbitrary or malicious action is not shown.
- Doles redundancy program does not appear to be tainted by bad faith
even if it hired casual employees to replace those dismissed (as it has
always hired casual employees to augment its manpower in accordance
with the demands of the industry.)
- The petition alleges that the redundancy program is part of a wide-scale
restructuring of the company.
- This purported restructuring is supported by the companys undisputed
history towards these ends, which culminated in the abolition of certain
positions and the Special Voluntary Resignation program in 1990-1991.
- Among the avowed goals of such restructuring is the reduction of
absenteeism in the company. The harsh economic and political climate
then prevailing in the country also emphasized the need for cost-saving
measures.
- Reorganization as a cost-saving device is acknowledged by jurisprudence.
An employer is not precluded from adopting a new policy conducive to a
more economical and effective management, and the law does not require
that the employer should be suffering financial losses before he can
terminate the services of the employee on the ground of redundancy.
- The law, however, does not prevent employers from saving on labor
costs.
- International Macleod, Inc. vs. Intermediate Appellate Court: held that the
determination of the need for the phasing out of a department as a labor
and cost saving device because it was no longer economical to retain said
department is a management prerogative, with which the courts will not
interfere.
- De Ocampo vs. NLRC: [t]he reduction of the number of workers in a
company made necessary by the introduction of the services of Gemac
Machineries in the maintenance and repair of its industrial machinery is
justified. There can be no question as to the right of the company to
contract the services of Gemac Machineries to replace the services
rendered by the terminated mechanics with a view to effecting more
economic and efficient methods of production. So long as the undertaking
to save on labor costs is not attended by malice, arbitrariness, or intent on
the part of the employer to circumvent the law, as in this case, the Court
will not interfere with such endeavor.
Ratio If an employee consented to his retrenchment or voluntarily applied
for retrenchment with the employer due to the installation of labor-saving
devices, redundancy, closure or cessation of operation or to prevent
financial losses to the business of the employer, the required previous
notice to the DOLE is not necessary as the employee thereby
acknowledged the existence of a valid cause for termination of his
employment (International Harvester, Inc. vs. NLRC).
- Here, most of the private respondents even filled up application forms to
be considered for the redundancy program and thus acknowledged the
existence that their services were redundant.
- Private respondents executed two releases in favor of petitioner company.
- Not all quitclaims are per se invalid or against public policy. But those
(1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person or

(2) where the terms of settlement are unconscionable on their face are
invalid. In these cases, the law will step in to annul the questionable
transaction. There is no showing here that private respondents are
unsuspecting or gullible persons. Neither are the terms of the settlement
unconscionable.
Indeed, private respondents received a generous
separation package, as set out in the narration of facts above.
Disposition Petition is GRANTED and the decision of the NLRC ANNULLED
and SET ASIDE. TRO LIFTED

PHILIPPINE TUBERCULOSIS SOCIETY INC V NLRC

294 SCRA 567
MENDOZA; August 25, 1998
NATURE: This is a petition for certiorari to set aside the decision of the
NLRC declaring the retrenchment of 116 employees of petitioner invalid
and ordering the reinstatement and backwages to them.
FACTS
- The Philippine Tuberculosis Society, Inc. is a non-stock and non-profit
domestic corporation with the primary objective of fighting tuberculosis in
the Philippines.
It has employees who are represented by private
respondent National Labor Union.
- In the proceedings before the NLRC, it was shown that, in 1989, the
Society began to experience serious financial difficulties when it incurred a
deficit of P2 million. The shortfall increased to P9,100,000.00 in 1990 and
was certain to become worse were it not for quick measures taken by
petitioner.
- First, the Society leased a property in Tayuman to a fastfood outlet,
cancelled its service agreement with a janitorial company, and sold its
equity in the Philippine Long Distance Telephone Company (PLDT).
Second, it withdrew from the Pag-Ibig Fund Program, negotiated with the
Government Service Insurance System for the restructuring of its
obligations, and applied for exemption from minimum wage increases.
Finally, it disapproved the overtime pay of supervisory and managerial
employees, obtained the waiver of personnel of their entitlement to wage
differentials, and implemented the retrenchment of one hundred sixteen
(116) employees.The retrenchment is the subject of the present suit.
- On September 27, 1991, respondent NLU filed a notice of strike against
the Society with the National Conciliation and Mediation Board (NCMB),
charging the Society with unfair labor practice in terminating the services
of the aforementioned employees.
- Conferences were scheduled by the NCMB, which however failed to
resolve the case. On November 6, 1991, then Secretary of Labor and
Employment Ruben Torres certified the case to the NLRC on the ground
that the labor dispute seriously affected the national interest.
- On August 31, 1993, the NLRC rendered a decision declaring as invalid
the retrenchment of the employees concerned on the ground that the
Society did not take seniority into account in their selection.
ISSUE: WON NLRC committed grave abuse of discretion in rendering its
decision

HELD: NO
- Clearly (under the Labor Code), retrenchment or reduction of the
workforce in cases of financial difficulties is recognized as a ground for the
termination of employment.
- Although petitioner is a non-stock and non-profit organization,
retrenchment as a measure adopted to stave off threats to its
existence is available to it.
- However, the employers prerogative to layoff employees is subject to
certain limitations set forth in Lopez Sugar Corporation v. Federation of
Free Workers as follows:
- 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 bonafide 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. An employer who, for instance, lays off
substantial numbers of workers while continuing to dispense fat executive
bonuses and perquisites or so-called golden parachutes, can scarcely
claim to be retrenching in good faith to avoid losses. To impart operational
meaning to the constitutional policy of providing full protection to labor,
the employers prerogative to bring down labor costs by retrenching must
be exercised essentially as a measure of last resort, after less drastic
means - e.g., reduction of both management and rank-and-file bonuses
and salaries, going on reduced time, improving manufacturing efficiencies,
trimming of marketing and advertising costs, etc. - have been tried and
found wanting.
- Lastly, but certainly not the least important, alleged losses if already
realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence.
The reason for requiring this quantum of proof is readily apparent: any less
exacting standard of proof would render too easy the abuse of this ground
for termination of services of employees.
- In addition to the above, the retrenchment must be implemented in
a just and proper manner. As held in Asiaworld Publishing House, Inc. v.
Ople:
there must be fair and reasonable criteria to be used in selecting
employees to be dismissed, such as: (a) less preferred status (e.g.
temporary employee); (b) efficiency rating; and (c) seniority.
- There is substantial evidence in the record to support the NLRCs finding
that the Society suffered financial distress as a result of growing deficits
which were not likely to abate. Petitioner presented to the NLRC the
balance sheets, financial statements, and the reports of its external
auditors for the years 1989 and 1990. We cannot, therefore, say that the

finding of the NLRC is unsupported by substantial evidence. Accordingly,

the NLRC could rightly conclude:
Given the claim of the Society that its present financial troubles were
occasioned by a dearth of funding from its traditional sources of revenue,
. . . it is Our considered view that the Societys claim to retrench
employees . . . is valid.
- Nor do we think the NLRC erred in holding that though the Society was
justified in ordering a retrenchment, its implementation of the scheme
rendered the retrenchment invalid. That is because in selecting the
employees, the Society disregarded altogether the factor of seniority. As
the NLRC noted:
- We noted with concern that the criteria used by the Society failed to
consider the seniority factor in choosing those to be retrenched, a failure
which, to our mind, should invalidate the retrenchment, as the omission
immediately makes the selection process unfair and unreasonable. Things
being equal, retaining a newly hired employee and dismissing one who had
occupied the position for years, even if the scheme should result in savings
for the employer, since he would be paying the newcomer a relatively
smaller wage, is simply unconscionable and violative of the senior
employees tenurial rights. In Villena vs. NLRC, 193 SCRA 686, February 7,
1991, the Supreme Court considered the seniority factor an important
ingredient for the validity of a retrenchment program. According to the
Court, the following legal procedure should be observed for a
retrenchment to be valid; (a) one-month prior notice to the
employee as prescribed by Article 282 of the Labor Code; and b)
use of a fair and reasonable criteria in carrying out the
retrenchment program, such as 1) less preferred status (as in the
case of temporary employees) 2) efficiency rating, 3) seniority,
and 4) proof of claimed financial losses.
- Petitioner has not explained why the said employees had to be laid off
without considering their many years of service to the Society. The fact
that these employees had accumulated seniority credits indicates that they
had been retained in the employ of the Society because of loyal and
efficient service. The burden of proving the contrary is on petitioner.
Disposition Petition DISMISSED for lack of showing that in rendering its
decision, NLRC committed grave abuse of discretion.

BOGO-MEDELLIN SUGARCANE PLANTERS ASSN V NLRC (ALU,

MONTILLA)
296 SCRA 108
PANGANIBAN; September 25, 1998
FACTS
- The workers performed the functions of computer, sampler and scalers.
They joined and became members of Associated Labor Unions, with
Bonifacio Montilla as its. The company told him to withdraw his
membership from the Associated Labor Unions or else they will not be
hired at the start of the milling season and will be dismissed. The workers
did not heed the warning and stuck to their membership with the private

respondent union. As a consequence and as earlier warned of being

dismissed if they persisted in their union activities, notices of termination
were sent to the workers informing them that their services will be
terminated due to financial difficulties. While the said notices stated that
their services will be terminated 30 days from date, they were not allowed
to work within that 30 day period and Montilla was immediately replaced
by Gavino Negapatan. The workers alleged that their dismissal was sought
due to their membership [in] the private respondent union as they have
not violated any company rules and regulations. There is also no allegation
to this effect by the respondents and the latter strongly advocated
retrenchment to prevent losses as their basis in terminating the [private
respondents]. Aggrieved of the respondents' actuations they filed the
present complaint or before the expiration of the 30 days notice. Just on
the 30th day of the notice of termination, four of the workers were paid
their corresponding separation/gratuity pay and accordingly signed their
Quitclaim and Release.
ISSUE: WON the retrenchment was justified
HELD: NO
- Retrenchment is the termination of employment effected by management
during periods of business recession, industrial depression, seasonal
fluctuations, lack of work or considerable reduction in the volume of the
employer's business. Resorted to by an employer to avoid or minimize
business losses, it is a management prerogative consistently recognized by
this Court and allowed under Article 283 of the Labor Code as follows:
"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 undue taking 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 retrenchment to prevent losses . . ., the separation pay shall
be equivalent to one (1) month pay for every year of service, which ever
is higher. A fraction of at least six (6) months shall be considered one (1)
whole year."
- In a number of cases, the Court has laid down the following requisites of a
valid retrenchment: (1) the losses incurred are substantial and not de
minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in
preventing the expected losses; and (d) the alleged losses, if already
incurred, or the expected imminent losses sought to be forestalled, are
proven by sufficient and convincing evidence. In the present case,
petitioners miserably failed to prove (1) substantial losses and (2) the
reasonable necessity of the retrenchment.
No Sufficient and Substantial
Evidence of Business Loss
- To justify retrenchment, the employer must prove serious business
losses. Indeed, not all business losses suffered by the employer would
justify retrenchment under this article. The Court has held that the "'loss'
referred to in Article 283 cannot be just any kind or amount of loss;

otherwise, a company could easily feign excuses to suit its whims and
prejudices or to rid itself of unwanted employees."
- In the case at bar, Petitioner Corporation claimed that the retrenchment
of private respondents was justified, because it suffered business losses, as
evidenced by its Comparative Statement of Revenue and Expenses for crop
years for two years. In their rebuttal, petitioners allege the following: (1)
the comparative financial statement of the corporation duly reflects its
income and expenses in a given taxable year and, despite its different
nomenclature, is substantially the same as a profit and loss statement or
any other financial statement; and (2) the National Internal Revenue Code
(NIRC) requires the certification of an independent certified public
accountant only if the taxpayer's gross receipts exceed P25,000 in any
quarter of any taxable year.
- The contentions of petitioners are untenable. A comparative statement of
revenue and expenses for two years, by itself, is not conclusive proof of
serious business losses. The Court has previously ruled that financial
statements audited by independent external auditors constitute the normal
method of proof of the profit and loss performance of a company. While
Petitioner Corporation avers that it was not required to file audited financial
statements under Section 232 of the Tax Code, it failed to establish its
exemption through any evidence showing that its quarterly gross revenues
did not exceed P25,000. Thus, its claim that it did not need to have its
financial statements certified by a certified public accountant is without
basis in fact and in law and does not excuse it from complying with the
usual requirement. Besides, the requirement of the Tax Code is one thing,
and the requirement of the Labor Code is quite another. Moreover, the
financial statement of Petitioner Corporation for two crop years is
insufficient proof of serious business losses that would justify the
retrenchment of private respondents.
MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND
LIVESTOCK SUPERVISORY UNION, MAYA FARMS EMPLOYEES
ASSOCIATION, and MAYA FARMS, INC. SUPERVISORY UNION,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MAYA
REALTY & LIVESTOCK, INC., MAYA FARMS, INC., and LIBERTY FLOUR
MILLS, INC., respondents.
ALABANG COUNTRY CLUB V NLRC (ALABANG COUNTRY CLUB
INDEPENDENT EMPLOYEES UNION)
466 SCRA 329
CARPIO-MORALES; August 9, 2005
NATURE: Petition for review on certiorari.
Alabang Country Club Inc.
(ACCI) seeks to set aside the appellate courts decision which denied its
motion for reconsideration, and ordered the reinstatement of herein 63
respondents-members of the labor organization Alabang Country Club
Independent Employees Union, without loss of seniority rights and other
privileges, and payment of full backwages.
FACTS

- ACCIs internal auditor conducted a study on the profitability of ACCIs

Food and Beverage Department
- Her report showed that from 1989-1993, the F&B Dept had been incurring
substantial losses of around P8,727,135
- Realizing that it was no longer profitable for ACCI to maintain its own F&B
Dept, the management decided to cease from operating it, and to open it
to a contractor, which would be willing to operate its own food and
beverage business within the club.
- ACCI entered into an agreement with La Tasca Restaurant for it to operate
the F&B Dept.
- ACCI sent its F&B Dept employees letters informing them their services
would be terminated effective 1 month later, that they would get
separation pay of 125% of their monthly salary for every year of service,
that La Tasca agreed to absorb all affected employees immediately with
the status of regular employees without need of undergoing probationary
period, and that they would receive the same salary they were receiving at
the time of their termination
- The Union filed a complaint for illegal dismissal, unfair labor practice,
regularization and damages with prayer for the issuance of a writ of
preliminary injunction against ACCI
- The ACCI ceased operating its F&B Dept as scheduled, and La Tasca
began operating its own F&B business
- Meanwhile, in the proceedings before the Labor Arbiter, respondent union
informed that the F&B division had been reporting gaining profits as shown
by the Statement of Income and Deficit prepared by SGV. They thus argued
that compliance with standards for losses to justify their retrenchment
were not met by ACCI.
- ACCI averred that it may exercise management prerogatives to adopt a
cost-saving and cost-consciousness program t improve efficiency in its
operations, etc.
- By decision of April 30, 1999, the Labor Arbiter dismissed the complaint
for illegal dismissal on the ground that a business entity has the right to
reduce its work force if necessitated by compelling economic factors which
endanger its existence or stability.
- On appeal, the NLRC acknowledged the right of ACCI to regulate,
according to its own discretion and judgment, all aspects of employment
including the lay-off of workers because of losses in the operation of its
business, lack of work and considerable reduction in the volume of
business. It thus dismissed the appeal.
- Private respondents thereupon brought their case, via petition for
certiorari before the Court of Appeals, alleging that the Labor Arbiter and
the NLRC committed grave abuse of discretion and utter ignorance of the
law in completely disregarding the audited financial statements prepared
by SGV&Co. showing that ACCIs F & B Department had been consistently
earning profits.
- By decision of August 14, 2002, the Court of Appeals reversed those of
the NLRC and the Labor Arbiter. It held that due to ACCIs failure to prove
by sufficient and competent evidence that its alleged losses were
substantial, continuing and without any immediate prospect of abating
them, the bona fide nature of the retrenchment appeared doubtful

- ACCIs motion for reconsideration was denied by the appellate court by

Resolution of March 6, 2003
- During the pendency of the whole case, petitioner the separation package
of sixty-two (62) of the sixty-three (63) individual respondents on account
of which they executed Releases, Waivers and Quitclaims in its favor.
ISSUE: WON respondents were terminated for an authorized cause
HELD: YES
Reasoning
- The court first distinguished between retrenchment and closure of a
business undertaking, because the respondents were relying on a case
(Lopez Sugar Corp. v Federation of Free Workers) involving retrenchment
on the ground of serious business losses being allowed subject to certain
conditions.
- The court, however, viewed this case as one involving closure of business
undertaking.
- **Retrenchment is the reduction of personnel for the purpose of cutting
down on costs of operations in terms of salaries and wages resorted to by
an employer because of losses in operation of a business occasioned by
lack of work and considerable reduction in the volume of business.
- **Closure of a business or undertaking due to business losses is the
reversal of fortune of the employer whereby there is a complete cessation
of business operations to prevent further financial drain upon an employer
who cannot pay anymore his employees since business has already
stopped.
- While the Labor Code provides for the payment of separation package in
case of retrenchment to prevent losses, it does not obligate the employer
for the payment thereof if there is closure of business due to serious
losses.
- In the present case, when petitioner decided to cease operating its F & B
Department and open the same to a concessionaire, it did not reduce the
number of personnel assigned thereat. It terminated the employment of
all personnel assigned at the department.
- As in the case of retrenchment, however, for the closure of a business or
a department due to serious business losses to be regarded as an
authorized cause for terminating employees, it must be proven that the
losses incurred are substantial and actual or reasonably imminent; that the
same increased through a period of time; and that the condition of the
company is not likely to improve in the near future .
- As did the appellate court, this Court finds that the study report
submitted by the internal auditor of petitioner, the only evidence
submitted to prove its alleged losses, is self-serving and falls short of the
stringent requirement of the law that the employer prove sufficiently and
convincingly its allegation of substantial losses.
- Petitioners failure to prove that the closure of its F & B Department was
due to substantial losses notwithstanding, this Court finds that individual
respondents were dismissed on the ground of closure or cessation of an
undertaking not due to serious business losses or financial reverses,
which is allowed under Article 283 of the Labor Code:
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 the establishment or

undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the worker and the
Ministry of Labor and Employment at least one (1) month before its
intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least one (1) month pay 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 the
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 () month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
- While petitioner did not sufficiently establish substantial losses to justify
closure of its F & B Department on this ground, there is basis for its claim
that the continued maintenance of said department had become more
expensive through the years. An evaluation of the financial figures
appearing in the audited financial statements prepared by the SGV&Co.
shows that ninety one to ninety six (91% - 96%) percent of the actual
revenues earned by the F & B Department comprised the costs and
expenses in maintaining the department. Petitioners decision to place its F
& B operations under a concessionaire must then be respected, absent a
showing of bad faith on its part.
- While the closure of F & B Department is found to be justified, petitioner
is, under the above-quoted provision of Art. 283 of the Labor Code,
mandated to pay separation pay computed from the time individual
respondents commenced their employment until the time the department
ceased operations, in an amount equivalent to one (1) month pay or at
least one-half () month pay for every year of service, whichever is
higher. In petitioners case, it in fact voluntarily doled out to some of
individual respondents separation pay equivalent to one month and a
quarter (1) for every year of service, a fraction of a year being
considered as one year.
- Respondents not having been illegally dismissed, they are not entitled to
backwages.
By petitioners information, it had paid, during the pendency of the case,
the separation package of sixty-two (62) of the sixty-three (63) individual
respondents on account of which they executed Releases, Waivers and
Quitclaims in its favor.
Disposition Petition GRANTED
CHENIVER DECO PRINT TECHNICS CORP V NLRC (CFWMAGKAKAISANG LAKAS NG MGA MANGGAGAWA SA CHENIVER)
325 SCRA 758
QUISUMBING; February 17, 2000
NATURE: Special civil action for certiorari
FACTS

- Cheniver is a corporation operating its printing business in Makati. The

respondents are members of the labor union and former employees of
Cheniver.
- June 5, 1992 Cheniver informed its employees that it will transfer its
operations to Batangas. Reasons for the transfer are expiration of lease
contract on the premises of the Makati palnt, and local authorities action
to force out Chenivers operations from Makati because of alleged hazards
to residents nearby.
- Cheniver gave its employees until the end of June to inform management
if they wanted with Cheniver in its transfer, otherwise it would hire
replacements. Aug1 was the scheduled start of operations in the new plant
in Batangas.
- Aug 4, 1992 Cheniver wrote its employees to report to the new location
within 7days, otherwise they will be deemed to have lost interest in the job
and would be replaced. However, no one reported for work in batangas,
even after extension of period of time to report to work.
- Respondents filed a complaint for unfair labor practice and illegal
dismissal, and demanded separation pay (among others).
- LA ruled that the transfer of operations was valid and absolved cheniver
of charges for unfair labor practice and illegal dismissal. It however ordered
payment of separation pay. NLRC affirmed.
cheniver contends that the transfer of its business is neither closure nor
retrenchment, thus separation pay should not be awarded. Also,
employees were not terminated but they resigned because they find the
new site to far from their residences
ISSUE: WON employees are entitled to separation pay considering that the
transfer of the plant was valid
HELD
1. YES
Ratio Art. 283 of the Labor Code provides (in part):
ART. 283. Closure of establishment and reduction of personnel. - The
employer may terminate the employment of any employee due to the
installation of labor saving devices, 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
xxx
- 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. xxx
Reasoning
- there appears no complete dissolution of Chenivers business undertaking
but the relocation of its plant to Batangas, in our view, amounts to
cessation of petitioner's business operations in Makati. It must be stressed
that the phrase closure or cessation of operation of an establishment or
undertaking not due to serious business losses or reverses under Art. 283
includes both complete cessation of all business operations and the
cessation of only part of a company's business

- There is no doubt that petitioner has legitimate reason to relocate its

plant because of the expiration of the lease contract on the premises it
occupied. That is its prerogative. But even though the transfer was due to
a reason beyond its control, Cheniver has to accord its employees some
relief in the form of severance pay.
- Since the closure of the plant is not on account of serious business losses,
Cheniver shall give respondents separation pay equivalent to at least 1
month or month pay for every year of service
- that the employees resigned is not convincing. The transfer of Cheniver
to another place hardly accessible to its workers resulted in the latter's
untimely separation from the service not to their own liking, hence, not
construable as resignation
Disposition petition denied. NLRC resolutions AFFIRMED.
AGABON V NATIONAL LABOR RELATIONS
442 SCRA 573
YNARES-SANTIAGO; November 17, 2004
NATURE: Petition for review on certiorari
FACTS
- On January 2, 1992, petitioners Jenny Agabon and Virgilio Agabon were
hired as gypsum board and cornice installers by respondent Riviera Home
Improvements, Inc., a corporation engaged in the business of selling and
installing ornamental and construction materials. Seven (7) years later, on
February 23, 1999, their services were terminated on the ground of
abandonment of work.
Apparently, petitioners were subcontracting
installation jobs for another company and were frequently absent from
work. Thus, when petitioners reported for work on February 23, 1999,
respondent company refused to reemploy them unless they agree to work
on a pakyaw basis. Petitioners demurred since this would mean losing
their benefits. They were given their walking papers without according
them the twin requirements of notice and hearing. Respondent company
stated that they abandon their jobs. Hence, petitioners filed a complaint
for illegal dismissal and payment of money claims against respondent
company.
- On December 28, 1999, the Labor Arbiter held that the dismissal of
petitioners was illegal and ordered respondent company to pay them
backwages, holidy and service incentive leave pay, and separation pay in
lieu of reinstatement. On appeal, the NLRC reversed the decision of the
Labor Arbiter and ruled that the latter erred in awarding backwages and
separation pay to petitioners who deliberately abandoned their work. On
certiorari, the Court of Appeals affirmed the findings of the NLRC but
ordered respondent company to pay petitioners their money claims.
ISSUES
1. WON petitioners were illegally dismissed from the service
2. WON private respondent should be held liable for non-compliance with
the procedural requirements of due process
HELD
1. NO
Ratio To dismiss an employee, the law requires not only the existence of
a just and valid cause but also enjoins the employer to give the employee

the opportunity to be heard and to defend himself. Article 282 of the Labor
Code enumerates the just causes for termination by the employer: (a)
serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or the latters representative in connection with the
employees work; (b) gross and habitual neglect by the employee of his
duties; (c) fraud or willful breach by the employee of the trust reposed in
him by his employer or his duly authorized representative; (d) commission
of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
- In this case, Agabon abandoned their job. Abandonment is the deliberate
and unjustified refusal of an employee to resume his employment. It is a
form of neglect of duty, hence, a just cause for termination of employment
by the employer. For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without
valid or justifiable reason; and (2) a clear intention to sever employeremployee relationship, with the second as the more determinative factor
which is manifested by overt acts from which it may be deduced that the
employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and
unjustified.
2. YES
- Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights.
* It is worth noting that this ruling has evolved through times.
> Prior to 1989 - the rule was that a dismissal or termination is illegal if
the employee was not given any notice.
> In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission - where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the dismissal
may be upheld but the employer will be penalized to pay an indemnity to
the employee. This became known as the Wenphil or Belated Due Process
Rule.
> On January 27, 2000, in Serrano - violation by the employer of the
notice requirement in termination for just or authorized causes was not a
denial of due process that will nullify the termination. However, the
dismissal is ineffectual and the employer must pay full backwages from the
time of termination until it is judicially declared that the dismissal was for a
just or authorized cause.
Reasoning
a. Constitutional due process is different from statutory due process. The
former protects the individual from the government and assures him of his
rights in criminal, civil or administrative proceedings; while statutory due
process found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just cause after notice
and hearing.
b. The constitutional policy to provide full protection to labor is not meant
to be a sword to oppress employers. The commitment of this Court to the

cause of labor does not prevent us from sustaining the employer when it is
in the right, as in this case.
Disposition DENIED. But the private respondent is ORDERED to pay each
of the petitioners the amount of P30,000.00 as nominal damages for noncompliance with statutory due process.
JAKA FOOD PROCESSING CORPORATION, vs. DARWIN PACOT,
ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL
LESCANO and JONATHAN CAGABCAB.
G.R. No. 151378. March 28, 2005
Facts: Respondents were earlier hired by petitioner JAKA Foods Processing
Corporation until the latter terminated their employment because the
corporation was in dire financial straits. It is not disputed, however, that
the termination was effected without JAKA complying with the requirement
under Article 283 of the Labor Code regarding the service of a written
notice upon the employees and the Department of Labor and Employment
at least one (1) month before the intended date of termination.
Respondents filed complaints for illegal dismissal, underpayment of wages
and nonpayment of service incentive leave and 13th month pay against
JAKA. The Labor Arbiter rendered a decision declaring the termination
illegal and ordering JAKA to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. The Court of Appeals
reversed said decision and ordered respondent JAKA to pay petitioners
separation pay equivalent to one (1) month salary, the proportionate 13th
month pay and, in addition, full backwages from the time their
employment was terminated.
Issue: What are the legal implications of a situation where an employee is
dismissed for cause but such dismissal was effected without the
employers compliance with the notice requirement under the Labor Code?
Held: It was established that there was ground for respondents dismissal,
i.e., retrenchment, which is one of the authorized causes enumerated
under Article 283 of the Labor Code. Likewise, it is established that JAKA
failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case, the Court deem
it proper to fix the indemnity at P50, 000.00. The Court of Appeals have
been in error when it ordered JAKA to pay respondents separation pay
equivalent to one (1) month salary for every year of service. In all cases of
business closure or cessation of operation or undertaking of the employer,
the affected employee is entitled to separation pay. This is consistent with
the state policy of treating labor as a primary social economic force,
affording full protection to its rights as well as its welfare. The exception is
when the closure of business or cessation of operations is due to serious
business losses or financial reverses; duly proved, in which case, the right
of affected employees to separation pay is lost for obvious reasons.

INDUSTRIAL TIMBER CORP V ABABON

480 SCRA
YNARES-SANTIAGO; January 5, 2006
FACTS
- Industrial Plywood Group Corporation (IPGC) is the owner of a plywood
plant located at Agusan, Pequeo, Butuan City, leased to Industrial Timber
Corporation (ITC) August 30, 1985 for a period of five years. Thereafter,
ITC commenced operation of the plywood plant and hired 387 workers.
- March 16, 1990, ITC notified the DOLE and its workers that effective
March 19, 1990 it will undergo a "no plant operation" due to lack of raw
materials and will resume only after it can secure logs for milling.
- Meanwhile, IPGC notified ITC of the expiration of the lease contract in
August 1990 and its intention not to renew the same.
- June 26, 1990, ITC notified the DOLE and its workers of shutdown due to
the non-renewal of anti-pollution permit that expired in April 1990. This and
the alleged lack of logs for milling constrained ITC to lay off all its workers
until further notice. This was followed by a final notice of closure or
cessation of business operations on August 17, 1990 with an advice for all
the workers to collect the benefits due them under the law and CBA.
- October 15, 1990, IPGC took over the plywood plant after it was issued a
Wood Processing Plant Permit , which included the anti-pollution permit, by
the DENR coincidentally on the same day the ITC ceased operation of the
plant.
- Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal
dismissal, unfair labor practice and damages. They alleged, among others,
that the cessation of ITC's operation was intended to bust the union and
that both corporations are one and the same entity being controlled by one
owner.
- January 20, 1992, after requiring both parties to submit their respective
position papers, LA held that there was lack of evidence to prove that it
was used to perpetuate fraud or illegal act; upheld the validity of the
closure; and ordered ITC to pay separation pay of 1/2 month for every year
of service.
- Ababon, et al. appealed to the NLRC. NLRC set aside the decision of the
LA and ordered the reinstatement of the employees to their former
positions, and the payment of full back wages, damages and attorney's
fees.
- ITC and IPGC filed MFR. However, it was dismissed for being filed out of
time having been filed only on the date of actual receipt by the NLRC on
June 29, 1993, three days after the last day of the reglementary period.
Thus, they filed a Petition for Relief from Resolution, which was treated as a
2nd MFR by the NLRC and dismissed for lack of merit.
Petitioners filed a Notice of Appeal with the SC. Subsequently, they filed
MFR/ 2nd petition for relief with the NLRC.
- SC dismissed the Notice of Appeal for being a wrong mode of appeal from
the NLRC decision. On the other hand, the NLRC granted the Second
Petition for Relief and set aside all its prior decision and resolutions.

- October 2, 1995, Virgilio Ababon, et al. filed a Petition for Certiorari with
the SC. Pursuant to St. Martin's Funeral Home v. NLRC, it was referred to
the CA for appropriate action and disposition.
- October 21, 2002, the CA set aside the decision on the 2 nd petition for
relief of the NLRC and reinstated its initial decision and resolution.
- Both filed their respective MFRs which were denied, hence, the present
consolidated petitions for review
ISSUES
1. WON NLRC should have taken cognizance of the most recent MFR
2. WON Ababon, et al. were illegally dismissed due to the closure of ITC's
business; and whether they are entitled to separation pay, backwages, and
other monetary awards
HELD
1. YES
- Substantial justice is best served by allowing the petition for relief despite
procedural defect of filing MFR
- Under Art 218 (c) LC, NLRC may, in the exercise of its appellate powers,
correct, amend, or waive any error, defect or irregularity whether in
substance or in form. Further, Art 221 LC provides that in any proceeding
before the Commission or any of the LA, the rules of evidence prevailing in
courts of law or equity shall not be controlling and it is the spirit and
intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process.
- Sec14 Rules of Procedure of the NLRC that MFR shall not be entertained
except when based on palpable or patent errors, provided that the motion
is under oath and filed within 10 calendar days from receipt of the order,
resolution or decision should not be interpreted as to sacrifice substantial
justice to technicality. The limitation of the period is to forestall or avoid an
unreasonable delay in the administration of justice, from which the NLRC
absolved ITC and IPGC because the filing of their MFR was due to
excusable negligence.
2. NO
- The records reveal that respondent ITC actually underwent 'no plant
operation' since 19 March 1990 due to lack of log supply. This s admitted
by complainants. Since then several subsequent incidents prevented
respondent ITC to resume its business operations. Without the raw
materials respondent ITC has nothing to produce. Without the permits it
cannot lawfully operate the plant. And without the contract of lease
respondent ITC has no option but to cease operation and turn over the
plant to the lessor.
- The right to close the operation of an establishment or undertaking is one
of the authorized causes in terminating employment of workers, the only
limitation being that the closure must not be for the purpose of
circumventing the provisions on termination of employment in the LC.
- According to Art 283 LC, a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious
business losses or financial reverses or otherwise. Under the first kind, the

employer must sufficiently and convincingly prove its allegation of

substantial losses, while under the second kind, the employer can lawfully
close shop anytime as long as cessation of or withdrawal from business
operations was bona fide in character and not impelled by a motive to
defeat or circumvent the tenurial rights of employees, and as long as he
pays his employees their termination pay in the amount corresponding to
their length of service. Just as no law forces anyone to go into business, no
law can compel anybody to continue the same. It would be stretching the
intent and spirit of the law if a court interferes with management's
prerogative to close or cease its business operations just because the
business is not suffering from any loss or because of the desire to provide
the workers continued employment.
- In sum, under Art 283 LC, three requirements are necessary for a valid
cessation of business operations: (a) service of a written notice to the
employees and to the DOLE at least one month before the intended date
thereof; (b) the cessation of business must be bona fide in character; and
(c) payment to the employees of termination pay amounting to one month
pay or at least one-half month pay for every year of service, whichever is
higher.
- In these consolidated cases, we find that ITC's closure or cessation of
business was done in good faith and for valid reasons.
- Having established that ITC's closure of the plywood plant was done in
good faith and that it was due to causes beyond its control, the conclusion
is inevitable that said closure is valid. Consequently, Ababon, et al. could
not have been illegally dismissed to be entitled to full backwages.
However, they are entitled to separation pay equivalent to one month pay
or at least one-half month pay for every year of service, whichever is
higher.
- Although the closure was done in good faith and for valid reasons, we find
that ITC did not comply with the notice requirement. While an employer is
under no obligation to conduct hearings before effecting termination of
employment due to authorized cause, however, the law requires that it
must notify the DOLE and its employees at least one month before the
intended date of closure.
Disposition the Decision of CA, which set aside the decision and
resolution of NLRC, are hereby REVERSED. The May 24, 1995 Decision of
the NLRC reinstating the decision of the Laf finding that the closure or
cessation of ITC's business valid, is AFFIRMED with the MODIFICATIONS that
ITC is ordered to pay separation pay equivalent to one month pay or to at
least one-half month pay for every year of service, whichever is higher,
and P50,000.00 as nominal damages to each employee.
Sy et. al. vs Court of Appeals
G..R. No. 142293
February 27, 2003
Employer-Employee Relationship

Facts: This petition for review seeks the reversal of the decision of the
Court of Appeals dated February 29, 2000.
Sometime in 1958, private respondent Jaime Sahot started working as a
truck helper for petitioners family-owned trucking business named Vicente
Sy Trucking. In 1965, he became a truck driver of the same family
business, renamed T. Paulino Trucking Service, later 6Bs Trucking
Corporation in 1985, and thereafter known as SBT Trucking Corporation
since 1994. Throughout all these changes in names and for 36 years,
private respondent continuously served the trucking business of
petitioners.
In April 1994, Sahot was already 59 years old. He had been incurring
absences as he was suffering from various ailments. Particularly causing
him pain was his left thigh, which greatly affected the performance of his
task as a driver. He inquired about his medical and retirement benefits with
the Social Security System (SSS) on April 25, 1994, but discovered that his
premium payments had not been remitted by his employer.
Sahot had filed a week-long leave sometime in May 1994. But found
himself in a dilemma. He was facing dismissal if he refused to work, But he
could not retire on pension because petitioners never paid his correct SSS
premiums. The NLRC NCR ruled that there was no illegal dismissal in
Sahots case. Private respondent had failed to report to work. On appeal,
the National Labor Relations Commission modified the judgment of the
Labor Arbiter. Petitioners assailed the decision of the NLRC before the Court
of Appeals.
Issues
(a) Whether or not an employer-employee relationship existed between
petitioners and respondent Sahot?
(b) Whether or not there was valid dismissal?
(c) Whether or not respondent Sahot is entitled to separation pay?
Held: But dealing the Labor Arbiter a reversal on this score the NLRC,
concurred in by the Court of Appeals, held that: While it was very obvious
that complainant did not have any intention to report back to work due to
his illness which incapacitated him to perform his job, such intention
cannot be construed to be abandonment. Instead, the same should have
been considered as one of those falling under the just causes of
terminating an employment. The insistence of respondent in making
complainant work did not change the scenario.
It is worthy to note that respondent is engaged in the trucking business
where physical strength is of utmost requirement (sic). Complainant
started working with respondent as truck helper at age twenty-three (23),
then as truck driver since 1965. Complainant was already fifty-nine (59)
when the complaint was filed and suffering from various illness triggered
by his work and age.

On the last issue, as held by the Court of Appeals, respondent Jaime Sahot
is entitled to separation pay. The law is clear on the matter. An employee
who is terminated because of disease is entitled to "separation pay
equivalent to at least one month salary or to one-half month salary for
every year of service, whichever is greater xxx." Following the formula set
in Art. 284 of the Labor Code, his separation pay was computed by the
appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We
agree with the computation, after noting that his last monthly salary was
P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible error
nor grave abuse of discretion on the part of appellate court, we are
constrained to sustain its decision. To avoid further delay in the payment
due the separated worker, whose claim was filed way back in 1994, this
decision is immediately executory. Otherwise, six percent (6%) interest per
annum should be charged thereon, for any delay, pursuant to provisions of
the Civil Code.
WHEREFORE, the petition is DENIED and the decision of the Court of
Appeals dated February 29, 2000 is AFFIRMED. Petitioners must pay
private respondent Jaime Sahot his separation pay for 36 years of service
at the rate of one-half monthly pay for every year of service, amounting to
P74,880.00, with interest of six per centum (6%) per annum from finality of
this decision until fully paid.
ROQUERO V PHILIPPINE AIRLINES INC
401 SCRA 424
PUNO; April 22, 2003
NATURE: CERTIORARI
FACTS
- Roquero, along with Rene Pabayo, were ground equipment mechanics of
PAL.
- From the evidence on record, it appears that Roquero and Pabayo were
caught red-handed possessing and using shabu in a raid conducted by PAL
security officers and NARCOM personnel.
- The two alleged that they did not voluntarily indulge in the said act but
were instigated by a certain Jojie Alipato who was introduced to them by
Joseph Ocul, Manager of the Airport Maintenance Division of PAL.
- Alipato was unsuccessful, until one day, he was able to persuade Pabayo
to join him in taking the drugs and who in turn persuaded Roquero.
- Inside the company premises, they locked the door and Alipato lost no
time in preparing the drugs to be used. When they started the procedure of
taking the drugs, armed men entered the room, arrested Roquero and
Pabayo and seized the drugs and the paraphernalia used.
- Roquero and Pabayo were subjected to a physical examination where the
results showed that they were positive of drugs.
- They were also brought to the security office of PAL where they executed
written confessions without the benefit of counsel.

- Roquero and Pabayo received a notice of administrative charge for

violating the PAL Code of Discipline. They were required to answer the
charges and were placed under preventive suspension.
- Roquero and Pabayo asserted that they were instigated by PAL to take the
drugs and that Alipato was not really a trainee of PAL but was placed in the
premises to instigate the commission of the crime because Alipato was not
arrested and that Alipato has no record of employment with PAL.
- Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for
illegal dismissal.
- LA: the dismissal of Roquero and Pabayo was upheld. The Labor Arbiter
found both parties at fault PAL for applying means to entice the
complainants into committing the infraction and the complainants for
giving in to the temptation and eventually indulging in the prohibited
activity. Nonetheless, the Labor Arbiter awarded separation pay and
attorneys fees to the complainants.
- RTC: acquitted the 2 of the criminal case of conspiracy for possession
and use of a regulated drug in violation of Section 16, Article III of Republic
Act 6425 on the ground of instigation.
- NLRC: ruled in favor of complainants as it likewise found PAL guilty of
instigation; ordered reinstatement to their former positions but without
backwages.
- Complainants did not appeal from the decision but filed a motion for a
writ of execution of the order of reinstatement.
- LA granted the motion but PAL refused to execute the said order on the
ground that they have this petition pending which was eventually referred
to the CA.
- CA: reversed the decision of the NLRC and reinstated the decision of the
LA insofar as it upheld the dismissal of Roquero.
ISSUES
1.WON the instigated employee shall be solely responsible for an action
arising from the instigation perpetrated by the employer
2. WON the executory nature of the decision, more so the reinstatement
aspect of a labor tribunals order can be halted by a petition having been
filed in higher courts without any restraining order or preliminary injunction
having been ordered in the meantime
3. WON the employer who refused to reinstate an employee despite a writ
duly issued can be held liable to pay the salary of the subject employee
from the time that he was ordered reinstated up to the time that the
reversed decision was handed down
HELD
1. YES - Instigation is only a defense against criminal liability. It cannot be
used as a shield against dismissal from employment especially when the
position involves the safety of human lives.
- It is of public knowledge that drugs can damage the mental faculties of
the user. Roquero was tasked with the repair and maintenance of PALs
airplanes. He cannot discharge that duty if he is a drug user. His failure to
do his job can mean great loss of lives and properties. Hence, even if he
was instigated to take drugs he has no right to be reinstated to his

position. He took the drugs fully knowing that he was on duty and more so
that it is prohibited by company rules
- There is no question that petitioner Roquero is guilty of serious
misconduct for possessing and using shabu. He violated Chapter 2, Article
VII, section 4 of the PAL Code of Discipline which states:
Any employee who, while on company premises or on duty, takes or is
under the influence of prohibited or controlled drugs, or hallucinogenic
substances or narcotics shall be dismissed.
- Philippine Aeolus Automotive United Corporation vs. NLRC (2000): Serious
misconduct is defined as the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. For
serious misconduct to warrant the dismissal of an employee, it (1) must be
serious; (2) must relate to the performance of the employees duty; and (3)
must show that the employee has become unfit to continue working for the
employer
- PAL complied with the twin-notice requirement before dismissing the
petitioner. The twin-notice rule requires (1) the notice which apprises the
employee of the particular acts or omissions for which his dismissal is
being sought along with the opportunity for the employee to air his side,
and (2) the subsequent notice of the employers decision to dismiss him.
2. NO
- The order of reinstatement is immediately executory
- Philippine Rabbit Bus Lines, Inc. vs. NLRC, (1999): The unjustified refusal
of the employer to reinstate a dismissed employee entitles him to payment
of his salaries effective from the time the employer failed to reinstate him
despite the issuance of a writ of execution. Unless there is a restraining
order issued, it is ministerial upon the Labor Arbiter to implement the order
of reinstatement. In the case at bar, no restraining order was granted.
Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate
him in the payroll. Having failed to do so, PAL must pay Roquero the salary
he is entitled to, as if he was reinstated, from the time of the decision of
the NLRC until the finality of the decision of this Court.
- Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12
of RA No. 6715, and Sec 2 of the NLRC Interim Rules on Appeals under RA
No. 6715, Amending the Labor Code, provide that an order of
reinstatement by the Labor Arbiter is immediately executory even pending
appeal.
- The rationale of the law has been explained in Aris (Phil.) Inc. vs.
NLRC:
In authorizing execution pending appeal of the reinstatement aspect of
a decision of the Labor Arbiter reinstating a dismissed or separated
employee, the law itself has laid down a compassionate policy which,
once more, vivifies and enhances the provisions of the 1987 Constitution
on labor and the working man.
xxx xxx
xxx
These duties and responsibilities of the State are imposed not so much
to express sympathy for the workingman as to forcefully and
meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms with equal intensity. Labor
is an indispensable partner for the nations progress and stability.

xxx xxx
xxx
x x x In short, with respect to decisions reinstating employees, the law
itself has determined a sufficiently overwhelming reason for its
execution pending appeal.
xxx xxx
xxx
x x x Then, by and pursuant to the same power (police power), the State
may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that saving
act is designed to stop, although temporarily since the appeal may be
decided in favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated employee and his
family.
3. YES.
- Even if the order of reinstatement of the LA is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of
the dismissed employee during the period of appeal until reversal by the
higher court.
- If the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required
to reimburse whatever salary he received for he is entitled to such, more
so if he actually rendered services during the period.
Disposition The dismissal of petitioner Roquero is AFFIRMED, but PAL is
ordered to pay the wages to which Roquero is entitled from the time the
reinstatement order was issued until the finality of this decision.
MILAGROS PANUNCILLO v. CAP PHILIPPINES, INC.
515 SCRA 323 (2007), SECOND DIVISION (Carpio Morales, J.)
The protection of the rights of the laborers does not authorize the
oppression or self-destruction of the employer.
Milagros Panuncillo was hired as Office Senior Clerk by CAP Philippines Inc.
In order to secure the education of her son, Panuncillo procured an
educational plan which she had fully paid but which she later sold to
Josefina Pernes for P37,000. Before the actual transfer of the plan could be
effected, however, Panuncillo pledged it for P50,000 to John Chua who,
however, sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to
Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the
plan, Josefina informed CAP Philippines Inc. that Panuncillo had "swindled"
her but that she was willing to settle the case amicably as long as
Panuncillo will pay the amount involved and the interest.
CAP Philippines Inc. terminated the services of Panuncillo. Panuncillo
sought reconsideration of her dismissal. Acting on Panuncillos motion for
reconsideration, CAP Philippines Inc. denied the same. Panuncillo thus filed
a complaint for illegal dismissal, 13th month pay, service incentive leave
pay, damages and attorneys fees against CAP Philippines Inc.

The Labor Arbiter, while finding that the dismissal was for a valid cause,
found the same too harsh. He thus ordered the reinstatement of Panuncillo
to a position one rank lower than her previous position. On appeal, the
National Labor Relations Commission (NLRC) reversed the decision of the
Labor Arbiter. It held that Panuncillos dismissal was illegal and accordingly
ordered her reinstatement to her former position.
CAP Philippines Inc. challenged the NLRC Decision before the appellate
court via Petition for Certiorari. The appellate court reversed the NLRC
Decision and held that the dismissal was valid and that CAP Philippines Inc.
complied with the procedural requirements of due process. Hence, the
present petition.
ISSUE:
Whether or not Milagros has been illegally dismissed
HELD:
Panuncillos repeated violation of Section 8.4 of CAP Philippines Incs Code
of Discipline, she violated the trust and confidence of CAP Philippines Inc.
and its customers. To allow her to continue with her employment puts CAP
Philippines Inc. under the risk of being embroiled in unnecessary lawsuits
from customers similarly situated as Josefina, et al. Clearly, CAP Philippines
Inc. exercised its management prerogative when it dismissed Panuncillo.
Under the Labor Code, the employer may terminate an employment on the
ground of serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection with his
work. Infractions of company rules and regulations have been declared to
belong to this category and thus are valid causes for termination of
employment by the employer.
The employer cannot be compelled to continue the employment of a
person who was found guilty of maliciously committing acts which are
detrimental to his interests. It will be highly prejudicial to the interests of
the employer to impose on him the charges that warranted his dismissal
from employment. Indeed, it will demoralize the rank and file if the
undeserving, if not undesirable, remain in the service. It may encourage
him to do even worse and will render a mockery of the rules of discipline
that employees are required to observe. This Court was more emphatic in
holding that in protecting the rights of the laborer, it cannot authorize the
oppression or self-destruction of the employer.
There can thus be no doubt that Panuncillo was given ample opportunity to
explain her side. Parenthetically, when an employee admits the acts
complained of, as in Panuncillos case, no formal hearing is even necessary.
SENTINEL SECURITY AGENCY INC V NLRC (CABANO)
295 SCRA 123
PANGANIBAN; September 3, 1998

FACTS
- The complainants were employees of Sentinel Security Agency, Inc. They
were assigned to render guard duty at the premises of [Philippine
American Life Insurance Company] at Jones Avenue, Cebu City. On
December 16, 1993 Philippine American Life Insurance Company [the
Client, ], sent notice to all concerned that the [Agency] was again awarded
the contract of security services together with a request to replace all the
security guards in the companys offices at the cities of Cebu, Bacolod,
Cagayan de Oro, Dipolog and Ilagan. In compliance therewith, [the Agency]
issued a Relief and Transfer Order replacing the complainants as guards [of
the Client] and for then to be re-assigned to other clients. As ordered, the
complainants reported but were never given new assignments but instead
they were told that they were replaced because they are already old.
Precisely, the complainants lost no time but filed the subject illegal
dismissal cases and prayed for payment of separation pay and other labor
standard benefits.
- Defendants Comment
"[The Client and the Agency] maintained there was no dismissal on the
part of the complainants, constructive or otherwise, as they were protected
by the contract of security services which allows the recall of security
guards from their assigned posts at the will of either party. It also advanced
that the complainants prematurely filed the subject cases without giving
the [Agency] a chance to give them some assignments.
- On the part of [the Client], it averred further that there [was] no
employer-employee relationship between it and the complainants as the
latter were merely assigned to its Cebu Branch under a job contract; that
[the Agency] ha[d] its own separate corporate personality apart from that
of [the Client]. Besides, it pointed out that the functions of the
complainants in providing security services to [the Clients] property [were]
not necessary and desirable to the usual business or trade of [the Client],
as it could still operate and engage in its life insurance business without
the security guards. In fine, [the Client] maintains that the complainants
have no cause of action against it."
ISSUES
1. WON the complainants were illegally dismissed
2. WON the Client is jointly and severally liable for their thirteenth-month
and service incentive leave pays
HELD
1. YES
Ratio The transfer of an employee involves a lateral movement within the
business or operation of the employer, without demotion in rank,
diminution of benefits or, worse, suspension of employment even if
temporary. The recall and transfer of security guards require reassignment
to another post and are not equivalent to their placement on "floating
status." Off-detailing security guards for a reasonable period of six months
is justified only in bona fide cases of suspension of operation, business or
undertaking.
Reasoning
a. The legally recognized concept of transfer was not implemented. The
agency hired new security guards to replace the complainants, resulting in

a lack of posts to which the complainants could have been reassigned.

Thus, it refused to reassign Complainant Andoy when he reported for duty
on February 2, 4 and 7, 1994; and merely told the other complainants on
various dates from January 25 to 27, 1994 that they were already too old to
be posted anywhere.
b. A floating status requires the dire exigency of the employers bona fide
suspension of operation, business or undertaking. In security services, this
happens when the clients that do not renew their contracts with a security
agency are more than those that do and the new ones that the agency
gets. However, in the case at bar, the Agency was awarded a new contract
by the Client. There was no surplus of security guards over available
assignments. If there were, it was because the Agency hired new security
guards. Thus, there was no suspension of operation, business or
undertaking, bona fide or not, that would have justified placing the
complainants off-detail and making them wait for a period of six months. If
indeed they were merely transferred, there would have been no need to
make them wait for six months.
(2) The Client did not, as it could not, illegally dismiss the complainants.
Thus, it should not be held liable for separation pay and back wages. But
even if the Client is not responsible for the illegal dismissal of the
complainants, it is jointly and severally liable with the Agency for the
complainants service incentive leave pay.
Disposition The petition is DISMISSED and the assailed Decision and
Resolution are hereby AFFIRMED, but the award of the thirteenth-month
pay is DELETED
VIERNES V NLRC (BENGUET ELECTRIC COOP)
400 SCRA 557
AUSTRIA-MARTINEZ; April 4, 2003
FACTS
- The 15 complainants services were contracted as meter readers by
Benguet Electric Cooperative (BENECO) for less than a months duration
from October 8 to 31, 1990. Their employment contracts, couched in
identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under
BENECO-NEA Management with compensation at the rate of SIXTY-SIX
PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from October 08
to 31, 1990.
- The said term notwithstanding, the complainants were allowed to work
beyond October 31, 1990, or until January 2, 1991. On January 3, 1991,
they were each served their identical notices of termination dated
December 29, 1990. The same read:
Please be informed that effective at the close of office hours of December
31, 1990, your services with the BENECO will be terminated.
Your
termination has nothing to do with your performance. Rather, it is because
we have to retrench on personnel as we are already overstaffed.
- The complainants filed separate complaints for illegal dismissal. It is the
contention of the complainants that they were not apprentices but regular
employees whose services were illegally and unjustly terminated in a

manner that was whimsical and capricious. On the other hand, the
respondent invokes Article 283 of the Labor Code in defense of the
questioned dismissal.
- The Labor Arbiter dismissed the complaints for illegal dismissal but
directed BENECO to extend the contract of each complainant, with the
exception of Viernes who was ordered to be appointed as regular
employee, a months salary as indemnity for failure to give the 30-day
notice, and backwages.
- The NLRC declared the complainants dismissal illegal, thus ordering their
reinstatement to their former position as meter readers or to any
equivalent position with payment of backwages limited to one year but
deleting the award of indemnity and attorneys fees. The award of
underpayment of wages was affirmed.
ISSUES
1. WON the NLRC committed grave abuse of discretion in ordering the
reinstatement of petitioners to their former position as meter readers on
probationary status in spite of its finding that they are regular employees
under Article 280 of the Labor Code
2. WON the NLRC committed grave abuse of discretion in limiting the
backwages of petitioners to one year only in spite of its finding that they
were illegally dismissed, which is contrary to the mandate of full
backwages until actual reinstatement but not to exceed 3 years
3. WON the NLRC committed grave abuse of discretion in deleting the
award of indemnity pay which had become final because it was not
appealed and in deleting the award of attorneys fees because of the
absence of a trial-type hearing
4. WON the mandate of immediately executory on the reinstatement
aspect even pending appeal as provided in the decision of Labor Arbiters
equally applies in the decision of the NLRC even pending appeal, by means
of a motion for reconsideration of the order reinstating a dismissed
employee or pending appeal because the case is elevated on certiorari
before the Supreme Court
HELD
1. YES
Ratio There are two separate instances whereby it can be determined that
an employment is regular: (1) The particular activity performed by the
employee is necessary or desirable in the usual business or trade of the
employer; or (2) if the employee has been performing the job for at least a
year.
Reasoning
- Petitioners fall under the first category. They were engaged to perform
activities that are necessary to the usual business of BENECO. We agree
with the labor arbiters pronouncement that the job of a meter reader is
necessary to the business of BENECO because unless a meter reader
records the electric consumption of the subscribing public, there could not
be a valid basis for billing the customers. The fact that the petitioners were
allowed to continue working after the expiration of their employment
contract is evidence of the necessity and desirability of their service to
BENECOs business. In addition, during the preliminary hearing of the case

on February 4, 1991, BENECO even offered to enter into another temporary

employment contract with petitioners. This only proves BENECOs need for
the services of the petitioners. With the continuation of their employment
beyond the original term, petitioners have become full-fledged regular
employees. The fact alone that the petitioners have rendered service for a
period of less than 6 months does not make their employment status as
probationary.
- The principle [exception to the rule in Ratio] enunciated in Brent School
vs. Zamora applies only with respect to fixed term employments. While it is
true that petitioners were initially employed on a fixed term basis as their
employment contracts were only for October 8 to 31, 1990, after October
31, 1990, they were allowed to continue working in the same capacity as
meter readers without the benefit of a new contract or agreement or
without the term of their employment being fixed anew. After October 31,
1990, the employment of petitioners is no longer on a fixed term basis. The
complexion of the employment relationship of petitioners and BENECO is
thereby totally changed. Petitioners have attained the status of regular
employees.
2. YES
Reasoning
- A279 LC, as amended by RA 6715 [effective March 21, 1989], provides
that an illegally dismissed employee is entitled to full back wages, inclusive
of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. Since petitioners were employed on
October 8, 1990, the amended provision shall apply to the present case.
Hence, it was patently erroneous, tantamount to grave abuse of discretion
on the part of the NLRC in limiting to one year the back wages awarded to
petitioners.
3. YES
Ratio An employer becomes liable to pay indemnity to an employee who
has been dismissed if, in effecting such dismissal, the employer fails to
comply with the requirements of due process
Reasoning
- The indemnity is in the form of nominal damages intended not to penalize
the employer but to vindicate or recognize the employees right to
procedural due process which was violated by the employer. Under A2221
CC, nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.
- Indemnity is not incompatible with the award of back wages. These two
awards are based on different considerations. Back wages are granted on
grounds of equity to workers for earnings lost due to their illegal dismissal
from work. On the other hand, the award of indemnity is meant to
vindicate or recognize the right of an employee to due process which has
been violated by the employer. In this case, BENECO failed to comply with
the provisions of Article 283 of the Labor Code which requires an employer
to serve a notice of dismissal upon the employees and to the Department
of Labor, at least one month before the intended date of termination. As to

the award of attorneys fees, the same is justified by the provisions of

Article 111 of the Labor Code.
4. YES
Reasoning
- A223 LC is plain and clear that the decision of the NLRC shall be final and
executory after 10 calendar days from receipt by the parties. In addition,
Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC provides
that should there be a motion for reconsideration entertained pursuant to
Section 14, Rule VII of these Rules, the decision shall be executory after 10
calendar days from receipt of the resolution on such motion. We find
nothing inconsistent or contradictory between the two. The provision of the
NLRC Rules of Procedure merely provides for situations where a motion for
reconsideration is filed. Since the Rules allow the filing of a motion for
reconsideration of a decision of the NLRC, it simply follows that the ten-day
period provided under Article 223 of the Labor Code should be reckoned
from the date of receipt by the parties of the resolution on such motion. In
the case at bar, petitioners received the resolution of the NLRC denying
their motion for reconsideration on October 22, 1992. Hence, it is on
November 2, 1992 that the questioned decision became executory.
Disposition Petition PARTLY GRANTED. Decision of the NLRC is MODIFIED.
BENECO is ordered to reinstate petitioners to their former or substantially
equivalent position as regular employees, without loss of seniority rights
and other privileges, with full back wages from the time of their dismissal
until they are actually reinstated. The indemnity to petitioners is
REINSTATED. BENECO is also ordered to pay attorneys fees in the amount
of 10% of the total monetary award due to the petitioners. In all other
respects the assailed decision and resolution are AFFIRMED.
TORRES V NLRC (E&R SECURITY AGENCY)
330 SCRA 311
PARDO; April 12, 2000
NATURE: Petition for certiorari
FACTS:
- Jan 5, 1989, E & R security agency hired Chona Torres as a security guard.
- On Oct 27, 1989, during a routinary meeting of the security guards of the
agency assigned to the Philippine Aerospace Development Corporation, the
issue of granting a P25.00 pay increase pursuant to RA 6727 was taken up
and questions were raised as to the date of implementation of the
increase. Petitioner Torres stood up and uttered aloud at the presiding
officer: "BAKIT ANG SASABIHIN NINYO SA OPISINA AT DITO AY MAGKAIBA!"
to which remark the presiding officer replied: "WALA NAMAN PAGKAKAIBA,
DI BA?". The presiding officer also asked: "BAKIT AYAW MO DOON SA
OPISINA?" Then petitioner shouted: "WALA NA AKONG TIWALA SA INYO AT
SA AGENCY KASI SINUNGALING KAYO. EH, KUNG LALAKI LANG AKO, BAKA
KUNG ANO PA ANG NAGAWA KO SA INYO NGAYON!"
- On the same day, the agency sent Torres a letter saying effective
immediately, she is suspended from duty as Security Guard for fifteen days
for discourtesy, disloyalty and insubordination while in the performance of
duty.

- Torres filed with the Labor Arbiter a complaint for illegal suspension and
violation of R.A. 6727, and for having been required to sign on a blank
payroll.
- On Nov 10, 1989, Torres received a letter from the agency informing her
that she was re-assigned and required to report at the respondent's Manila
office for further instructions. On Nov 27, the agency terminated her
services for abandonment when she failed to report for work in her new
assignment.
- Torres filed with the Labor Arbiter an amended complaint charging
respondent with underpayment of wages under R.A. No. 6640 and
harassment.
- Labor Arbiter ordered agency to reinstate Torres to her former position,
pay her salary for Oct 1989, and salary differentials under RA 6640 and RA
6727
Agency appealed to NLRC. The NLRC denied the appeal on the ground of
non-perfection due to lack of appeal bond and that there was no reason to
disturb the decision.
- The decision having become final, the Labor Arbiter issued a writ of
execution on the reinstatement aspect, but it was not implemented
because the monetary aspect of the decision remained to be determined.
- On Nov 8, 1991, Torres asked the Labor Arbiter to issue an alias writ of
execution based on the completed computation of back wages of
P104,396.00 worked out by NLRC's Research and Information Unit.
- NLRC Sheriff issued a Notice of Garnishment which was served the
agencys deposit account with PNB, in the amount of P105,296.00 inclusive
of the execution fee of P1,000.00.
- On Nov 27, 1991, Labor Arbiter directed PNB to release the garnished
amount and to make it payable to NLRC cashier for the account of Torres
pending ultimate release to her. PNB issued a Manager's Check dated Dec
6, 1991.
- Meantime, on Dec 3, 1991, the agency filed with the Labor Arbiter an
Urgent Ex-Parte Motion to Quash the Alias Writ of Execution on the ground
that there has been a change in the situation of the parties which makes
the execution inequitable. Respondent contended that Torres accepted
employment from another security agency without previously resigning
from it.
- On Feb 2, 1992, Labor Arbiter issued an order for partial execution
directing the release of the uncontested salary differential amounting to
P15,523.48, to be deducted from the amount of P105,396.00, and to
withhold the balance, pending resolution of the Motion to Quash the alias
Writ of Execution.
- On March 19, 1992, petitioner filed with NLRC a petition for mandamus
and injunction to compel the Labor Arbiter to issue an order directing the
NLRC Cashier to release the entire amount deposited with the latter to
petitioner.
- On Aug 11, 1992, NLRC issued a resolution denying the petition for
mandamus and injunction and ordered Labor Arbiter to immediately
resolve respondents Urgent Motion to Quash Writ of Execution.
- Petitioner contends that the release of the judgment award is purely a
ministerial duty of the Labor Arbiter.

ISSUE: WON NLRC committed grave abuse of discretion in ordering the

Labor Arbiter to resolve the motion to quash alias writ of execution
HELD: YES
- Execution is the final stage of litigation, the end of the suit. It can not be
frustrated except for serious reasons demanded by justice and equity.
When a judgment becomes final and executory, it is the ministerial duty of
the court to issue a writ of execution to enforce the judgment.
- A writ of execution may however be refused on equitable grounds as
when there was a change in the situation of the parties that would make
execution inequitable or when certain circumstances, which transpired
after judgment became final, rendered execution of judgment unjust. The
fact that the decision has become final does not preclude a modification or
an alteration thereof because even with the finality of judgment, when its
execution becomes impossible or unjust, it may be modified or altered to
harmonize the same with justice and the facts.
- The respondent agency's contention that there has been a change in the
situation of the parties making execution inequitable because petitioner
accepted employment from another agency without resigning from it is
patently without merit. The rule now is that back wages awarded to an
illegally dismissed employee shall not be diminished or reduced by the
earnings derived by him elsewhere during the period of his illegal
dismissal.
- In this particular case, the decision is final and, in fact, the amount of the
salary differentials and back wages awarded to Torres has been garnished
from the account of respondent agency with PNB with no opposition or
resistance and it is the ministerial duty of the Labor Arbiter to release the
money to petitioner.
Disposition Petition granted. Labor Arbiter directed to release the money
award to petitioner

Imperial Textile Mills versus NLRC

TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION

(TMPCWA), VERSUS (NLRC-2ND DIVISION)
Facts: Toyota Motor Philippines Corporation Workers Association (Union)
and its dismissed officers and members seek to set aside the Decision of
the Court of Appeals which affirmed the Decision and Resolution of the
National Labor Relations Commission (NLRC), declaring illegal the strikes
staged by the Union and upholding the dismissal of the 227 Union officers
and members.
On the other hand, in the related cases docketed as G.R. Nos.
158798-99, Toyota Motor Philippines Corporation (Toyota) prays for the

recall of the award of severance compensation to the 227 dismissed

employees, which was granted.
In view of the fact that the parties are petitioner/s and respondent/s
and vice-versa in the four (4) interrelated cases, they will be referred to as
simply the Union and Toyota hereafter.
ISSUE:
(1)
WHETHER THE MASS ACTIONS COMMITTED BY THE UNION ON
DIFFERENT OCCASIONS ARE ILLEGAL STRIKES; AND
(2)
WHETHER SEPARATION PAY SHOULD BE AWARDED TO THE UNION
MEMBERS WHO PARTICIPATED IN THE ILLEGAL STRIKES.
HELD: We rule that the protest actions undertaken by the Union officials
and members on February 21 to 23, 2001 are not valid and proper
exercises of their right to assemble and ask government for redress of their
complaints, but are illegal strikes in breach of the Labor Code. The Unions
position is weakened by the lack of permit from the City of Manila to hold
rallies. Shrouded as demonstrations, they were in reality temporary
stoppages of work perpetrated through the concerted action of the
employees who deliberately failed to report for work on the convenient
excuse that they will hold a rally at the BLR and DOLE offices in Intramuros,
Manila, on February 21 to 23, 2001. The purported reason for these
protest actions was to safeguard their rights against any abuse which the
med-arbiter may commit against their cause. However, the Union failed to
advance convincing proof that the med-arbiter was biased against them.
The acts of the med-arbiter in the performance of his duties are presumed
regular. Sans ample evidence to the contrary, the Union was unable to
justify the February 2001 mass actions. What comes to the fore is that the
decision not to work for two days was designed and calculated to cripple
the manufacturing arm of Toyota. It becomes obvious that the real and
ultimate goal of the Union is to coerce Toyota to finally acknowledge the
Union as the sole bargaining agent of the company. This is not a legal and
valid exercise of the right of assembly and to demand redress of grievance.
It is obvious that the February 21 to 23, 2001 concerted actions
were undertaken without satisfying the prerequisites for a valid strike
under Art. 263 of the Labor Code. The Union failed to comply with the
following requirements: (1) a notice of strike filed with the DOLE 30 days
before the intended date of strike, or 15 days in case of unfair labor
practice; (2) strike vote approved by a majority of the total union
membership in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; and (3) notice given to the DOLE of the
results of the voting at least seven days before the intended strike. These
requirements are mandatory and the failure of a union to comply with
them renders the strike illegal. The evident intention of the law in
requiring the strike notice and the strike-vote report is to reasonably
regulate the right to strike, which is essential to the attainment of
legitimate policy objectives embodied in the law. As they failed to conform
to the law, the strikes on February 21, 22, and 23, 2001 were illegal.
The Court declined to grant termination pay because the causes for
dismissal recognized under Art. 282 of the Labor Code were serious or
grave in nature and attended by willful or wrongful intent or they
reflected adversely on the moral character of the employees. We

therefore find that in addition to serious misconduct, in dismissals

based on other grounds under Art. 282 like willful disobedience, gross
and habitual neglect of duty, fraud or willful breach of trust, and
commission of a crime against the employer or his family, separation
pay should not be conceded to the dismissed employee. Based on
existing jurisprudence, the award of separation pay to the Union
officials and members in the instant petitions cannot be sustained.

respondents
Constitution
promotion of
Disposition
3 months for

also run afoul of the public policy enshrined in the

ensuring the protection of the rights of workers and the
their welfare.
Bartolabac & Quimpo suspended from the practice of law for
violation of Canon 1 and Rule 1.01 of CPR.

COLEGIO DE SAN JUAN DE LETRAN - CALAMBA V. VILLAS

399 SCRA 550
CORONA; March 26, 2003
QUIJANO V BARTOLABAC
480 SCRA 204
TINGA; January 27, 1999
FACTS
- Quijano was employed by Mercury Drug Corporation as a warehouseman
--- a clerical/rank and file position. He was dismissed, so he filed a
complaint with the NLRC for illegal dismissal. The case reached the SC. In
1998, the SC ruled for his reinstatement to his old position or to a
substantially similar position. The SC denied the companys mfr, and came
out with a resolution in 1999 for Quijanos reinstatement.
- Whats this case all about, then? The respondents in this case are the LA
and the NLRC commissioner, respectively. Quijano filed a case against then
for violation of Canon 1 and Rule 1.01 of the Code of Professional
Responsibility. WHY? They gave out orders contrary to the resolution of the
SC. The LA said to make him self-service attendant because accdg to
mercury there were only 4 positions open. All 4 positions required college
graduates, but LA said he thinks Quijano could handle the self-service
attendant job. The NLRC commissioner said since there are no available
positions, he should just be given separation pay.
ISSUE: WON Bartolabac & Quimpo erred
HELD: YES
- The decision of the SC was already final and executory. They had no place
to use discretion in executing a final and executory order of the Supreme
Court. SUPREME. If the final & executory orders of the SC would be secondguessed by other bodies, then cases would never reach finality. The
implementation of the final and executory decision is mandatory. (The
court was disappointed in the IBP recommendation to dismiss the
complaint against Bartolabac & Quimpo.)
- The SC wont compel to instantly restore the position of warehouseman if
it had already been abolished. It ruled that Quijano should be reinstated to
original or substantially similar position. They took notice of Mercury Drugs
nationwide operation. SC couldnt believe that they wouldnt have a
position for Quijano.
- Our Constitution mandates that no person shall be deprived of life,
liberty, and property without due process of law. It should be borne in mind
that employment is considered a property right and cannot be taken away
from the employee without going through legal proceedings. In the instant
case, respondents wittingly or unwittingly dispossessed complainant of his
source of living by not implementing his reinstatement. In the process,

NATURE: Petition for review on certiorari

FACTS
- Respondent Belen Villas was employed by the petitioner School as high
school teacher.
She applied for a study leave for six months. The principal of the high
school department told Villas that her request for study leave was granted
for one (1) school year subject to certain conditions.
- Respondent alleged that she intended to utilize the first semester of her
study leave to finish her masteral degree at the Philippine Womens
University (PWU). Unfortunately, it did not push through so she took up an
Old Testament course in a school of religion and at the same time utilized
her free hours selling insurance and cookware to augment her familys
income. However, during the second semester of her study leave, she
studied and passed 12 units of education subjects at the Golden Gate
Colleges in Batangas City.
- In response to the letters sent her by petitioner to justify her study leave,
she submitted a certification from Golden Gate Colleges and a letter
explaining why she took up an Old Testament course instead of enrolling in
her masteral class during the first semester.
- The President and Rector of the School, Fr. Ramonclaro G. Mendez, O. P.,
wrote her, stating that her failure to enroll during the first semester was a
violation of the conditions of the study leave and that the reasons she
advanced for failure to enroll during the first semester were not
acceptable.
- Respondent then filed a case for illegal dismissal and the case was
assigned to the Voluntary Arbitrator who found that respondent was
illegally dismissed. Hence this petition.
ISSUE: WON respondents alleged violation of the conditions of the study
grant constituted serious misconduct which justified her termination from
petitioner School
HELD: 1. NO
Reasoning
- Under the Labor Code, there are twin requirements to justify a valid
dismissal from employment: (a) the dismissal must be for any of the
causes provided in Article 282 of the Labor Code (substantive aspect) and
(b) the employee must be given an opportunity to be heard and to defend
himself (procedural aspect).
- In the case at bar, the requirements for both substantive and procedural
aspects were not satisfied.

- We affirm the findings of the Court of Appeals that there was no violation
of the conditions of the study leave grant. Thus, respondent could not be
charged with serious misconduct warranting her dismissal as a teacher in
petitioner School. Petitioner has failed to convince us that the alleged
violations of the study leave grant constituted serious misconduct which
justified the termination of respondents employment. The most
respondent could be charged with was simple misconduct
- Misconduct is improper or wrongful conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error
of judgment. Under Article 282 of the Labor Code, the misconduct, to be a
just cause for termination, must be serious. This implies that it must be of
such grave and aggravated character and not merely trivial or
unimportant.
- We similarly affirm the Voluntary Arbitrators decision that respondent is
not entitled to moral and exemplary damages and attorneys fees because
there is no evidence showing that bad faith or malice attended the
dismissal of respondent. Moral damages are recoverable only where the
dismissal is attended by bad faith or fraud, or constitutes an act oppressive
to labor, or is done in a manner contrary to morals, good customs or public
policy. A dismissal may be contrary to law but, by itself alone, it does not
necessarily establish bad faith
Disposition Petition is DENIED.

Ratio Constructive dismissal is an involuntary resignation resorted to when

continued employment is rendered impossible, unreasonable or unlikely;
when there is a demotion in rank and/or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable
to the employee.
Reasoning
- In this case, the Court ruled that Lucila voluntarily resigned and was not
pressured into doing so.
- Voluntary resignation is defined as the act of en employee who finds
himself in a situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service and he has no other
choice but to disassociate himself from his employment.
- Lucilas basis for his demotion is inadequate as the Court ruled that
there is no demotion where there is no reduction in position rank or salary
as a result of such transfer.
Disposition The petition is hereby granted. The questioned decision of
the NLRC is set aside and the decision of the Labor Arbiter is reinstated and
affirmed. No costs.

PHIL WIRELESS INC V NLRC (LUCILA)

310 SCRA 653
PARDO; July 20, 1999
NATURE: Petition for certiorari to set aside a decision of the NLRC
FACTS
- January 8, 1976 Phil. Wireless Inc. (Pocketbell) hired respondent Doldwin
Lucila as an operator/encoder. Three years later, Lucila was promoted as
Head Technical and Maintenance Department of the Engineering
Department. On September 11, 1987, he was promoted as Technical
Services Supervisor and later on October 1, 1990, he became Project
Management Superintendent.
- December 8, 1990 Lucila tendered his resignation.
- December 3, 1991 Lucila filed with the NLRC a complaint for
illegal/constructive dismissal.
- Lucila alleges that his promotion from Technical Services Supervisor to
Project Management Superintendent was actually a demotion because it
was demeaning, illusory and humiliating. He based it on the fact that he
was not given a secretary/assistant and subordinates.
- June 29, 1992 Labor Arbiter Villarente declared that Lucila actually
resigned and dismissed the complaint for lack merit.
- June 15, 1993 NLRC reversed the findings of the Labor Arbiter and
ordered for Lucilas reinstatement with payment of backwages or
separation pay.
ISSUE: WON Lucila was constructively dismissed
HELD: NO

PRODUCERS BANK OF THE PHILS V NLRC (PRODUCERS BANK

EMPLOYEES ASSN)
ROMERO; November 16, 1998
FACTS: - Producers Bank was assigned a conservator by the Central Bank
for the purposes of protecting its assets. When the Union sought the
implementation of the CBA re retirement plan, the conservator refused.
Union filed with LA for unfair labor practice and for flagrant violation of
CBA.
- LA dismissed. NLRC reversed, holding that the CBA must be enforced.
ISSUE: WON the conservator can ignore the CBA

King of Kings versus Mamac

C. Retirement

HELD: NO
- The CBA is the law between the Union and the company.
- The conservator can only preserve assets and reorganize management.
He cant revoke an existing valid contract. Even the legislature cannot
infringe on this Constitutional right, much less can it delegate such nonexistent powers to the conservator. The conservator can assail defective
contracts; but cant repudiate valid ones.
- Apart from the non-impairment clause, it is also well-settled that when
the conflicting interests of labor and capital are weighed on the scales of
social justice, the dominant influence of the latter must be counterbalanced by the sympathy and compassion the law must accord the underprivileged worker.
- The retirement of an employee does not, in itself, affect his employment
status especially when it involves all rights and benefits due to him, since
these must be protected as though there had been no interruption of

service. It must be borne in mind that the retirement scheme was part of
the employment package and the benefits to be derived therefrom
constituted, as it were, a continuing consideration for services rendered, as
well as an effective inducement for remaining with the corporation. It is
intended to help the employee enjoy the remaining years of his life,
releasing him from the burden of worrying for his financial support, and are
a form of reward for his loyalty.
- When the retired employees were requesting that their retirement
benefits be granted, they were not pleading for generosity but were merely
demanding that their rights, as embodied in the CBA, be recognized. Thus,
when an employee has retired but his benefits under the law or the CBA
have not yet been given, he still retains, for the purpose of prosecuting his
claims, the status of an employee entitled to the protection of the Labor
Code, one of which is the protection of the labor union.
Disposition Petition denied. NLRC decision affirmed.
BRION V SOUTH PHILIPPINE UNION MISSION OF THE SEVENTH DAY
ADVENTIST CHURCH
ROMERO; May 19, 1999
FACTS
- Petitioner Delfin A. Brion became a member of respondent South
Philippine Union Mission of the Seventh Day Adventist Church (hereafter
SDA) and worked his way up the ladder until he became an ordained
minister and president of the Northeastern Mindanao Mission of the
Seventh Day Adventist Church in Butuan City. Petitioner worked until he
retired in 1983. As was the practice of the SDA, petitioner was provided a
monthly amount as a retirement benefit.
- Sometime thereafter, petitioner got into an argument with Samuel Sanes,
another pastor of the SDA. This disagreement degenerated into a rift
between petitioner and the SDA, culminating in the establishment by
petitioner of a rival religious group which he called the "Home Church."
Petitioner succeeded in enticing a number of SDA members to become part
of his congregation even as he continued disparaging and criticizing the
SDA. Because of his actions, petitioner was excommunicated by the SDA
and, on July 3, 1993, his name was dropped from the Church Record Book.
As a consequence of his "disfellowship," petitioner's monthly retirement
benefit was discontinued by the SDA.
- RTC ruled in favor of petitioner. CA reversed taking into account the
disloyalty after retirement.
ISSUE: WON the conditions for eligibility for retirement be met only at the
time of retirement
HELD: YES
- The following provisions on retirement, contained in the General
Conference Working Policy of the SDA, are of primary importance in
resolving the issue at hand:
Beneficiaries of Retirement Plan The benefits of the retirement plan are
designed for those who have devoted their lives to the work of the
Seventh-day Adventist Church and are eligible to retire for reasons of old
age and/or disability.
xxx
xxx
xxx

- Termination of Benefits The benefits shall terminate with the decease

of the beneficiary, except where there is an eligible surviving spouse
and/or children.
- In the case at bar, the words are very clear. Benefits are only to terminate
upon death. The employer and employee are free to stipulate on
retirement benefits, as long as these do not fall below the floor limits
provided by law. Furthermore, pension and retirement plans, in line with
the Constitutional mandate of affording full protection to labor, must be
liberally construed in favor of the employee, it being the general rule that
pension plans formulated by an employer are to be construed most
strongly against the employer. Again, while paying retirement benefits to
petitioner may be odious and abhorrent to the SDA, in the absence of any
other stipulation for the termination of petitioner's retirement benefits, the
SDA must comply with its contractual obligations, the contract being the
law between the parties.
Disposition CA decision reversed and set aside
Rivera vs Solidbank (2006) G.R. 163269
Facts:
Rivera had been working for the Solidbank since 1977. In Dec 1994,
deciding to devote his time and attention to his poultry business in Cavite,
Rivera applied for retirement. Subsequently, Solidbank required Rivera to
sign an undated Release, Waiver and Quitclaim, Rivera acknowledged
receipt of the net proceeds of his separation and retirement benefits and
promised that "[he] would not, at any time, in any manner whatsoever,
directly or indirectly engage in any unlawful activity prejudicial to the
interest of Solidbank, its parent, affiliate or subsidiary companies, their
stockholders, officers, directors, agents or employees, and their
successors-in-interest and will not disclose any information concerning the
business of Solidbank, its manner or operation, its plans, processes, or
data of any kind."
On May 1995, the Equitable employed Rivera as Manager of its Credit
Investigation and Appraisal Division of its Consumers Banking Group. Upon
discovering this, Solidbank First Vice-President for HRD Celia Villarosa
wrote a letter informing Rivera that he had violated the Undertaking. She
likewise demanded the return of all the monetary benefits he received in
consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him, when Rivera refused,
Solidbank filed complaint.
Issue: WON the one year employment ban imposed by Solidbank upon
Rivera is null and void for being unreasonable and oppressive and for
constituting restraint of trade?
Held: The post-retirement competitive employment ban is unreasonable
because it has no geographical limits.
Article 1306 of the NCC provides that the contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs,
public order or public policy. On the face of the Undertaking, the postretirement competitive employment ban is unreasonable because it has no
geographical limits; respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period.
Although the period of one year may appear reasonable, the matter of

whether the restriction is reasonable or unreasonable cannot be

ascertained with finality solely from the terms and conditions of the
Undertaking, or even in tandem with the Release, Waiver and Quitclaim.
Employer is burdened to establish that a restrictive covenant barring an
employee from accepting a competitive employment after retirement or
resignation is not an unreasonable or oppressive, or in undue or
unreasonable restraint of trade, thus, unenforceable for being repugnant to
public policy. As the Court stated in Ferrazzini v. Gsell, cases involving
contracts in restraint of trade are to be judged according to their
circumstances, to wit: x x x There are two principal grounds on which the
doctrine is founded that a contract in restraint of trade is void as against
public policy. One is, the injury to the public by being deprived of the
restricted partys industry; and the other is, the injury to the party himself
by being precluded from pursuing his occupation, and thus being
prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision
prohibiting him or her from accepting competitive employment as against
public policy, the employer has to adduce evidence to prove that the
restriction is reasonable and not greater than necessary to protect the
employers legitimate business interests. The restraint may not be unduly
harsh or oppressive in curtailing the employees legitimate efforts to earn a
livelihood and must be reasonable in light of sound public policy.