LABOR Digest Termination Complete

LABOR LAW REVIEW DIGESTS – FLJ The CA also justified his dismissal on the ground of willful breach of trust,
TERMINATION OF EMPLOYMENT giving credence to the company’s posture that Salas was a warehouseman holding
a position of trust and confidence. There is nothing to suggest that Salas position
Just Causes was a highly or even primarily confidential position, so that he can be removed for
1. Salas v. Aboitiz One, June 27, 2008 loss of trust and confidence by the employer.
Doctrine: There is also no semblance of willful breach of trust on the part of Salas.
Loss of trust must be based not on ordinary breach but, in the language of Loss of trust must be based not on ordinary breach but, in the language of Article
Article 282(c) of the Labor Code, on willful breach. A breach is willful if it is done 282(c) of the Labor Code, on willful breach.
intentionally, knowingly and purposely, without justifiable excuse, as distinguished Aboitiz’s reliance on the past offenses of Salas for his eventual dismissal
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest is likewise unavailing. The correct rule has always been that such previous
on substantial grounds and not on the employer’s arbitrariness, whims, caprices or offenses may be used as valid justification for dismissal from work only if the
suspicion; otherwise, the employee would eternally remain at the mercy of the infractions are related to the subsequent offense
employer. upon which the basis of termination is decreed. Furthermore, Salas had already
The rule is that previous offenses may be used as valid justification for suffered the corresponding penalties for these prior infractions. Thus, to consider
dismissal from work only if the infractions are related to the subsequent offense these offenses as justification for his dismissal would be penalizing Salas twice for
upon which the basis of termination is decreed. the same offense.
Undoubtedly, no just cause exists to warrant Salas dismissal.
Recit Ready: Consequently, he is entitled to reinstatement to his former position without loss of
Salas was an employee of Aboitiz One who rose from the ranks and seniority rights, and to payment of backwages. However, the award of backwages
became a materials controller. He was tasked with ensuring that the company had is limited in view of the fact that Salas was not faultless. Had he informed his
sufficient provisions of Quickbox for its day-to-day operations. One fateful day, immediate supervisor of the shortage in stocks, the matter could have been
however, the company ran out of large Quickboxes, which unduly hampered its avoided. Although his infraction is not enough to warrant his dismissal, it is not
operations and caused it considerable monetary losses and loss of goodwill with something that should be tolerated. Therefore, he is only entitled to backwages
its clients. Due to this, Salas was sent a memo by A1 asking him why he should counted from the decision of the NLRC finding him illegally dismissed.
not be sanctioned. An administrative hearing was conducted, and eventually he
was served with a notice of termination. He filed a reply letter asking for some Facts:
concessions or compromise. He was granted a month and a half stay with the Oligario Salas was initially hired by Aboitiz One (A1) as assistant utility
company while he looked for another job. He then filed a complaint for illegal man. He rose from the ranks and became material controller under the Materials
dismissal, which was dismissed by the LA. The NLRC reversed the LA but found Management & Operations Team. He was tasked with making sure that the
that Salas was not faultless so it deleted the award of backwages and ordered company’s stock requirement of Quickbox in its day-to-day operations is always
payment of separation pay instead of reinstatement. The CA sustained the met. One day, the company ran out of Large Quickboxes which caused
dismissal, finding Salas grossly negligent. considerable losses to the company. Because of this, the company sent Salas a
The issue here is whether Salas was validly terminated or not. The Court memorandum the following day asking him to explain in writing within 72 hours
ruled in the negative. Salas made a requisition as early as 2 weeks before the why he should not be disciplinarily dealt with for the previous day’s incident.
incident and followed up several times. He also talked to the supplier to facilitate An administrative hearing was conducted to give Salas an opportunity to
immediate delivery of the boxes, so it could not be said that he was grossly explain himself. However, the company found his explanation unsatisfactory and
negligent. His fault was that he failed to inform his superior of the non-delivery of sent him a termination letter indicating 3 reasons for it: (1) his failure to inform his
the items, but such did not amount to gross neglect of duty or willful breach of trust superiors about the failure to deliver stocks of the Quickbox despite him repeatedly
which will justify his dismissal. following up, (2) his tampering with the Bin Card by postdating it to conceal his
negligence, and (3) the losses that his mistake has cause the company. Salas
Agunoy, Albaña, Andal, Aquino, Avanceña, Borja, Cariño, Cervero, Choa, Clavano, Co, Dela Cruz, Descallar, Dimaandal, Dimson, Dominguez, Dueñas, Gaw, Gutierrez, Ignacio, Kalaw, Kato, Lim, Odulio, Paris,
Samson, Tan (Alvin), Tan (Ariane), Uy, Valdez, Yu, Zerrudo | 1
wrote a reply-letter asking for reconsideration and indicating therein 3 alternative position, so that he can be removed for loss of trust and confidence by the
pleas: (1) that he be allowed to avail of the retirement plan after having served the employer. The term trust and confidence is restricted to managerial employees or
company for more than 10 years, (2) to be allowed to tender his resignation those who are vested with powers or prerogatives to lay down and execute
instead of being terminated, and (3) that he be allowed to continue working until management policies and/or to hire transfer, suspend, layoff, recall, discharge,
the end of the month to allow him to be able to look for other jobs. In its reply the assign or discipline employees or to effectively recommend such managerial
company allowed him to stay for a longer period in the meantime so he can still actions.
earn while looking for new work. There is no semblance of willful breach of trust on the part of Salas. It is
He then filed a complaint for illegal dismissal with prayer for reinstatement, true that there was erasure or alteration on the bin card. Aboitiz, however, failed to
backwages, moral and exemplary damages, and attorney’s fees. The LA ruled in demonstrate that it was done to cover up Salas alleged negligence. Other than the
favor of A1, finding that he was validly terminated. The NLRC reversed the LA, but bin card and Aboitiz’s barefaced assertion, no other evidence was offered to prove
found that Salas was also partly at fault so it deleted the award of backwages and the alleged coverup. Neither was there any showing that Salas attempted to
ordered the payment of separation pay instead of reinstatement. Both parties filed mislead the investigating team. Loss of trust must be based not on ordinary breach
their respective petitions for certiorari with the CA, which sustained the dismissal of but, in the language of Article 282(c) of the Labor Code, on willful breach. A breach
Salas, finding him guilty of gross negligence. is willful if it is done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
Issue: inadvertently. It must rest on substantial grounds and not on the employer’s
1. W/N there was failure to comply with procedural requirements for the arbitrariness, whims, caprices or suspicion; otherwise, the employee would
filing of a petition for certiorari eternally remain at the mercy of the employer. Aboitiz utterly failed to establish the
2. W/N there was valid termination requirements prescribed by law and jurisprudence for a valid dismissal on the
ground of breach of trust and confidence.
Held/Ratio: Neither can he be dismissed for serious misconduct for the supposed
1. NO. Salas submitted a duplicate original of the assailed CA Decision. failure to account for unused accountable forms amounting to tens of thousands of
Likewise, he indicated the material dates showing that the petition was filed on pesos. Such charge was only brought up after the case for illegal dismissal was
time. He also complied with the requirement on CNFS, although he committed a filed. The said forms were actually issued to Salas in 2001, but it was not included
typographical error in addressing the Court. Even so, it has been consistently held as a ground in the notice of termination in 2003.
that the ends of justice are better served when cases are decided on the merits. The CA also mentioned Salas’ unauthorized sale of the company’s 8 used
air-conditioning units as ground for upholding his termination. However, Salas had
2. NO. Records show that Salas made a requisition as early as 2 weeks never been charged or suspended for this alleged unauthorized sale of used air-
before the incident and followed up several times. He also talked to the supplier to conditioners during his employment with Aboitiz. The infraction for which Salas had
facilitate immediate delivery of the boxes, so it could not be said that he was been penalized by suspension of five (5) days was his failure to meet the security
grossly negligent. His fault was that he failed to inform his superior of the non- requirements of the company.
delivery of the items, but such did not amount to gross neglect of duty or willful Aboitiz’s reliance on the past offenses of Salas for his eventual dismissal
breach of trust which will justify his dismissal. The CA also justified his dismissal is likewise unavailing. The correct rule has always been that such previous
on the ground of willful breach of trust, giving credence to the company’s posture offenses may be used as valid justification for dismissal from work only if the
that Salas was a warehouseman holding a position of trust and confidence. infractions are related to the subsequent offense
A position of trust and confidence is one where a person is entrusted with upon which the basis of termination is decreed. Furthermore, Salas had already
confidence on delicate matters, or with the custody, handling, or care and suffered the corresponding penalties for these prior infractions. Thus, to consider
protection of the employer’s property. Salas as material controller was tasked with these offenses as justification for his dismissal would be penalizing Salas twice for
monitoring and maintaining the availability and supply of Quickbox. There is the same offense.
nothing to suggest that Salas position was a highly or even primarily confidential Undoubtedly, no just cause exists to warrant Salas dismissal.
Consequently, he is entitled to reinstatement to his former position without loss of knowledge of the production deadline, with no proof to show that he was sick and
seniority rights, and to payment of backwages. However, the award of backwages in fact, he had actually continued working throughout the day, fulfills the elements.
is limited in view of the fact that Salas was not faultless. Had he informed his
immediate supervisor of the shortage in stocks, the matter could have been However, procedural due process was not afforded to respondent. The undue
avoided. Although his infraction is not enough to warrant his dismissal, it is not haste in effecting respondent's termination shows that the termination process was
something that should be tolerated. Therefore, he is only entitled to backwages a mere simulation the required notices were given, a hearing was even scheduled
counted from the decision of the NLRC finding him illegally dismissed. and held, but respondent was not really given a real opportunity to defend himself;
and it seems that petitioners had already decided to dismiss respondent from
service, even before the first notice had been given. Morevoer, the written notice of
2. RB Michael Press v. Galit chargest was a general description of offenses; the hearing was set on the
G.R. No. 153510, February 13, 2008 afternoon after notice was first received, giving him no chance to consult a union
official or lawyer, or prepare his defense. Thus, while the dismissal was valid, RB
Doctrine: Michael Press was required to pay nominal damages due to the violation of due
For willful disobedience to be a valid cause for dismissal, these two elements must process.
concur: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must FACTS:
have been reasonable, lawful, made known to the employee, and must pertain to Nicaso Galit was employed petitioner R.B. Michael Press as an offset machine
the duties which he had been engaged to discharge. operator. During his employment, Galit was tardy for a total of 190 times, totaling
to 6,117 minutes, and was absent without leave for a total of nine and a half days.
Recit-ready Digest
Nicaso Galit was an employee who was constantly tardy and absent. After he He was ordered to render overtime service in order to comply with a job order
refused to render overtime work, he was given an Office Memorandum containing deadline, but he refused to do so. The following day, Galit reported for work but
the charges against him and a notice of hearing to be held on the same day. He petitioner Escobia told him not to work, and to return later in the afternoon for a
was terminated since, according to the termination letter, he had admitted his hearing. When he returned, a copy of an Office Memorandum was served on him,
infractions. Galit filed an illegal dismissal case, and the LA ruled in his favor. The which indicated a warning for dismissal for the following offenses:
NLRC and CA affirmed. (1) habitual and excessive tardiness
(2) committing acts of discourtesy, disrespect in addressing superiors
However, the SC said that the dismissal was valid. Galit’s tardiness cannot be (3) failure to work overtime after having been instructed to do so
considered condoned by petitioners. There was no evidence for this, and the (4) Insubordination - willfully disobeying, defying or disregarding company
management prerogative to discipline employees and impose punishment is a authority
legal right which cannot, as a general rule, be impliedly waived. Moreover, The Memorandum also contained a notice of hearing. He was eventually
considering he was a daily-wage earner, any deductions from his salary due to terminated. The termination letter indicated that his admission of the offenses
absences cannot be considered a penalty. However, there was insubordination against him during the hearing were just cause to dismiss him.
due to his willful disobedience. For willful disobedience to be a valid cause for
dismissal, these two elements must concur: (1) the employee's assailed conduct Galit filed a complaint for illegal dismissal and money claims before the NLRC. The
must have been willful, that is, characterized by a wrongful and perverse attitude; Labor Arbiter found that Galit was illegally dismissed and ordered his
and (2) the order violated must have been reasonable, lawful, made known to the reinstatement with backwages. The LA ruled that the employer cannot use Galit’s
employee, and must pertain to the duties which he had been engaged to habitual tardiness and unauthorized absences to justify his dismissal since they
discharge. Considering that Galit refused to render overtime work despite had already deducted the corresponding amounts from his salary. Furthermore,
since Galit was not subjected to any admonition or penalty for tardiness, the damage.In the present case, petitioners' business is a printing press whose
offense was considered condoned. production schedule is sometimes flexible and varying.
The NLRC affirmed the Labor Arbiter. The CA affirmed the NLRC, only modifying Willfulness was described as "characterized by a wrongful and perverse mental
the basis of the computation of the monetary award. The CA found that it was not attitude rendering the employee's act inconsistent with proper subordination. The
Galit’s tardiness and absences, but his refusal to render overtime work which fact that respondent refused to provide overtime work despite his knowledge that
caused the termination of his employment. It ruled that he could not have been there is a production deadline that needs to be met, and that without him, the offset
afforded ample opportunity to explain his side and to adduce evidence on his machine operator, no further printing can be had, shows willfulness. Respondent's
behalf. Petitioner’s MR was denied. excuse that he was not feeling well that day is unbelievable, as he showed no
proof of this, and he even continued working.
ISSUES:
1. W/N there was just cause to terminate the employment of respondent 2. NO.
2. W/N due process was observed in the dismissal process Under the twin notice requirement, the employees must be given two (2) notices
before his employment could be terminated:
HELD:
The foregoing charges may be condensed into: (1) tardiness constituting neglect of (1) The first written notice to be served on the employees should contain the
duty; (2) serious misconduct; and (3) insubordination or willful disobedience. specific causes or grounds for termination against them, and a directive
that the employees are given the opportunity to submit their written
1. YES. explanation within a reasonable period. "Reasonable opportunity" under
Habitual tardiness is a form of neglect of duty. The mere fact that the numerous the Omnibus Rules means every kind of assistance that management
infractions of respondent have not been immediately subjected to sanctions cannot must accord to the employees to enable them to prepare adequately for
be interpreted as condonation of the offenses or waiver of the company to enforce their defense. This should be construed as a period of at least five (5)
company rules. The management prerogative to discipline employees and impose calendar days from receipt of the notice to give the employees an
punishment is a legal right which cannot, as a general rule, be impliedly waived. opportunity to study the accusation against them, consult a union official or
Galit failed to show any evidence of waiver. Moreover, considering that he was a lawyer, gather data and evidence, and decide on the defenses they will
daily wage earner, salary deductions on days he was absent cannot be considered raise against the complaint. Moreover, in order to enable the employees to
a penalty. intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve
However, the charge of insubordination however is meritorious. For willful as basis for the charge against the employees. A general description of
disobedience to be a valid cause for dismissal, these two elements must concur: the charge will not suffice. Lastly, the notice should specifically mention
(1) the employee's assailed conduct must have been willful, that is, characterized which company rules, if any, are violated and/or which among the grounds
by a wrongful and perverse attitude; and (2) the order violated must have been under Art. 282 is being charged against the employees.
reasonable, lawful, made known to the employee, and must pertain to the duties
which he had been engaged to discharge. (2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the
In the present case, there is no question that petitioners' order for respondent to opportunity to: (1) explain and clarify their defenses to the charge against
render overtime service to meet a production deadline complies with the second them; (2) present evidence in support of their defenses; and (3) rebut the
requisite. Art. 89 of the Labor Code empowers the employer to legally compel his evidence presented against them by the management. During the hearing
employees to perform overtime work against their will to prevent serious loss or or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties 3. San Miguel Corporation v. NLRC, April 16, 2008
as an opportunity to come to an amicable settlement. DOCTRINE
An employer has the prerogative to prescribe reasonable rules and regulations
(3) After determining that termination of employment is justified, the necessary for the proper conduct of its business, to provide certain disciplinary
employers shall serve the employees a written notice of measures in order to implement said rules and to assure that the same would be
termination indicating that: (1) all circumstances involving the charge complied with. An employer enjoys a wide latitude of discretion in the promulgation
against the employees have been considered; and (2) grounds have been of policies, rules and regulations on work-related activities of the employees.
established to justify the severance of their employment.
Appropriate disciplinary sanction is within the purview of management imposition.
In addition, if the continued employment poses a serious and imminent threat to Thus, in the implementation of its rules and policies, the employer has the choice
the life or property of the employers or of other employees like theft or physical to do so strictly or not, since this is inherent in its right to control and manage its
injuries, and there is a need for preventive suspension, the employers can business effectively. Consequently, management has the prerogative to impose
immediately suspend the erring employees for a period of not more than 30 days. sanctions lighter than those specifically prescribed by its rules, or to condone
Notwithstanding the suspension, the employers are tasked to comply with the twin completely the violations of its erring employees. Of course, this prerogative must
notice requirement under the law. The preventive suspension cannot replace the be exercised free of grave abuse of discretion, bearing in mind the requirements of
required notices. Thus, there is still a need to comply with the twin notice justice and fair play.
requirement and the requisite hearing or conference to ensure that the employees
are afforded due process even though they may have been caught in flagrante or RECIT READY
when the evidence of the commission of the offense is strong. SMC employed Ibias as an operator in one of its plants. According to SMCs Policy
on Employee Conduct, absences without permission or “AWOPs” were subject to
On the surface, it would seem that petitioners observed due process. However, the disciplinary action. In 1997, Ibias was AWOP for 14 times. After his first 5
undue haste in effecting respondent's termination shows that Galit was not really absences, he was given a written warning that further absences would be subject
given a real opportunity to defend himself; and it seems that petitioners had to disciplinary action. For his absences thereafter, Ibias allegedly falsified his
already decided to dismiss respondent from service, even before the first notice medical consultation card by claiming that he was granted sick leave when in truth
had been given. The notice of hearing was merely a general description of the he was not. After investigating Ibias, SMC concluded that he committed the
claimed offenses of respondent. The hearing was immediately set in the afternoon offenses of excessive AWOPs and falsification of company records, and
of the day respondent received the first notice. Therefore, he was not given any accordingly dismissed him.
opportunity at all to consult a union official or lawyer, and, worse, to prepare for his
defense. He was never given any real opportunity to justify his inability to perform Issue: W/N dismissal was illegal. Held: No. Ibias’ dismissal was well within the
work on those days. This is the only explanation why petitioners assert that purview of SMCs management prerogative. When SMC imposed the penalty of
respondent admitted all the charges. dismissal for the 12th and 13th AWOPs, it was acting well within its rights as an
employer. [SEE DOCTRINE]
In the February 24, 1999 notice of dismissal, petitioners simply justified
respondent's dismissal by citing his admission of the offenses charged. It did not FACTS
specify the details surrounding the offenses and the specific company rule or Ibias (respondent) was employed by SMC (petitioner) initially as a CRO
Labor Code provision upon which the dismissal was grounded. operator in its Metal Closure and Lithography Plant. Respondent
continuously worked therein until he advanced as Zamatic operator. He
CA REVERSED. THE DISMISSAL WAS VALID AND LEGAL. Petitioners are, was also an active member of a labor organization called IBM-SMC
however, ordered jointly and solidarily to pay respondent nominal damages in the Chapter.
amount of PhP 30,000 for violation of respondent's right to due process.
According to SMCs Policy on Employee Conduct, absences without any sick leave for his absences. One day, when respondent came
permission or “AWOPs,” which are absences not covered either by a to him for consultation, Marable confronted respondent about the
certification of the plant doctor that the employee was absent due to falsified entries in his medical consultation card, but respondent
sickness or by a duly approved application for leave of absence filed at only explained that he had been having a lot of problems.
least 6 days prior to the intended leave, are subject to disciplinary action. After the completion of the investigation, SMC concluded that respondent
The same Policy on Employee Conduct also punishes falsification of committed the offenses of excessive AWOPs and falsification of company
company records or documents with discharge or termination for the first records or documents, and accordingly dismissed him
offense if the offender himself or somebody else benefits from falsification Respondent filed a complaint for illegal dismissal against SMC.
or would have benefited if falsification is not found on time
As per company records, respondent was AWOP in 1997 for 14 ISSUE: W/N Respondent was illegally dismissed.
times. After his first 5 absences, he was given a written warning that
further absences would be subject to disciplinary action. For his absences HELD/RATIO: No (due to unauthorized absences)
thereafter, respondent allegedly falsified his medical consultation card by
claiming that he was granted sick leave by the plant clinic when in truth he As regard the falsification charge
was not. SMC was unable to prove the falsification charge against respondent.
Respondent submitted a handwritten explanation to the charges, to wit: Respondent cannot be legally dismissed on the basis of the
Tungkol po sa ibinibintang po ninyong [sic] sa akin na falsification of uncorroborated and self-serving testimonies of SMCs employees. SMC
medical consultation card ito po hindi ko magagawa at sa mga araw na merely relied on the testimonies of Marabe and Siwa, who both stated that
hindi ko po ipinasok ito po ay may kaukulang supporting paper[s]. respondent admitted to them that he falsified his medical consultation card
During the investigation, respondent admitted his absence the first 5 times, to cover up his excessive AWOPs.
but claimed that (1) he had not sought sick leave permission for those For his part, respondent denied having had any knowledge of said
dates, and (2) denied falsifying his medical consultation card. falsification, both in his testimony during the company-level investigation
Ferdinand Siwa (Siwa), staff assistant, and Dr. Angelito Marable and in his handwritten explanation. He did not even claim that he had
(Marable), retainer-physician, testified for SMC. requested for, nor had been granted any sick leave for the days that the
o Siwa testified that he called respondent’s attention to AWOPs he falsified entries were made. Siwa, being responsible for the medical cards,
incurred on 28 and 29 April. He admitted having given respondent should take the blame for the loss and alleged tampering thereof, and not
a written warning for his first 5 absences. respondent who had no control over the same.
o Siwa was surprised that the medical consultation card was in In this case, although respondent’s medical card had falsified entries in it,
respondent’s possession since this should have been in the rack SMC was not able to prove, by substantial evidence, that it was
beside the plant clinic. His medical consultation showed that he respondent who made the unauthorized entries.
was purportedly granted sick. However, upon verification with the
plant clinic, Siwa found that respondent was not granted sick As regards the unauthorized absences
leaves on those dates. Respondent admitted during the company-level investigation that that his
o When Siwa confronted respondent about the falsification, first 5 absences were without permission. He explained that during those
respondent allegedly replied that he resorted to falsification to times, he had a family problem which needed his attention; he was
cover up his AWOPs which he was forced to incur because of confused and was unable to inform or seek permission from his superior.
personal problems. He was never punished for first 5 AWOPs, and was only given a warning.
o Meanwhile, Marable testified that he counter-checked However, even if he was not punished for his subsequent AWOPs, he was
respondent’s sick leaves with the daily personnel leave authority aware of the number of AWOPs he incurred and should have known that
report. The examination revealed that the clinic had not granted these were punishable under company rules. The fact that he was spared
from suspension cannot be used as a reason to incur further AWOPs and LBC, he parked his motorcycle in front of the office but forgot to lock the steering
be absolved from the penalty therefor. wheel. 3 to 5 minutes later, the motorcycle was gone. LBC directed him to appear
Respondent’s dismissal was well within the purview of SMCs management in his office for investigation. Thereafter, he received a notice of termination. He
th
prerogative. When SMC imposed the penalty of dismissal for the 12 and filed a complaint for illegal dismissal. Mateo was undisputedly negligent when he
th
13 AWOPs, it was acting well within its rights as an employer. left the motorcycle without locking it despite clear, specific instructions to do so. He
An employer has the prerogative to prescribe reasonable rules and did not exercise even the slightest degree of care during that very short time.
regulations necessary for the proper conduct of its business, to provide Mateo deliberately did not heed the employer’s very important precautionary
certain disciplinary measures in order to implement said rules and to measure to ensure the safety of company property. He was accorded due process.
assure that the same would be complied with. An employer enjoys a wide What the law requires is that the employee be informed of the particular acts or
latitude of discretion in the promulgation of policies, rules and regulations omissions for which his dismissal is sought, which the memorandum did in this
on work-related activities of the employees. case.
Appropriate disciplinary sanction is within the purview of management
imposition. Thus, in the implementation of its rules and policies, the FACTS
employer has the choice to do so strictly or not, since this is inherent in its James Mateo, a customer associate, was a regular employee of LBC Express –
right to control and manage its business Metro Manila. His job is to deliver and pick-up packages to and from LBC and its
effectively. Consequently, management has the prerogative to impose customers and he was assigned a motorcycle. On April 30, 2011, Mateo arrived at
sanctions lighter than those specifically prescribed by its rules, or to LBC’s Escolta office to drop off packages coming from various LBC airposts. He
condone completely the violations of its erring employees. Of course, this parked the motorcycle in front of the LBC office but did not lock the steering wheel
prerogative must be exercised free of grave abuse of discretion, bearing in because he was concerned more with the packages, including a huge sum of
mind the requirements of justice and fair play. money. He returned within 3 to 5 minutes but the motorcycle was gone. He
All told, SMC acted well within its rights when it dismissed respondent for reported the loss to his superiors and to the nearest police station.
his numerous absences. Respondent was afforded due process and was
validly dismissed for cause. Lorenzo Niño, Vice-President of LBC, directed Mateo to appear in his office to
explain his side and for formal investigation. Mateo presented his side. After
investigation, he received a notice of termination and was barred from reporting for
4. LBC Express v. Mateo work.
G.R. No. 168215
June 9, 2009 Mateo filed a complaint for illegal dismissal, payment of backwages and
reinstatement with damages. The Labor Arbiter found Mateo’s dismissal to be
DOCTRINES lawful on the ground of gross negligence.
Gross negligence is characterized by want of even slight care, acting or omitting to
act in a situation where there is a duty to act, not inadvertently but willfully and ISSUE
intentionally with a conscious indifference to consequences insofar as other Whether or not Mateo’s dismissal is lawful on the ground of gross negligent.
persons may be affected.
What the law merely requires is that the employee be informed of the particular HELD
acts or omissions for which his dismissal is sought. The services of a regular employee may be terminated only for just or authorized
causes, including gross and habitual negligence. Gross negligence is
EMERGENCY RECIT characterized by want of even slight care, acting or omitting to act in a situation
James Mateo, as a customer associate, was given a motorcycle by LBC. He was where there is a duty to act, not inadvertently but willfully and intentionally with a
assigned to deliver and pick-up packages to and from LBC. When he arrived in conscious indifference to consequences insofar as other persons may be affected.
the particular acts or omissions allegedly committed by Genuino. The extent of
Mateo was undisputedly negligent when he left the motorcycle without locking it Genuino's alleged knowledge and participation in the diversion of bank's clients'
despite clear, specific instructions to do so. His argument that he stayed inside the funds, manner of diversion, and amounts involved; the acts attributed to Genuino
LBC office for only three to five minutes was of no moment. It only proved that he that conflicted with the bank's interests; and the circumstances surrounding the
did not exercise even the slightest degree of care during that very short time. alleged irregular transactions, were not specified in the notices/letters. A hearing
Mateo deliberately did not heed the employer’s very important precautionary was held but she did not attend and her lawyers continued to ask that the bank
measure to ensure the safety of company property. Regardless of the reasons specify the acts she was accused of. The bank dismissed her and she filed a
advanced, the exact evil sought to be prevented by LBC in directing them to lock complaint for illegal dismissal. ISSU: whether Genuino was dismissed for just
their motorcycle occurred, resulting in a substantial loss to LBC. cause and with due process. The SC held that Genuino was dismissed for just
cause. Although the Court held that Citibank had not accorder her due process in
On the issue of due process, what the law merely requires is that the employee be the termination, the notice being defective for not specifying the acts complained
informed of the particular acts or omissions for which his dismissal is sought. In of, Citibank was able to prove that she had a conflict of interest, being a substantial
this case, the memorandum directing Mateo to be present for investigation clearly stockholder in a competing bank, Global, and with her being instrumental in the
provided the grounds for his investigation. Mateo was thereafter given the transfer of funds of some depositors from Citibank to Global.
opportunity to explain his side and was handed the requisite second notice of
termination. Thus, procedural due process was complied with. FACTS
Genuino was employed by Citibank as its Treasury Sales Division Head with a
rank of AVP. Citibank sent Genuino a letter charging her with "knowledge and/or
5. Genuino v. NLRC involvement" in transactions "which were irregular or even fraudulent." In the same
G.R. Nos. 142732-33 letter, Genuino was informed she was under preventive suspension.
December 4, 2007
Genuino’s counsels wrote Citibank and asked the bank that they:
DOCTRINE a. Confront our client with the factual and legal basis of your charges, and afford
The two-notice requirement of the Labor Code is an essential part of due process. her an opportunity to explain;
The first notice informing the employee of the charges should neither be pro- b. Substantiate your charge of fraudulent transactions against our client; or if the
forma nor vague. It should set out clearly what the employee is being held liable same cannot be substantiated;
for. c. Correct/repair/compensate the damage you have caused our client.
Loss of confidence is a valid ground for dismissing an employee and proof beyond The Senior Human Resources Officer sent her a letter giving her a list of clients of
reasonable doubt of the employee's misconduct is not required. It is sufficient if whose transactions the charges against her were related. She was then required
there is some basis for such loss of confidence or if the employer has reasonable to answer in writing within 3 days from receipt of the letter. A hearing date was set
ground to believe or to entertain the moral conviction that the employee concerned and she was told that she could bring counsel if she wished.
is responsible for the misconduct and that the nature of his participation therein
rendered him unworthy of the trust and confidence demanded by his position. Genuino’s counsel replied demanding a bill of particulars. Citibank replied with the
following:
“…You will certainly not deny that we have already fully discussed with you what is
RECIT READY meant by the conflict with the bank's interest vis-à-vis the bank clients/parties
Genuino, Treasury Sales Division Head of Citibank was charged with conflict of named in the September 13, 1993 letter of Citibank to Ms. Genuino. As we have
interest in knowledge and/or involvement" in transactions "which were irregular or repeatedly explained to you, what the bank meant by it is that your client and Mr.
even fraudulent." She was sent two letters but the letters did not identify Dante Santos, using the facilities of their family corporations (Torrance and Global)
appear to have participated in the diversion of bank clients' funds from Citibank to, the bank's interests; and the circumstances surrounding the alleged irregular
and investment thereof in, other companies and that they made money in the transactions, were not specified in the notices/letters.
process, in violation of the conflict of law rule. It is her side of this issue that
Citibank, N.A. is waiting to receive/hear from Ms. Genuino” While the bank gave Genuino an opportunity to deny the truth of the allegations in
writing and participate in the administrative investigation, the fact remains that the
Genuino did not appear in the administrative investigation. But her lawyers wrote a charges were too general to enable Genuino to intelligently and adequately
letter asking "what bank clients' funds were diverted from the bank and invested in prepare her defense.
other companies, the specific amounts involved, the manner by which and the date
when such diversions were purportedly affected." Instead of answering, Citibank The two-notice requirement of the Labor Code is an essential part of due process.
just noticed her absence in the hearing and demanded she give a written The first notice informing the employee of the charges should neither be pro-
explanation as to the absence. She did not. forma nor vague. It should set out clearly what the employee is being held liable
for. The employee should be afforded ample opportunity to be heard and not mere
She was then notified of the results of the investigation and found that she had opportunity. As explained in King of Kings Transport, Inc., ample opportunity to be
used "facilities of Genuino's family corporation, namely, Global Pacific, personally heard is especially accorded the employees sought to be dismissed after they are
and actively participated in the diversion of bank clients' funds to products of other specifically informed of the charges in order to give them an opportunity to refute
companies that yielded interests higher than what Citibank products offered, and such accusations leveled against them. Since the notice of charges given to
that Genuino and Santos realized substantial financial gains, all in violation of Genuino is inadequate, the dismissal could not be in accordance with due process.
existing company policy and the Corporation Code, which for your information,
carries a penal sanction." Genuino's employment was terminated by Citibank on While Citibank failed to observe procedural due process, nevertheless Genuino's
grounds of (1) serious misconduct, (2) willful breach of the trust reposed upon her dismissal was justified. Citibank maintains that Genuino was aware of the bank's
by the bank, and (3) commission of a crime against the bank. Corporate Policy Manual specifically Chapter 3 on "Principles and Policies" with
regard to avoiding conflicts of interest. She had even submitted a Conflict of
Genuino filed an illegal dismissal case against Citibank. LA said that she was Interest Survey to Citibank. In that survey, she denied any knowledge of engaging
illegally dismissed and ordered her reinstatement with backwages, plus moral and in transactions in conflict with Citibank's interests. Citibank, for its part, submitted
exemplary damages and attorney’s fees. NLRC held that she was validly evidence showing 99% ownership of Global stocks by Genuino and Santos. In July
dismissed but also ordered the payment of salaries from the time that she was 1993, Citibank discovered that Genuino and Santos were instrumental in the
reinstated in the payroll up to the date of the NLRC decision. CA modified holding withdrawal by bank depositors of PhP 120 million of investments in Citibank. This
that Citibank failed to observe due process and should indemnify her with P5k. amount was subsequently invested in another foreign bank, Internationale
Nederlanden Bank, N.V., under the control of Global and Torrance, another
ISSUE corporation controlled by Genuino and Santos. Citibank also filed two criminal
Whether or not the dismissal of Genuino is for a just cause and in accordance with complaints against Genuino and Santos for violations of the conflict of interest rule
due process. provided in Sec. 31 in relation to Sec. 144 of the Corporation Code.
HELD Art. 282(c) of the Labor Code provides that an employer may terminate an
The dismissal was for just cause but without due process. employment for fraud or willful breach by the employee of the trust reposed in
him/her by his/her employer or duly authorized representative. In order to
In this case, the letters sent by Citibank did not identify the particular acts or constitute as just cause for dismissal, loss of confidence should relate to acts
omissions allegedly committed by Genuino. The extent of Genuino's alleged inimical to the interests of the employer
knowledge and participation in the diversion of bank's clients' funds, manner of
diversion, and amounts involved; the acts attributed to Genuino that conflicted with
As Assistant Vice-President of Citibank's Treasury Department, Genuino was Bughaw worked for Treasure Island (TI) who had employee problems as allegedly
tasked to solicit investments, and peso and dollar deposits for, and keep them in the employees were doing drugs in the company premises. Bughaw’s co-
Citibank; and to sell and/or push for the sale of Citibank's financial products, such employee was caught red handed with shabu. During police investigations, the co-
as the MBS, for the account and benefit of Citibank. She held a position of trust employee implicated Bughaw. In line with this, TI asked Bughaw in a letter to
and confidence. There is no way she could deny any knowledge of the bank's attend an administrative hearing to explain himself. He did not show up. Another
policies nor her understanding of these policies as reflected in the survey done by letter was given for another hearing. He still did not show up. A third letter was
the bank. She could not likewise feign ignorance of the businesses of Citibank, and given terminating him which according to TI, Bughaw refused to receive.
of Global and Torrance. Assuming that Citibank did not engage in the same Bughaw says that he never got that third letter and that he was suspended from
securities dealt with by Global and Torrance; nevertheless, it is to the interests of work then when he came back he was already fired.
Citibank to retain its clients and continue investing in Citibank. Curiously, Genuino VALID CAUSE FOR DISMISSAL. Despite his receipt of the first two
did not even dissuade the depositors from withdrawing their monies from Citibank, letters/notices, petitioner did not submit any written explanation on the charge
and was even instrumental in the transfers of monies from Citibank to a competing against him, even after the lapse of the 120-day period given him. Neither did
bank through Global and Torrance, the corporations under Genuino's control. petitioner appear in the scheduled administrative hearing to personally present his
side. Thus, the respondent cannot be faulted for considering only the evidence at
All the pieces of evidence compel us to conclude that Genuino did not have her hand, which was Loberanes statement, and conclude therefrom that there was just
employer's interest. The letter of the bank's clients which attested that the cause for petitioners termination.
withdrawals from Citibank were made upon their instructions is of no import. It did INVALID PROCESS FOR DISMISSAL. GIVE NOMINAL DAMAGES. We
not explain why they preferred to invest in Global and Torrance, nor did it mention cannot give credence to respondents allegation that the petitioner refused to
that Genuino tried to dissuade them from withdrawing their deposits. receive the third letter dated 21 August 2001 which served as the notice of
termination. There is nothing on record that would indicate that respondent even
attempted to serve or tender the notice of termination to petitioner. No affidavit of
6. Bughaw v. Treasure Island, March 28, 2008 service was appended to the said notice attesting to the reason for failure of
Doctrine: service upon its intended recipient. Neither was there any note to that effect by the
Under the Labor Code, the requirements for the lawful dismissal of an employee server written on the notice itself. The burden therefore is on respondent to
are two-fold, the substantive and the procedural aspects. Hence, the two (2) facets present clear and unmistakable proof that petitioner was duly served a copy
of a valid termination of employment are: (a) the legality of the act of dismissal, i.e., of the notice of termination but he refused receipt. Bare and vague
the dismissal must be under any of the just causes provided under Article 282 of allegations as to the manner of service and the circumstances surrounding
the Labor Code; and (b) the legality of the manner of dismissal, which means that the same would not suffice. A mere copy of the notice of termination allegedly
there must be observance of the requirements of due process, otherwise known as sent by respondent to petitioner, without proof of receipt, or in the very least, actual
the two-notice rule. service thereof upon petitioner, does not constitute substantial evidence. It was
unilaterally prepared by the petitioner and, thus, evidently self-serving and
The law mandates that it is incumbent upon the employer to prove the validity of insufficient to convince even an unreasonable mind.
the termination of employment. Failure to discharge this evidentiary burden would
necessarily mean that the dismissal was not justified and, therefore, illegal. Facts:
Unsubstantiated claims as to alleged compliance with the mandatory provisions of Bughaw was a production worker in Treasure Island (TI). TI was receiving
law cannot be favored by this Court. In case of doubt, such cases should be information that many of its employees were using prohibited drugs during working
resolved in favor of labor, pursuant to the social justice policy of our labor laws and hours and within the company premises.
Constitution.
One of its employees, Loberanes was caught in flagrante delicto by the police
Recit-ready: officers while in possession of shabu. In the course of police investigation,
Loberanes admitted the commission of the crime. He implicated Bughaw and said The charge of drug abuse inside the companys premises and during working hours
that the illegal drugs purchased were for their consumption for the rest of the against petitioner constitutes serious misconduct, which is one of the just causes
month. for termination.
TI served a Memo for Explanation to petitioner requiring him to explain within 120 Loberaness statements given to police during investigation is evidence which can
hours why no disciplinary action should be imposed against him for his alleged be considered by the respondent against the petitioner. Petitioner failed to
involvement in illegal drug activities. Notwithstanding said Memo, petitioner failed controvert Loberanes claim that he too was using illegal drugs. Records reveal that
to appear before the respondents legal counsel on the scheduled hearing date and respondent gave petitioner a first notice dated 11 June 2001, giving him 120 hours
to explain his side on the matter. TI, through legal counsel, sent a second letter to within which to explain and defend himself from the charge against him and to
petitioner directing him to attend another administrative hearing but petitioner once attend the administrative hearing scheduled on 16 June 2001. There is no dispute
again failed to show up. Consequently, respondent, in a third letter terminated the that petitioner received said notice as evidenced by his signature appearing on the
latters employment. lower left portion of a copy thereof together with the date and time of his receipt.
He also admitted receipt of the first notice in his Memorandum before this Court.
Bughaw filed an illegal dismissal case. Petitioner alleged that he had been working Despite his receipt of the notice, however, petitioner did not submit any written
for the respondent for 15 years and he was very conscientious with his job. He was explanation on the charge against him, even after the lapse of the 120-day period
suspended for 30 days based on the unfounded allegation of his co-worker that he given him. Neither did petitioner appear in the scheduled administrative hearing to
used illegal drugs within company premises. When petitioner reported back to personally present his side. Thus, the respondent cannot be faulted for considering
work after the expiration of his suspension, he was no longer allowed by only the evidence at hand, which was Loberanes statement, and conclude
respondent to enter the work premises and was told not to report back to work. therefrom that there was just cause for petitioners termination.
LA: ILLEGAL DISMISSAL. (Basically believed everything Bughaw said) It was by petitioners own omission and inaction that he was not able to present
evidence to refute the charge against him.
NLRC: AFFIRM. An accusation of illegal drug use, standing alone, without any
proof or evidence presented in support thereof, would just remain an accusation. Now we proceed to judge whether the manner of petitioners dismissal was legal;
stated otherwise, whether petitioner was accorded procedural due process. In
Issue: Pastor Austria v. National Labor Relations Commission, the Court underscored the
(1) Whether or not petitioner was illegally dismissed? significance of the two-notice rule in dismissing an employee:
Held/Ratio: The first notice, which may be considered as the proper charge, serves to apprise
the employee of the particular acts or omissions for which his dismissal is sought.
VALID CAUSE FOR DISMISSAL. INVALID PROCESS FOR DISMISSAL. The second notice on the other hand seeks to inform the employee of the
employers decision to dismiss him. This decision, however, must come only after
Under the Labor Code, the requirements for the lawful dismissal of an employee the employee is given a reasonable period from receipt of the first notice within
are two-fold, the substantive and the procedural aspects. Hence, the two (2) facets which to answer the charge and ample opportunity to be heard and defend himself
of a valid termination of employment are: (a) the legality of the act of dismissal, i.e., with the assistance of a representative if he so desires. This is in consonance with
the dismissal must be under any of the just causes provided under Article 282 of the express provision of the law on the protection to labor and the broader dictates
the Labor Code; and (b) the legality of the manner of dismissal, which means that of procedural due process. Non-compliance therewith is fatal because these
there must be observance of the requirements of due process, otherwise known as requirements are conditions sine qua non before dismissal may be validly effected.
the two-notice rule.
While there is no dispute that respondent fully complied with the first-notice "wrongful and perverse attitude"; and (2) the order violated must have been
requirement apprising petitioner of the cause of his impending termination reasonable, lawful, made known to the employee and must pertain to the duties
and giving him the opportunity to explain his side, we find that it failed to which he has been engaged to discharge.
satisfy the need for a second notice informing petitioner that he was being
dismissed from employment. In order to constitute serious misconduct which will warrant the dismissal of an
employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient
We cannot give credence to respondents allegation that the petitioner refused to that the act or conduct complained of has violated some established rules or
receive the third letter dated 21 August 2001 which served as the notice of policies. It is equally important and required that the act or conduct must have
termination. There is nothing on record that would indicate that respondent even been performed with wrongful intent.
attempted to serve or tender the notice of termination to petitioner. No affidavit of
service was appended to the said notice attesting to the reason for failure of ER: SSC-R has a policy against external teaching engagements. One can only do
service upon its intended recipient. Neither was there any note to that effect by the so if permitted by by the president of the school. Moreno was found to have
server written on the notice itself. violated this policy and was dismissed upon notice and hearing. However, Moreno
argues that the dismissal was not commensurate in view of the fact that it’s her
The law mandates that it is incumbent upon the employer to prove the validity of first offense and that she’s a good employee (she was offered the chairmanship of
the termination of employment. Failure to discharge this evidentiary burden would a business and finance department, etc.). LA said dismissal was proper. NLRC
necessarily mean that the dismissal was not justified and, therefore, illegal. said the dismissal is too harsh, considering the circumstances. CA however
Unsubstantiated claims as to alleged compliance with the mandatory provisions of agreed with LA. There was willful transgression making the termination just. It said
law cannot be favored by this Court. In case of doubt, such cases should be that despite Moreno’s awareness of the policy, she still violated it. And CA said the
resolved in favor of labor, pursuant to the social justice policy of our labor laws and policy was just. However, the SC said, that Moreno’s actions were not willful in
Constitution. character, willful implying wrongful intent. The misconduct to be serious within the
meaning of the act must be of such a grave and aggravated character and not
The burden therefore is on respondent to present clear and unmistakable merely trivial or unimportant.
proof that petitioner was duly served a copy of the notice of termination but
he refused receipt. Bare and vague allegations as to the manner of service COMPLETE DIGEST
and the circumstances surrounding the same would not suffice. A mere copy Facts: SSC-R miserably failed to prove that Morenos misconduct was induced by
of the notice of termination allegedly sent by respondent to petitioner, without proof a perverse and wrongful intent. SSC-R merely anchored Morenos alleged bad faith
of receipt, or in the very least, actual service thereof upon petitioner, does not on the fact that she had full knowledge of the policy that was violated and that it
constitute substantial evidence. It was unilaterally prepared by the petitioner and, was relatively easy for her to secure the required permission before she taught in
thus, evidently self-serving and insufficient to convince even an unreasonable other schools.
mind.
In 1999, SSC-R employed petitioner Jackqui R. Moreno (Moreno) as a teaching
fellow. In 2000 Moreno was appointed as a full-time college faculty member; in
7. Moreno v. San Sebastian College 2001, Moreno became a member of the permanent college faculty. She was also
G.R. No. 175283 March 28, 2008 Joben Odulio offered the chairmanship of the Business Finance and Accountancy Department of
her college on 13 September 2002.
Doctrine: Under Art. 282(a) of the Labor Code, willful disobedience of the
employers lawful orders as a just cause for termination of employment envisages Subsequently, rumors of Moreno’s unauthorized external teaching engagements
the concurrence of at least two requisites: (1) the employees assailed conduct allegedly circulated and reached SSC-R. Formal investigations reveal that Moreno
must have been willful or intentional, the willfulness being characterized by a
had unauthorized teaching assignments at the Centro Escolar (CEU) and at the approved and adopted the findings and recommendations of the grievance
College of the Holy Spirit (CHS), Manila, for varying semesters from 2000-2002. committee and her employment was to be terminated.
Moreno received a memorandum, from the Dean of her college, requiring her to Moreno thus instituted with the NLRC a complaint for illegal termination against
explain the reports regarding her unauthorized teaching engagements.1 SSC-R.
Moreno sent a written explanation in which she admitted her failure to secure any The LA dismissed the complaint. Moreno’s admission of her violation rendered her
written permission before she taught in other schools. Moreno explained that the liable for the penalty of dismissal as provided for in the SSC-R Faculty Manual.
said teaching engagements were merely transitory in nature and that it was never
her intention to jeopardize her work in SSC-R and that she merely wanted to On appeal by Moreno, the NLRC reversed the rulings of the LA. The NLRC
improve her family’s poor financial conditions. appreciated extenuating circumstances (i.e. she always lands among the 5 best
teachers in evaluations, her moonlighting activities does not affect her work
A Special Grievance Committee was then formed in order to investigate and make performance, she was considered for the chairmanship of the Finance department)
recommendations regarding Morenos case. In a letter, the grievance committee that should have been considered in determining the propriety of the penalty of
required Morenoto answer the following series of questions concerning her case: dismissal meted upon the complainant. These circumstances are the fact that it
“Did you teach in other schools without first obtaining the consent of your superiors was her first offense in four years of unblemished employment, and the fact that
in SSC-R? Did you ever go beyond the maximum limit for an outside load? Did you she candidly admitted her fault. SSC-R’s MR was denied.
ever truthfully disclose completely to your superiors at SSC-R any outside Load?
Do you deny teaching in CEU? Holy Spirit?” The CA reversed, stating that Moreno’s actions fulfilled the requisites for willful
disobedience.2 The requisites are present in this case. The CA viewed the
Moreno admitted in her letter she did not formally disclose her teaching loads at prohibition as reasonable policy, permissive in character, as it allows other
the CHS and at the CEU for fear that the priest administrators may no longer grant teaching engagements so long as its president approves of the same.
her permission, as prior similar requests had already been declined; that she did
this because she needed to support her mother and sister, her masteral studies, Issue: Whether or not the dismissal is proper? No.
and her sisters canteen business, all of which coincided with the payment of the
emergency loan from the SSC-R administrators that paid for her mothers illness Held: No just cause
and that she did not wish to resign because she felt she deserved a second In termination cases, the burden of proof rests on the employer to show that the
chance. dismissal is for just cause. When there is no showing of a clear, valid and legal
cause for the termination of employment, the law considers the matter a case of
On the same day that Moreno sent the letter, the grievance committee issued its illegal dismissal and the burden is on the employer to prove that the termination
resolution, finding that she violated the prohibition and recommended Moreno’s was for a valid or authorized cause.
dismissal. Then, SSC-R sent a letter to Moreno, informing her that they had
SSC-R contends that Moreno committed serious misconduct and willful
disobedience against the school, and thereby submitted herself to the
corresponding penalty, which is termination for cause.
1 The Faculty Manual says: Administrative permission is required for all full-time faculty
members to teach part-time elsewhere. If ever teaching permission is granted, the total
teaching load should not exceed the maximum allowed by CHED rules and 2 (1) the employees assailed conduct must have been willful or intentional, the willfulness
regulations. Faculty members are required to report all other teaching assignments being characterized by a wrongful or perverse attitude; and (2) the order violated must have
elsewhere within two (2) weeks from start of the classes every semester. been reasonable, lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge
Moreno has indeed committed misconduct against respondent SSC-R. However, process, it nonetheless failed to discharge its burden of proving the legality of
said misconduct falls below the required level of gravity that would warrant Moreno’s termination from employment. Thus, the imposed penalty of dismissal is
dismissal as a penalty. hereby declared as invalid.
Misconduct is defined as improper or wrong conduct. It is the transgression of Awards

some established and definite rule of action, a forbidden act, a dereliction of Court imposes the penalty of suspension of 1 year on Moreno, to be counted
duty, willful in character and implies wrongful intent and not mere error of from 16 November 2002, the effective date of her illegal dismissal. However, given
judgment. The misconduct to be serious within the meaning of the act must be of the period of time in which Moreno was actually prevented from working in the
such a grave and aggravated character and not merely trivial or unimportant. respondent school, the said suspension should already be deemed served.
SSC-R miserably failed to prove that Morenos misconduct was induced by a As a general rule, the normal consequences of a finding that an employee has
perverse and wrongful intent. SSC-R merely anchored Morenos alleged bad faith been illegally dismissed are,
on the fact that she had full knowledge of the policy that was violated and that it that the employee becomes entitled to reinstatement without loss of
was relatively easy for her to secure the required permission before she taught in seniority rights;
other schools. the payment of backwages corresponding to the period from his illegal
dismissal up to his actual reinstatement.
On the propriety of dismissal
In addition, even if dismissal for cause is the prescribed penalty for the misconduct The two forms of relief are, however, distinct and separate from each
herein committed, in accordance with the SSC-R Faculty Manual and Moreno’s other. Though the grant of reinstatement commonly carries with it an award of
employment contract, the Court finds the same to be disproportionate to the backwages, the appropriateness or non-availability of one does not carry with it the
offense. inappropriateness or non-availability of the other.
While an employer enjoys a wide latitude of discretion in the promulgation of The Court may not only mitigate, but also absolve entirely, the liability of the
policies, those directives, however, must always be fair and reasonable, and the employer to pay backwages where good faith is evident. Likewise, backwages may
corresponding penalties, when prescribed, must be commensurate to the offense be withheld from a dismissed employee where exceptional circumstances are
involved and to the degree of the infraction. availing.
Special circumstances were present in the case at bar which should have been In the present case, the good faith of SSC-R is apparent. Indeed, the only mistake
properly taken into account in the imposition of the appropriate penalty. that the respondent school has committed was to strictly apply the provisions of
its Faculty Manual and its contract with Moreno without regard for the
In Moreno’s contract of employment of the provisions therein categorically stated aforementioned special circumstances. Even then, Morenos right to procedural
that should a violation of any of the terms and conditions thereof be committed, the due process was fully respected.
penalty that will be imposed would either be suspension or dismissal from
employment. Thus, contrary to its position from the beginning, SSC-R clearly had WHEREFORE, the Petition for Review is GRANTED. The Decision of the Court of
the discretion to impose a lighter penalty of suspension and was not at all Appeals in CA-G.R. SP No 90083 dated 7 November 2006 is hereby REVERSED.
compelled to dismiss Moreno. Respondent San Sebastian College-Recoletos, Manila, is hereby ordered to
reinstate Petitioner Jackqui R. Moreno without loss of seniority rights and other
Procedural process was followed privileges. No pronouncement as to cost.
Court holds that the dismissal of petitioner Moreno failed to comply with the
substantive aspect of due process. Despite SSC-Rs observance of procedural due SO ORDERED.
8. Janssen Pharmaceutica v. Silayro, February 26, 2008 Respondent was negligent in reporting the number of product samples in
RECIT READY: The respondent employee worked in Johnson and Johnson. He his custody for August and September 1998. He also committed three other
was charged with several infraction of the company. Thus he allegedly gave away offenses in the past. First, he was found guilty of and penalized for granting
too many free samples, incurred in delay in submitting process reports, and unauthorized free good. Secondly, he incurred delays in submitting his process
cheated a test. He was also asked to return the company vehicle and other reports, for which charge he was punished with one-day suspension. Lastly, he
accountables, which he was not able to do as well. He was eventually terminated. cheated in an ROL test for which he was punished with another one-day
suspension.
Issue: W/N he was validly terminated. NO, for various reasons.
FIRST: Respondent explained, that he failed to count the quantity of
First, petitioner had not been able to identify an act of dishonesty, samples when they were placed in his custody. Thus, he failed to take note of the
misappropriation, or any illicit act, which the respondent may have committed in excess samples from previous months. He, likewise, admitted to committing errors
connection with the erroneously reported product samples. While respondent was in posting the samples that he distributed to some.
admittedly negligent in filling out his DCR, his errors alone are insufficient evidence
of a dishonest purpose. SECOND and THIRD: Respondent submitted a written explanation to the
petitioner stating that the delay in the submission of reports was caused by the
The rest of the infractions imputed to the respondent were committed during the deaths of his grandmother and his aunt, and the hospitalization of his mother. He
time he was undergoing serious family problems. His inability to comply with the also averred that he had asked his co-employee Joedito Gasendo to write his
deadlines for his process reports and his lack of care in accounting for the product answers to the ROL test because at the time when the examination was due, he
samples in his custody are understandably the result of his preoccupation with already needed to leave to see his father-in-law, who was suffering from cancer
very serious problems. Added to the pressure brought about by the numerous and confined in a hospital in Manila.
charges he found himself facing, his errors and negligence should be viewed in a
more compassionate light. Before the date given by petitioner for respondent to surrender all his
accountabilities, a Memorandum was issued to respondent for the following
The ROL test is a take-home examination intended to check a territory alleged infractions: (1) Failure to turn over company vehicles assigned after the
representatives understanding of information already contained in their Sales receipt of instruction to that effect from superiors, and (2) Refusing or neglecting to
Career Manual, wherein the examinees are even instructed to refer to their obey Company management orders to perform work without justifiable reason.
manuals. The improper taking of this test, while it puts into question the examinees
moral character, does not result in any potential loss of property or damage to the Petitioner terminated the services of respondent. Petitioner found
reputation of the employer. respondent guilty of dishonesty in accomplishing the report on the number of
Petitioner is the division of Johnson & Johnson Philippines Inc., Petitioner product samples in his possession and failing to return the company vehicle and
employed respondent as Territory/Medical Representative. During respondent’s his other accountabilities. Petitioner also found respondent to be a habitual
employment, he was a recipient of several awards for great work. On the dark offender whose previous offenses included: (1) Granting unauthorized
side, however, respondent was also investigated for, and in some cases found premium/free goods to customer in 1994; (2) Unauthorized pull-out of stocks from
guilty of, several administrative charges. customer in 1994; (3) Delay in submission of reports despite oral admonition and
written reprimand in 1998; and (4) Dishonesty in accomplishing other accountable connection with the erroneously reported product samples. While respondent was
documents or instruments (in connection with the ROL test). admittedly negligent in filling out his DCR, his errors alone are insufficient
evidence of a dishonest purpose. Since fraud implies willfulness or wrongful intent,
Even after respondents termination from employment, there was still the innocent non-disclosure of or inadvertent errors in declaring facts by the
contact between petitioner and respondent regarding the latters accountabilities employee to the employer will not constitute a just cause for the dismissal of the
still in his possession. In a telephone conversation, respondent informed petitioner employee
that he will return his accountabilities only upon demand from the proper
governmental agency. A demand letter was sent to respondent by petitioner As for the failure of respondent to return the company vehicle and other
ordering the return of the company car, promotional materials, samples, a slide accountabilities, the charge against respondent of insubordination to the
projector, product manuals, product monographs, and training binders. petitioners instructions for the surrender of his accountabilities was unfounded
since the respondent was still waiting for said instructions when he was dismissed.
Respondent filed a Complaint against petitioner and its officers,
Rafael Besa, Rueben Cauton, Victor Lapid, and Raymond Bernardo before the Moreover, petitioner failed to observe procedural due process in
Sub-Regional Arbitration Branch of the NLRC in Iloilo City for (a) Unfair Labor connection with the aforementioned charge. Section 2(d) of Rule 1 of The
Practice; (b) Illegal Dismissal; (c) Reimbursement of operating and representation Implementing Rules of Book VI states that:
expenses under expense reports for October and November 1998;
(d) Nonpayment of salary, bonuses and other earned benefits for December 1998 For termination of employment based on just causes as defined in
like rice allocation, free goods allocation, etc.; and (e) Damages and attorneys Article 282 of the Labor Code:
fees.
(i) A written notice served on the
ISSUE: W/N sufficient grounds existed for the dismissal of the employee specifying the ground or
respondent. NOPE! grounds for termination, and giving said
employee reasonable opportunity
To constitute a valid dismissal from employment, two requisites must within which to explain his side.
concur: (1) the dismissal must be for any of the causes provided in Article 282 of
the Labor Code; and, (2) the employee must be given an opportunity to be heard (ii) A hearing or conference during which
and to defend himself. the employee concerned, with the
assistance of counsel if he so desires is
Respondent admitted that when the product samples had arrived, he given opportunity to respond to the
failed to check if the number of product samples indicated in the DCR charge, present his evidence, or rebut
corresponded to the number actually delivered and that he made mistakes in the evidence presented against him.
posting the product samples distributed during the period in question.
(iii) A written notice of termination served on
In this case, petitioner had not been able to identify an act of dishonesty, the employee, indicating that upon due
misappropriation, or any illicit act, which the respondent may have committed in consideration of all the circumstances,
grounds have been established to justify The special circumstances of this case -- respondents family crises, the
his termination. duration of his employment, and the quality of his work during the previous years --
must necessarily influence the penalty to be meted out to the respondent. It would
The superficial compliance with two notices and a hearing in this case be a cruel disregard of the constitutional guarantee of security of tenure to impose
cannot be considered valid where these notices were issued and the hearing the penalty of dismissal, without giving due consideration to the ill fortune that may
made before an offense was even committed. The first notice, issued on 24 befall a normally excellent employee.
November 1998, was premature since respondent was obliged to return his
accountabilities only on 25 November 1998. Nonetheless, the infractions committed by the respondent, while
disproportionate to a penalty of dismissal, will not be overlooked. The suspension
The rest of the infractions imputed to the respondent were committed during the of five months without pay, imposed by the Court of Appeals, would serve as a
time he was undergoing serious family problems. His inability to comply with the sufficient and just punishment for his violations of the companys Code of Conduct.
deadlines for his process reports and his lack of care in accounting for the product
samples in his custody are understandably the result of his preoccupation with IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED and
very serious problems. Added to the pressure brought about by the numerous the assailed Decision of the Court of Appeals in CA-G.R. SP No. 81983,
charges he found himself facing, his errors and negligence should be viewed in a promulgated on 8 February 2006, is AFFIRMED. Costs against the petitioner.
more compassionate light.
Despite the disapproving stance taken by this Court against dishonesty, 9. Suico v. NLRC
Mariano v. NLRC & PLDT
there have been instances when this Court found the ultimate penalty of dismissal
PLDT v. Borje
excessive, even for cases which bear the stigma of deceit.
In this case, the ROL test is a take-home examination intended to check a Doctrine: Company rules supplementing the due process requirements under the
territory representatives understanding of information already contained in their Labor Code are binding upon the parties and violation of such Company Rules
Sales Career Manual, wherein the examinees are even instructed to refer to their amount to a violation of due process.
manuals. The improper taking of this test, while it puts into question the examinees
Recit Ready: This is a consolidation of 3 cases with similar facts and issue. Suico
moral character, does not result in any potential loss of property or damage to the
and other employees of PLDT Cebu; Mariano of PLDT Laoag; Borje of PLDT La
reputation of the employer. Nor does respondents previous performance show Union were all members of MKP which held strikes in their respective company
lack of knowledge required in his sales career. Additionally, the dishonesty premises.
practiced by the employee did not involve company property that was placed in his As to Suico, et al.: PLDT asked him to explain why he should not be
custody. Furthermore, the gravity of this offense is substantially diminished by the terminated for allegedly causing injury to a managerial employee during
fact that petitioner itself had thought it unimportant enough to merit only a one-day the strike;
suspension. The respondents ten years of commendable performance cannot be As to Mariano (union officer): PLDT also asked him to explain why he
should not be terminated for allegedly committing violence during the
cancelled out by a single mistake made during a difficult period of his life, a
picketing;
mistake that did not pose a potential danger to his employer.
As to Borje: PLDT also asked him to explain why he should not be o Petitioners did not file any explanation so PLDT VP sent them two
terminated for allegedly throwing stones at company officers during the other notices.
strike o Petitioners then submitted similar letters asking for the right to be
In all these notices, PLDT said failure to submit written explanation would amount heard in a formal hearing.
to a waiver of right to be heard. The employees did not submit a written o PLDT deferred action on the request for a formal hearing pending
explanation but instead requested for a formal hearing. PLDT sent them notices of receipt of the answers answering the charges against Petitioners.
termination for failure to submit the required explanations so they all filed But Petitioners didn’t submit an answer but instead requested
Complaints for Illegal Dismissal and damages. W/N due process was observed by again for a formal hearing.
PLDT in its termination of the said employees? NO. o PLDT VP then sent them NOTICES OF TERMINATION saying ïn
Supreme Court said that while PLDT complied with the 2 notice rule (first notice to light of the repeated demands and your consistent failure to
inform employee of the charges; second notice for notice of termination), PLDT did provide the written explanation for the following acts, … PLDT has
not comply with its own Company Rules providing for the procedure for handling considered the charges against you for violation of the Labor Code
administrative cases. SC said the minimum standards for due process under the for serious misconduct.” They were held guilty and was treated
Labor Code may be supplemented by company rules and this becomes binding as a just cause for termination.
upon the parties. In this case, the options given to employees by PLDT company o Petitioners filed a COMPLAINT FOR ILLEGAL DISMISSAL and
rule were either (1) request for a formal hearing and defend himself; or (2) submit damages with the Labor Arbiter.
written explanation to the charges. The employees here chose the first option. o LA: ruled illegal dismissal and ordered reinstatement. PLDT
Thus, the refusal of PLDT to grant the formal hearing constituted a violation of the appealed to NLRC.
employees’ right to due process. o NLRC: reversed. Petitioners filed M/R but was denied. Petitioners
filed R65 (Certiorari) with CA.
o CA: dismissed. Petitioners went to the SC via R45.
Facts: Consolidation of 3 cases with similar facts and issue Mariano v. NLRC & PLDT
Suico, et al. v. NLRC & PLDT o Petitioner was an employee of PLDT Laoag City Sub-Exchange
o Petitioners are regular employees of PLDT Cebu and members of and an officer of MKP. He led a picket of the premises of PLDT
Manggagawa ng Komunikasyon ng Pilipinas (MKP). They wherein a PLDT subscriber suffered injury and humiliation at the
participated in the strike launched by MKP against PLDT. hands of a striker. The injured identified Mariano as he culprit and
o DOLE Sec. Trajano assumed jurisdiction over the dispute and demanded his dismissal.
issued a return to work order but MKP did not follow. MKP filed an o PLDT VP for Personnel wrote Petitioner a notice asking for
opposition. explanation for violation of Art. 264 of the Labor Code (No person
o A managerial employee sustained injuries when she was blocked engaged in picketing shall commit any act of violence…) and
by the strikers in entering the company premises and implicated violates the company’s Code of Conduct and is considered
the Petitioners in this case. serious misconduct.
o PLDT VP for Personnel Management then sent separate notices o Petitioner didn’t submit the explanation so he was given another
to Petitioners asking for their respective explanations why they notice by PLDT otherwise charges shall be resolved based on
should not be terminated for physical assault to the managerial available evidence.
employee since it violated the Code of Conduct and is a ground o Petitioner sent a letter saying the memorandum given by PLDT
for termination under Art. 282 of the Labor Code. The letter said violates his right to self organization and requested for a formal
that failure to submit the notarized explanation amounted to a hearing and to be furnished with the complaint.
waiver of the right to be heard. o PLDT VP for North Luzon then sent him a NOTICE OF
TERMINATION saying he did not submit the required explanation.
oPetitioner filed a COMPLAINT FOR ILLEGAL DISMISSAL with o (c) A written notice of termination served on the employee
damages with LA. indicating that upon due consideration of all the circumstances,
o LA: dismissed it. NLRC affirmed. CA affirmed. grounds have been established to justify his termination xxx.
o Petitioner now comes before the SC. PLDT’s defense: the dismissals are due to strike-related violence so they
PLDT v. Borje (essentially same grounds – serious misconduct and can be terminated without complying with the procedure above.
commission of violence during a strike) SC: Art. 277 (b) of the Labor Code does not distinguish as to what kind of
o Borje (Respondent) was an employee of PLDT SFU Mother termination will the requirements of due process for termination apply.
Exchange and also a member of MKP. He also took part in the Even if the cause was strike-related, the minimum standards of due
picketing. process are:
o PLDT VP for Personnel also sent him a letter accusing him of o Written notice containing a statement of the cause of termination
engaging in violent activities during the strike (hurling a stone at o Opportunity to be heard and defend himself with assistance of
the leg of a Supervisor; throwing stones at an employee of the representative, if desired.
Security Agency at a PLDT Exchange in La Union) and asking for PLDT’s defense: they do not have to follow the Labor Code to the letter as
explanation and failure to do so would be a waiver of the right to long as due process is observed. Even if they have a Company Policy,
be heard. that only applies to administrative matters, not to strike related cases.
o Borje replied saying the memorandum violates his right to self SC: Implementing Rules also provide that these minimum standards can
organization, requested for a formal hearing. be supplemented by company policy (but cannot derogate from the
o PLDT sent him a NOTICE OF TERMINATION for failing to submit minimum standards) and these policies become binding on the parties.
required explanation. Here, PLDT’s procedure for termination is known as Systems Practice
o Borje filed a COMPLAINT FOR ILLEGAL DISMISSAL and No. 94-016 which provides for a way of handling administrative cases
damages with LA. (specifically that: An employee under investigation for the commission of
o LA: dismissed; NLRC: affirmed; CA: reversed and ordered an offense or infraction shall be informed in writing of the particular act
reinstatement. constituting the offense or infraction imputed to him. He may answer the
o PLDT went to SC to question the CA decision ruling there is illegal charges against him in writing within a reasonable period of time (at least
dismissal. 48 hours but not more than 72 hours) or be afforded the opportunity to be
heard and defend himself with the assistance of his counsel or union
Issue: W/N there were illegal dismissals? (But SC said the validity of dismissal representative, if he so desires. (Emphasis supplied). PLDT did not follow
was not in issue. Rather, it was W/N PLDT violated the requirements of due its own rules! PLDT also failed to prove that the strike related violence is
process under the labor Code when it dismissed the employees?) not an administrative case. And besides, administrative cases refer to
violation of company rules which is PLDT’s exact allegations in their
Held/Ratio: YES, PLDT violated due process. letters/notices to the employees.
According to the Implementing Rules, Due process for dismissal based on Did PLDT comply with the 2-notice requirement? Actually, YES. It first sent
JUST CAUSES are: notices to the employees informing them of their charges and then sent
o (a) A written notice served on the employee specifying the them notices of termination upon failure to submit explanation. However,
ground or grounds for termination, and giving to said employee what we follow now is the Systems Practice No. 94-016 which became
reasonable opportunity within which to explain his side; binding on the parties. And under that policy, PLDT granted employees the
o (b) A hearing or conference during which the employee option of either (1) filing written answer to the charges, or (2) requesting
concerned, with the assistance of counsel if the employee so for opportunity to be heard and defend himself.
desires, is given opportunity to respond to the charge, present his o Here, the employees requested for formal hearings but PLDT
evidence or rebut the evidence presented against him; and denied them of such right.
Note: the procedural deficiency in the dismissal did not affect the validity of
the dismissal (since substantive aspect was never questioned). Cases 3. An employee may be validly suspended by the employer for just cause provided
focused more on whether there was due process in the termination. by law. Such suspension shall only be for a period of 30 days, after which the
PARTLY GRANTED. employee shall either be reinstated or paid his wages during the extended period.
o As to Suico, et al.: there was no due process in the termination so
pay nominal damages Recit-ready: PT&T investigated its Shipping Department based on a tip that there
o As to Mariano: there was no due process in the termination so pay was an anomaly there. It discovered that the Shipping Section jacked up the value
nominal damages of the freight costs for goods shipped and that the duplicates of the shipping
o As to PLDT (regarding Borje): denied. (meaning, CA decision to documents allegedly showed traces of tampering, alteration and superimposition.
declare illegal dismissal was correct) so pay Borje nominal Perez and Doria were placed on preventive suspension for 30 days for their
damages. alleged involvement in the anomaly. Their suspension was extended for 15 days
twice. RULING: (1) PT&T was not able to sufficiently prove that the petitioners
were the only ones who handles the altered documents. (2) A hearing is not
10. Perez & Doria v. PT&T required to accord due process, only that meaningful opportunity (verbal or written)
G.R. No. 152048 be given to the employee to answer the charges against him. (3) If the suspension
April 7, 2009 is extended for more than 30 days, the employee shall either be reinstated or paid
Digest by: Kristine Uy his wages during the extended period. Here, when it was extended, the employer
did not pay the employees.
Doctrine: 1. The burden of proof rests on the employer to establish that the
dismissal is for cause in view of the security of tenure that employees enjoy under Facts:
the Constitution and the Labor Code. The employer’s evidence must clearly and Acting on an alleged unsigned letter regarding anomalous transactions at
convincingly show the facts on which the loss of confidence in the employee may the Shipping Section, PT&T formed a special audit team to investigate the
be fairly made to rest. It must be adequately proven by substantial evidence. matter.
It was discovered that the Shipping Section jacked up the value of the
2. The following are the guiding principles in connection with the hearing freight costs for goods shipped and that the duplicates of the shipping
requirement in dismissal cases: documents allegedly showed traces of tampering, alteration and
superimposition.
(a) ample opportunity to be heard means any meaningful opportunity On September 3, 1993, Perez and Doria were placed on preventive
(verbal or written) given to the employee to answer the charges against suspension for 30 days for their alleged involvement in the anomaly. Their
him and submit evidence in support of his defense, whether in a hearing, suspension was extended for 15 days twice: first on October 3, 1993 and
conference or some other fair, just and reasonable way. second on October 18, 1993.
On October 29, 1993, PT&T issued the following memo: “In line with the
(b) a formal hearing or conference becomes mandatory only when recommendation of the AVP-Audit as presented in his report of October
requested by the employee in writing or substantial evidentiary disputes 15, 1993 and the subsequent filing of criminal charges against the parties
exist or a company rule or practice requires it, or when similar mentioned therein, Mr. Felix Perez and Mr. Amante Doria are hereby
circumstances justify it. dismissed from the service for having falsified company documents.”
Thereafter, Perez and Doria filed a complaint for illegal dismissal. They
(c) the ample opportunity to be heard standard in the Labor Code prevails alleged that they were dismissed on November 8, 1993, the date they
over the hearing or conference requirement in the implementing rules and received the above-mentioned memorandum. Additionally, they claim that
regulations. due process was not observed in the absence of a hearing.
him and submit evidence in support of his defense, whether in a hearing,
Issue: (1) Was the employer able to sufficiently prove just cause? – No. conference or some other fair, just and reasonable way.
(2) Is a hearing or conference necessary to accord due process to the
dismissed employees? – No. (b) a formal hearing or conference becomes mandatory only when
(3) Can an employee be suspended without pay for more than 30 days? – requested by the employee in writing or substantial evidentiary disputes
No. exist or a company rule or practice requires it, or when similar
circumstances justify it.
Held/Ratio:
(c) the ample opportunity to be heard standard in the Labor Code prevails
1. PT&T’s evidence is insufficient to clearly and convincingly establish the over the hearing or conference requirement in the implementing rules and
facts from which the loss of confidence resulted. Other than their bare regulations.
allegations and the fact that such documents came into Perez and Doria’s
hands at some point, respondents should have provided evidence of 3. An employee may be validly suspended by the employer for just cause
petitioners’ functions, the extent of their duties, the procedure in the provided by law. Such suspension shall only be for a period of 30 days,
handling and approval of shipping requests and the fact that no personnel after which the employee shall either be reinstated or paid his wages
other than petitioners were involved. It was never proven that petitioners during the extended period.
alone had control of or access to these documents.
In this case, petitioners were not paid during the two 15-day extensions, or
While willful breach by the employee of the trust reposed in him by his a total of 30 days, of their preventive suspension.
employer or duly authorized representative is a just cause for termination,
loss of confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal or unjustified. Loss of 11. Bacolod-Talisay Realty v. Dela Cruz, April 30, 2009
confidence may not be arbitrarily asserted in the face of overwhelming G.R. Nos. 179563
evidence to the contrary. It must be genuine, not a mere afterthought to Date: April 30, 2009
justify an earlier action taken in bad faith. Digest by: Isa Avanceña
The burden of proof rests on the employer to establish that the dismissal is Recit-Ready (Doctrines in bold).
for cause in view of the security of tenure that employees enjoy under the - DELA CRUZ was an overseer of a farm owned by BTRD. He was accused
Constitution and the Labor Code. The employer’s evidence must clearly of payroll padding, misappropriating money from selling materials for
and convincingly show the facts on which the loss of confidence in the BTRD and renting out its tractor, etc. He was sent a letter suspending him
employee may be fairly made to rest. It must be adequately proven by for 30 days, and then 3 months later was sent a letter dismissing him. The
substantial evidence. issue is whether or not he was dismissed for just cause and whether or not
the proper procedure had been complied with. He was dismissed for just
2. There is no need for a hearing or conference. The following are the cause, as the charges against him were sufficiently proved by a number of
guiding principles in connection with the hearing requirement in dismissal affidavits and other documentary evidence. The proper procedure was
cases: not followed, because the first letter (which simply suspended him)
did not comply with the required first notice, the purpose of which is
(a) ample opportunity to be heard means any meaningful opportunity to apprise the employee of the cause for termination and to give him
(verbal or written) given to the employee to answer the charges against reasonable opportunity to explain his side. The confrontation before
the barangay council did not constitute the first notice as to give the
employee ample opportunity to be heard with the assistance of without loss of seniority rights and benefits, and backwages not to exceed
counsel, if he so desires. Hearings before the barangay council do three years
not afford the employee ample opportunity to be represented by
counsel if he so desires. Thus, since the proper procedure was not Issues/Held/Rationale:
complied with, nominal damages must be paid. W/N BTRD was able to establish with substantial evidence that just cause
existed for the termination of DELA CRUZ? YES.
- These included affidavits of the vice-president and secretary of BTRD;
Facts: affidavits of two workers who say they refused to sign the payroll indicating
- DELA CRUZ was employed as an overseer at the Hacienda Gloria (farm they received P256, because they only received P71, and the
owned and managed by Bacolod-Talisay Realty and Development corresponding copies of the payrolls where DELA CRUZ signed instead of
Corporation (BTRD)) from 1980 up to 1997 the two who refused; affidavit of the man in charge of payroll said that
o In charge of the work of the laborers, checking their attendance, DELA CRUZ never returned any of the excess wages; affidavit of
reporting the number of hours worked by each laborer for payroll someone saying he saw DELA CRUZ rent out the BTRD tractor and
purposes, checking in-coming and out-going cargo, and selling receive payment therefrom; affidavit of someone saying he saw DELA
and receiving payments for seedpieces and canepoints CRUZ selling pieces of patdan and drammy for the BTRD, but the money
o Also entrusted with farm equipment and other farm property. remitted to BTRD was less than that received in the sale.
- DELA CRUZ dismissed on charges of payroll padding, selling canepoints
without the knowledge and consent of management and misappropriating W/N BTRD complied with the proper procedure in dismissing DELA CRUZ?
the proceeds thereof, and renting out BTRD's tractor for use in another NO.
farm and misappropriating the proceeds thereof - BTRD failed to afford DELA CRUZ due process by failing to comply with
- DELA CRUZ filed a complaint for illegal suspension and illegal dismissal the twin notice requirement in dismissing him, viz: 1) a first notice to
before the apprise him of his fault, and 2) a second notice to him that his employment
- Respective Position Papers: is being terminated.
o DELA CRUZ: BTRD gave him a letter on June 3 telling him he - The letter dated June 3, 1997 sent to DELA CRUZ was a letter of
was going to be suspended for the next 30 days because of the suspension. It did not comply with the required first notice, the purpose of
investigation regarding the aforementioned charges; they gave which is to apprise the employee of the cause for termination and to give
him another letter on July 3 stating that he was going to be him reasonable opportunity to explain his side.
terminated on account of the charges - The confrontation before the barangay council did not constitute the first
o BTRD: During the investigation, it was discovered that there were notice as to give the employee ample opportunity to be heard with the
farm workers whose names were entered in the payroll even if assistance of counsel, if he so desires. Hearings before the barangay
they did not render services and the corresponding wages were council do not afford the employee ample opportunity to be represented by
not received by them; DELA CRUZ failed to return that money to counsel if he so desires because Section 415 of the Local Government
BTRD; a company tractor was used in another farm, rental fees of Code mandates that “[i]n all katarungang pambarangay proceedings, the
which were not remitted to BTRD, and when confronted, DELA parties must appear in person without the assistance of counsel or his
CRUZ admitted his wrongdoings and asked for forgiveness; and representatives, except for minors and incompetents who may be assisted
while a confrontation about the matter was held before the by their next-of-kin who are not lawyers.”
barangay council, no settlement was reached. - The requirement of giving DELA CRUZ the first notice not having been
- LA: Dismissed the complaint for lack of merit complied with, discussions of whether the second notice was complied
- NLRC: Dismissed DELA CRUZ’s appeal because it was not verified with are rendered unnecessary.
- CA: Reversed the LA and NLRC, saying BTRD did not comply with the - In fine, while the dismissal of DELA CRUZ was for a just cause, the
guidelines for dismissal, and DELA CRUZ is entitle to reinstatement procedure in effecting the same was not observed nominal damages.
12. Prudential Guarantee & Assurance Labor Union v. NLRC Facts:
G.R. No. 185335 | June 13, 2012 Vallota was employed by Prudential Guarantee (PGAI) in 1995 as a Junior
Programmer assigned to the Electronic Data
Doctrines: Processing (EDP) Department. On August 2005 he was elected to the
For an employee to be dismissed on the ground of loss of trust and Board of Directors of the Union.
confidence, two requisites must concur: (1) that the employee concerned On November 2005, the Union president (Apostol) was informed by the
must be one holding a position of trust and confidence (two classes: HR department head (Atty. Rillo) that they were going to conduct an on-
managerial employees, those who in the normal and routine exercise of the-spot security check in the IT Department.
their functions, regularly handle significant amounts of money or property); The inspection team started to check the EDP Department computers,
and (2) there must be an act that would justify the loss of trust and beginning with the one assigned to Vallota. After exploring the contents of
confidence. all the folders and subfolders in the "My Documents" folder, the inspector
A formal hearing or conference becomes mandatory only when requested apparently did not find anything unusual with Vallota’s computer and said
by the employee in writing or substantial evidentiary disputes exist or a "Wala naman, saan dito?" Retizos (the EDP head) insisted, "Nandyan
company rule or practice requires it, or when similar circumstances justify yan," and took over the inspection until she found a folder named "MAA."
it. She then exclaimed, "Heto oh! Ano to? Bakit may MAA dito?" Retizos
asked Vallota, "Are you working for MAA?" Vallota replied, "Hindi po, MAA
mutual life po yan na makikita po sa internet." Gutierrez saved a copy of
Recit Ready Digest: the contents of the MAA folder in a floppy disk.3
Vallota was hired by PGAI as a Junior Programmer. Ten years into his Following such discovery, Vallota was charged with the following
employment and after he was elected as a union officer, a spot inspection was violations:
conducted and some allegedly confidential files were found on his computer (files 1. Possession of company property without authorization;
include internal files, info on competitor, blank gatepass). During investigation, 2. Securing or obtaining Prudential materials or supplies fraudulently;
Vallota and the union asked that a grievance committee be convened but such 3. Using Company equipment, property, or material to perform or create
request was ignored. Vallota was dismissed due to loss of trust and confidence. something for personal gain or purpose; and
Issues are (1) W/N he was validly dismissed based on said ground and (2) W/N 4. Misuse or removal from company premises without proper
there was a denial of due process. On the first issue, for an employee to be authorization of Prudential records or confidential information of any
41
dismissed due to loss of trust and confidence, two requisites must concur: he/she nature.
should be a confidential employee, and there must be an act that would justify the Vallota then received a memorandum directing him to explain within 72
loss of trust and confidence. Though Vallota was properly classified as a hours why highly confidential files were stored in his computer. The same
confidential employee because he has access to confidential files, there was no memorandum also informed him that he was being placed under
act committed to justify loss of trust and confidence. There was no proof that the preventive suspension for 30 days effective upon receipt of the said notice.
presence of such files was part of an attempt to defraud his employer or to use the A second memorandum, notified Vallota of the extension of his preventive
files for a purpose other than that for which they were intended. It was also found suspension for another 30 days.
that the files of the competitor in his computer were actually not confidential but Meanwhile, the Union sent a letter to the company president requesting
were available to the public. On the issue of due process, because petitioners that a grievance committee be convened. The request for the convening of
expressly requested a conference or a convening of a grievance committee, such a grievance committee was ignored. Vallota was then given a notice of
formal hearing became mandatory. After PGAI failed to affirmatively respond to termination of his employment on the ground of loss of trust and
such request, the hearing requirement was not complied with and, therefore, confidence.
Vallota was denied his right to procedural due process. Company’s claims:
1. Vallota shouldn’t have had access to said files. Vallota’s functions as
Junior Programmer did not include matters relating to web On W/N the petitioner was validly dismissed on the ground of loss of trust
development; that under standard IT procedure and company practice, and confidence - NOPE
the employees who requested assistance from the IT Department The first requisite for dismissal on the ground of loss of trust and
were required to fill up a Job Request Form (JRF) which was then confidence is that the employee concerned must be one holding a
submitted for prior approval by the IT Head. Vallota could not produce position of trust and confidence. There are two (2) classes of positions
a single JRF when he was asked to do so and explained the lack of of trust.
JRFs by stating that such file repairs, file recovery, or printing jobs o The first class consists of managerial employees. They are
were merely "little favors" and that such were considered as company defined as those vested with the powers or prerogatives to lay
"practice"; and that he, however, refused to reveal the names of the down management policies and to hire, transfer suspend, lay-off,
employees who had sought assistance in the fixing/printing/recovery recall, discharge, assign or discipline employees or effectively
of the PGAI files. recommend such managerial actions.
2. The respondents aver that Vallota also had in his computer the PGAI o The second class consists of cashiers, auditors, property
Gate Pass Form template, a company property that could not be custodians, etc. They are defined as those who in the normal and
copied, stored, or reproduced without company permission. routine exercise of their functions, regularly handle significant
3. They also claim that Vallota was guilty of using company equipment, amounts of money or property.
property or material to perform or create something for personal gain Examples: a pharmaceutical company’s district manager
or purpose. Vallota’s possession of the PGAI and MAA files appeared employed to handle pharmaceutical products for
to be part of a plan to take advantage of the said documents for distribution, a bank manager, an employee tasked with
personal gain. purchasing supplies and equipment, a contract claims
Vallota’s defense: assistant tasked with monitoring enforcement of contracts
1. Company failed to prove by substantial evidence that Vallota’s position involving large sums of money.
did not allow him to access confidential information and that the data The second requisite is that there must be an act that would justify
found in his computer had been used for his personal gain; the loss of trust and confidence.
2. Vallota did not deliberately get the files from other departments; o Loss of trust and confidence to be a valid cause for dismissal must
instead, such files were acquired in the process of fixing diskettes and be based on a willful breach of trust and founded on clearly
printing information as requested by his co-employees; established facts. The basis for the dismissal must be clearly and
3. No evidence was presented to prove that Vallota sold or was about to convincingly established but proof beyond reasonable doubt is not
sell corporate documents to MAA Mutual Life Corporation or to any necessary.
company; and On first requisite: Vallota’s position as Junior Programmer is
4. Company’s refusal to convene a grievance machinery was a clear analogous to the second class of positions of trust and confidence.
abuse of management prerogative. Though he did not physically handle money or property, he became privy
to confidential data or information by the nature of his functions.
Issues: On second requisite: alleged acts not enough to constitute loss of
(1) W/N Vallota was validly dismissed on the ground of loss of trust and trust and confidence. There was no other evidence presented to prove
confidence; and fraud in the manner of securing or obtaining the files found in Vallota’s
(2) W/N the requirements of procedural due process for termination were computer. Aside from the presence of these files in Vallota’s hard drive,
observed. there was no other evidence to prove any gross misconduct on his part.
There was no proof either that the presence of such files was part of an
Held:
attempt to defraud his employer or to use the files for a purpose other than 3. The "ample opportunity to be heard" standard in the Labor Code
that for which they were intended. prevails over the "hearing or conference" requirement in the
o Note that in illegal dismissal cases, the burden of proof is upon implementing rules and regulations.
the employer to show that the employee’s termination from service In this case, the two-notice requirement was complied with. PGAI issued to
is for a just and valid cause. The quantum of proof is substantial Vallota a written Notice of Charges & Preventive Suspension. After an
evidence which is understood as such relevant evidence as a exchange of memoranda, PGAI then informed Vallota of his dismissal.
reasonable mind might accept as adequate to support a However, that the petitioners expressly requested a conference or a
conclusion, even if other equally reasonable minds might convening of a grievance committee, such formal hearing became
conceivably opine otherwise. mandatory. After PGAI failed to affirmatively respond to such
Moreover, the MAA files found in Vallota’s computer, the prospectus and request, it follows that the hearing requirement was not complied
corporate profile, are not sensitive corporate documents. These are with and, therefore, Vallota was denied his right to procedural due
documents routinely made available to the public. If anything, the process.
presence of the files would merely merit the development of some Dispostion: Vallota is entitled to reinstatement and backwages, but
suspicion on the part of the employer, but should not amount to a loss of because of strained relations, separation pay equivalent to one (1) month
trust and confidence such as to justify the termination of his employment. salary for every year of service should be awarded as an alternative.
While Vallota’s act or omission may have been done carelessly, it falls o Note that an illegally dismissed employee is entitled to two reliefs:
short of the standard required for termination of employment. It does not backwages and reinstatement. The two reliefs provided are
manifest either that the employee concerned is unfit to continue working separate and distinct. In instances where reinstatement is no
for his employer. longer feasible because of strained relations between the
When the act complained of is not so grave as to result in a complete loss employee and the employer, separation pay is granted. The
of trust and confidence, a lower penalty such as censure, warning, or even payment of separation pay is in addition to payment of
suspension, would be more circumspect. This is of particular significance backwages.
here where during Vallota’s ten years of service to PGAI, not once was he o Under the doctrine of strained relations, the payment of separation
ever warned or reprimanded for such printing services. pay is considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On one hand,
On W/N the procedural due process requirements for termination were such payment liberates the employee from what could be a highly
observed - NOPE oppressive work environment. On the other hand, it releases the
The petitioners allege that Vallota was denied due process of law, as the employer from the grossly unpalatable obligation of maintaining in
records of the case clearly show that his request for an administrative its employ a worker it could no longer trust.
hearing was denied.
The following are the guiding principles in connection with the hearing
requirement in dismissal cases: 13. Cosmos Bottling Co. v. Fermin
1. "Ample opportunity to be heard" means any meaningful opportunity Doctrine: Theft committed against a co-employee is considered as a case
(verbal or written) given to the employee to answer the charges analogous to serious misconduct, for which the penalty of dismissal from service
against him and submit evidence in support of his defense, whether in may be meted out to the erring employee.
a hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when Recit-Ready: Fermin was accused of stealing Braga’s cellphone (his co-worker)
requested by the employee in writing or substantial evidentiary after due inspection of the guards. He was given Show Cause Memorandum which
disputes exist or a company rule or practice requires it, or when similar required Fermin to explain why the cellphone was found inside the locker. He
circumstances justify it. explained that he merely pulled a prank on braga but he was nevertheless
dismissed. Fermin filed a complaint for illegal dismissal. LA, NLRC ruled against implies wrongful intent and not mere error in judgment.” For misconduct to
fermin; CA reversed but stated that he is entitled to retirement benefits, and that be serious and therefore a valid ground for dismissal, it must be: 1. of
Fermin’s act did not constitute as serious or willful disobedience to warrant grave and aggravated character and not merely trivial or unimportant and
dismissal. ISSUE: W/N dismissal was proper. SC said YES. Theft committed 2. connected with the work of the employee. 
against a co-employee is considered as a case analogous to serious misconduct, In a cited case of John Hancock Life Insurance v Davis, petitioner
for which the penalty of dismissal from service may be meted out to the erring dismissed respondent based on the NBI’s finding that the latter stole and
employee. used Yuseco’s credit cards. But since the theft was not committed against
petitioner itself but against one of its employees, respondent’s misconduct
Facts: was not work-related and therefore, she could not be dismissed for serious
Fermin is a forklift operator at Cosmos. He was accused of stealing of misconduct. Nonetheless, Article 282(e) of the Labor Code talks of other
Braga’s phone, his fellow employee. The cellphone was found inside his analogous causes or those which are susceptible of comparison to
locker after the inspection of the guards. another in general or in specific detail. For an employee to be validly
Cosmos gave a Show Cause Memorandum which required Fermin to dismissed for a cause analogous to those enumerated in Article 282, the
explain why the cellphone was found inside the locker. cause must involve a voluntary and/or willful act or omission of the
Fermin, in his affidavit, stated that he was merely pulling a prank on Braga. employee. A cause analogous to serious misconduct is a voluntary and/or
Braga on the other hand said that: he went out of the locker room and willful act or omission attesting to an employee’s moral depravity. Theft
inadvertently left his cellphone by the chair. Fermin was left inside the committed by an employee against a person other than his employer, if
room. Braga reported the incident to the guards and after inspection, it proven by substantial evidence, is a cause analogous to serious
was found in Fermin’s locker. Later that afternoon, Fermin said sorry to misconduct.
Braga for pulling that prank) In this case, Fermin’s commission of theft is deemed analogous to serious
Cosmos found Fermin guilty of stealing Braga’s phone in violation of misconduct, rendering Fermin’s dismissal from service just and valid. CA
company rules and regulations. Hence, Fermin was terminated (after 27 was correct in ruling that previous infractions may be cited as justification
yrs of service) for dismissing an employee only if they are related to the subsequent
Fermin filed a complaint for illegal dismissal offense.28 However, it must be noted that such a discussion was
LA: ruled against Fermin on the ground that the act of taking a fellow unnecessary since the theft, taken in isolation from Fermin’s other
employee’s cellphone amounted to gross misconduct. NLRC: affirmed LA. violations, was in itself a valid cause for the termination of his employment.
CA: reversed LA and NLRC and awarded him full retirement benefits. CA Finally, the award of financial compensation or assistance to an employee
also affirmed ruling that theft has been committed BUT stated that it is not validly dismissed from service has no basis in law. Therefore, considering
tantamount to “serious or willful” disobedience to call for dismissal. that Fermin’s act of taking the cellphone of his co-employee is a case
analogous to serious misconduct, this Court is constrained to reverse the
Issue: W/N the imposition of the penalty of dismissal was appropriate. CA’s ruling as regards the payment of his full retirement benefits. In the
same breath, neither can this Court grant his prayer for backwages.
Held/Ratio: YES, dismissal was proper.
“Article 282 of the Labor Code provides: An employer may terminate an
employment for any of the following causes: (a) Serious misconduct or 14. Sampaguita Auto Transport v. NLRC & Sagad, January 30, 2013
willful disobedience by the employee of the lawful orders of his employer G.R. 197384 | Jan. 30, 2013
or his representatives in connection with his work; xxxx (e) Other causes Chris Co
analogous to the foregoing.
Misconduct involves “the transgression of some established and definite
rule of action, forbidden act, a dereliction of duty, willful in character, and
Doctrine: The failure to follow the twin-notice requirement merits the awarding of infractions because the dismissal was not based on the acts but on the
nominal damages. Reckless driving constitutes a serious misconduct on the part of alleged connivance with the conductor. Under a rule 65 petition, the CA
a bus driver. affirmed the NLRC ruling and added that there was also a failure to comply
with the twin notice requirement. It also held that the acts did not fall under
Recit-Ready: any ground under Article 282 of the Labor Code.
Issues:
Sagad filed a complaint for illegal dismissal because the company did not have ● Was Sagad illegally dismissed? Yes.
basis in dismissing him. He alleged that first he was a regular employee because ● Is he entitled to separation pay or backwages? Not answered.
his signature in the probationary employment contract was forged. Second, the
grounds for dismissal did not fall under any ground under the Labor Code. The LA Held:
dismissed the case which the NLRC reversed. The CA agreed with the NLRC and ● The Court ruled that Sagad was actually a regular employee. It agreed that
stated that the acts did not fall under any ground under Article 282 of the Labor there was a variance in handwriting based on the submissions of Sagad
Code. It also held that there was a failure to comply with the twin-notice and the alleged contract. Further, the Court points out that he was still
requirement. The SC ruled that Sagad was a regular employee because it is under the services of the company as he was still receiving his salary even
persuaded of the act of forgery as well as the continuing employment despite the after the termination of the probationary period.
lapse of the probationary period. However, it held that there was sufficient grounds ● With regard to the issue of illegal dismissal, the Court finds that Sagad’s
under the Labor Code as his reckless driving and hit-and-run incident falls under dismissal had basis. Here, the Court pointed out that Sagad’s admission
the termination due to serious misconduct. The Court in the end held that there with regard to speeding as well as to recklessly drive in catching up with
was failure to observe procedural due process because of the non-compliance of another bus. His denial of a hit-and-run incident finds no merit as there is
the twin-notice requirement rule which merited the award of nominal damages. proof of such incident found in the Traffic Accident Investigation Report.
● The Court ruled that the CA failed to appreciate the law when it declared
Facts: that the grounds relied upon by the company did not fall under the acts
● Sagad filed an illegal dismissal complaint against the company. He alleged enumerated under Article. 282. It held that the infractions committed by
that the company hired him as a regular bus driver. In alleging that he was Sagad constitute as serious misconduct or analogous to serious
not a probationary employee, he argued that the signature in the contract misconduct.
for probationary employment was forged. He also alleged that he was ● With regard to the twin-notice requirement, the Court agrees with the CA
dismissed on Nov. 5, 2006 for having connived with a conductor in issuing that the company failed to comply with the requirement. It failed to serve
tickets. notice of the particular acts for which he was dismissed and his actual
● The company countered and stated that Sagad was a probationary dismissal. The failure to follow procedural due process merits nominal
employee and that he was informed of his corresponding duties and damages.
responsibilities. In order to assess his performance, an evaluator, in
civilian clothes, was required to observe his performance and attitude. The
evaluator recommended that he was a reckless driver. He admitted that 15. Dongon v. Rapid Movers
there was one time where he chased another bus when it swerved without 28 AUGUST 2013
warning. The company also cited him to be part of a hit and run accident GR NO 163431
which Sagad did not report to the company.
● The LA dismissed the complaint since the company was able to prove that Doctrine: Willfulness must be attended by a wrongful and perverse mental attitude
he was not a regular employee. However, the NLRC ruled that Sagad was rendering the employee’s act inconsistent with proper subordination and it is
illegally dimissed. It held that Sagad was able to prove that the contract implied that in every act of willful disobedience, the erring employee obtains undue
was actually forged. The NLRC also disregarded Sagad’s alleged advantage detrimental to the business interest of the employer.
been banned from all the warehouses of Tanduay, hence, Rapid has no
Recit-ready: Dongon is an employee of Rapid Movers as truck helper. He is available job for him.
assigned to Tanduay Otis Warehouse. Dongon and his driver were in Tanduay NLRC: Reversed LA, Rapid Movers did not suffer any pecuniary damage
trying to get some goods for distribution. Tanduay’s security guard called their from his act; and that his dismissal was a penalty disproportionate to the
attention because the driver was not wearing an ID. Dongon assured the guard act of petitioner complained of. It awarded him backwages and separation
that he will secure a special permission from the management, but he did not. pay in lieu of reinstatement.
What he did was he lent his ID to the driver and misrepresented themselves to get CA: Reversed NLRC. It ruled that the termination was due to willful
a clearance from Tanduay. The security guard saw the misrepresentation disobedience
committed, accosted them, and reported the matter to Tanduay. Dongon was
dismissed by Rapid due to this incident on the ground of willful disobedience. SC Issue: W/N the termination was legal due to the existence of willful disobedience
ruled that there was no willful disobedience, hence, there is illegal dismissal.
Willfulness must be attended by a wrongful and perverse mental attitude rendering Held:
the employee’s act inconsistent with proper subordination. Under the foregoing NO.
standards, the disobedience attributed to petitioner could not be justly For willful disobedience to be a ground, it is required that: (a) the conduct
characterized as willful disobedience. He neither benefitted from it, nor thereby of the employee must be willful or intentional; and (b) the order the
prejudiced the business interest of Rapid Movers. His explanation that his employee violated must have been reasonable, lawful, made known to the
deed had been intended to benefit Rapid Movers was credible. There could employee, and must pertain to the duties that he had been engaged to
be no wrong or perversity on his part that warranted the termination of his discharge.
employment based on willful disobedience. Willfulness must be attended by a wrongful and perverse mental attitude
rendering the employee’s act inconsistent with proper subordination. In
Facts: any case, the conduct of the employee that is a valid ground for dismissal
Dongon is a truck helper leadman of Rapid Movers. under the Labor Code constitutes harmful behavior against the business
Dongon’s area of assignment is the Tanduay Otis Warehouse where he interest or person of his employer.
has a job of facilitating the loading and unloading of Rapid’s trucks. It is implied that in every act of willful disobedience, the erring employee
Dongon and his driver were in the vicinity of Tanduay as they tried to get obtains undue advantage detrimental to the business interest of the
some goods to be distributed to their clients when Tanduay’s security employer.
guard called the attention of Dongon because the driver was not wearing Under the foregoing standards, the disobedience attributed to petitioner
his ID. Dongon assured the guard that he will secure a special permission could not be justly characterized as willful disobedience. He neither
from the management to warrant the orderly release of goods. benefitted from it, nor thereby prejudiced the business interest of
Instead of complying with his compromise, Dongon lent his ID to the driver Rapid Movers. His explanation that his deed had been intended to
and by reason of such misrepresentation, they got a clearance from benefit Rapid Movers was credible. There could be no wrong or
Tanduay for the release of the goods. However, the security guard, who perversity on his part that warranted the termination of his
saw the misrepresentation committed, accosted them and reported the employment based on willful disobedience.
matter to the management of Tanduay. It is true that an employer is given a wide latitude of discretion in managing
After conducting an administrative investigation, Dongon was dismissed its own affairs. The broad discretion includes the implementation of
from Rapid Movers. company rules and regulations and the imposition of disciplinary measures
LA: valid dismissal since Rapid Movers merely exercised its prerogative to on its employees. But the exercise of a management prerogative like this
dismiss Dongon considering that 1) he had admitted lending his ID to the is not limitless, but hemmed in by good faith and a due consideration of
driver, 2) his act constituted dishonesty and deceit amounting to breach of the rights of the worker. In this light, the management prerogative will be
trust, 3) Rapid’s relationship with Tanduay was jeopardized, and 4) he had
upheld for as long as it is not wielded as an implement to circumvent hear his defenses. A full adversarial proceeding is not necessary as the parties
the laws and oppress labor. may be heard through pleadings, written explanations, position papers,
Dismissal should only be a last resort, a penalty to be meted only after all memorandum or oral argument.
the relevant circumstances have been appreciated and evaluated with the
goal of ensuring that the ground for dismissal was not only serious but RECIT-READY DIGEST: Bandiola was a bookkeeper in ACC as bookkeeper.
true. The cause of termination, to be lawful, must be a serious and grave ACC’s Board of Directors received a letter reporting the alleged immoral conduct
malfeasance to justify the deprivation of a means of livelihood. Bandiola for having an illicit relationship with Thelma. ACC conducted a
It must be ensured that the employer exercises the prerogative to preliminary investigation, which revealed that Bandiola was involved in an extra-
discipline humanely and considerately, and that the sanction imposed is marital affair with Thelma. Bandiola was informed, through a Board Resolution, of
commensurate to the offense involved and to the degree of the infraction. ACC’s decision to terminate him for engaging in such illicit relationship. Bandiola
The discipline exacted by the employer should further consider the filed a Complaint for Illegal Dismissal against ACC. ISSUES: (1) W/N Bandiola
employee’s length of service and the number of infractions during his was validly dismissed. (2) W//N procedural due process of Bandiola was violated.
employment. HELD: (1) YES, Bandiola was validly dismissed for engaging in extra-marital
Considering that Dongon’s in lending his company ID to Villaruz was to affairs, which is a ground for termination of employment stated in both ACC’s old
benefit Rapid Movers as their employer by facilitating the loading of goods and new Personnel Policy. An employer may make reasonable rules and
at the Tanduay Otis Warehouse for distribution to Rapid Movers’ clients regulations for the government of its employees, which become part of the contract
and considering also that Dongon had rendered seven long unblemished of employment, provided they are made known to the employee. An employee
years of service to Rapid Movers, his dismissal was plainly unwarranted. may be validly terminated for violating the employer’s rules and regulations. (2)
NO, Bandiola’s right to procedural due process was NOT violated. He was
adequately afforded the opportunity to defend himself and explain the accusation
16. Alilem Credit Cooperative v. Bandiola against him. ACC conducted a preliminary investigation. He was also allowed to
G.R. No. 173489 see report of the Ad Hoc Committee and was advised that he was entitled to
February 25, 2013 assistance of counsel. It was only after the investigation that ACC decided to
terminate him, as embodied in a Board Resolution, a copy of which was furnished
DOCTRINES: to him.
An employer is free to regulate all aspects of employment. It may make
reasonable rules and regulations for the government of its employees, which FACTS:
become part of the contract of employment, provided they are made known to Salvador Bandiola was employed as bookkeeper of petitioner Alilem Credit
the employee. If there is a violation, an employee may, be validly terminated Cooperative (ACC). The Board of Directors of ACC received a letter from
from employment, on the ground that an employer cannot be expected to Napoleon Gao-ay, reporting the alleged immoral conduct of Bandiola by
retain the employment of a person whose lack of morals, respect and loyalty to having an illicit relationship with Napoleon's sister, Thelma Palma. The Board
his employer, regard for his employer's rules and application of the dignity and conducted a preliminary investigation and received the sworn statements of
responsibility, has so plainly and completely been shown. some relatives and friends of Thelma. They alleged incidents and
Before the services of an employee can be validly terminated, the employer circumstances supporting the allegation of Bandiola and Thelma’s illicit
must furnish him two written notices: (a) a written notice served on the relationship. For instance, they allegedly slept on the same bed in a boarding
employee specifying the ground or grounds for termination, and giving the house in San Fernando, La Union. The family of Thelma also tried to convince
employee reasonable opportunity to explain his side; and (b) a written notice of her to end her extramarital affair with Bandiola but she still lived together with
termination served on the employee indicating that upon due consideration of him.
all the circumstances, grounds have been established to justify his termination. The Board formed an Ad Hoc Committee to investigate the charges against
The employer must inform the employee of the charges against him and to Bandiola. Thelma and Bandiola merely denied the accusation against them.
Bandiola claimed that some members of the cooperative and of the Board are that bring discredit to the organization," while under the new policy, one of
just insecure to him because of his growing popularity and exemplary record in the grounds is the "commission of acts that brings (sic) discredit to the
work. The Board received a petition from about (50) members of the cooperative organization, especially, but not limited to, conviction of any crime,
cooperative asking the relief of respondent due to his illicit affair with Thelma. illicit marital affairs, scandalous acts inimical to established and accepted
Eventually, the Ad Hoc Committee concluded that Bandiola was having an social mores.” ACC did not create a new ground for the termination. The
extra-marital affair with Thelma. enumeration containing the specific act of “illicit marital affairs” under the new
The Chairman of the Board informed Bandiola, through a letter, of the policy is an example of “an act that brings discredit to the cooperative.” Thus,
existence of a prima facie case against him for “illicit marital affair,” an act that engaging in extra-marital affairs is a ground for termination in both old and new
brings discredit to the cooperative organization and a cause for termination per policies.
AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy. Bandiola was An employer is free to regulate all aspects of employment. It may make
informed of the Board's decision to terminate his services as bookkeeper of reasonable rules and regulations for the government of its employees, which
ACC, without any compensation or benefit, except the unpaid balance of his become part of the contract of employment, provided they are made known to
regular salary for services actually rendered. the employee. If there is violation, an employee may, be validly terminated
Bandiola filed a Complaint for Illegal Dismissal against ACC before the from employment, on the ground that an employer cannot be expected to
Regional Arbitration Branch of the National Labor Relations Commission retain the employment of a person whose lack of morals, respect and loyalty to
(NLRC). his employer, regard for his employer's rules and application of the dignity and
LA: dismissed Bandiola’s complaint for lack of merit and found that Bandiola responsibility, has so plainly and completely been shown.
was validly dismissed by ACC for violation of the cooperative's Personnel While Bandiola’s act of engaging in extra-marital affairs may be considered
Policy. LA found no violation of respondent's right to due process. NLRC: set personal to him and does not directly affect the performance of his assigned
aside the LA decision and declared that ACC illegally dismissed Bandiola. CA: task as bookkeeper, aside from the fact that the act was specifically provided
found that Bandiola was illegally dismissed. Hence this petition. for by ACC’s Personnel Policy as one of the grounds for termination, said act
raised concerns to ACC as the Board received numerous complaints and
ISSUES: petitions from the cooperative members themselves asking for the removal of
1. W/N Bandiola was validly dismissed. – YES respondent because of his immoral conduct.
2. W/N procedural due process of Bandiola was violated. – NO
2. NO, Bandiola’s right to procedural due process was NOT violated.
HELD: YES, Bandiola was validly dismissed for engaging in extra-marital Before the services of an employee can be validly terminated, the employer
affairs, which is a ground for termination of employment stated in ACC’s must furnish him two written notices: (a) a written notice served on the
Personnel Policy. employee specifying the ground or grounds for termination, and giving the
In this case, ACC adequately proved that Bandiola was engaged in extra- employee reasonable opportunity to explain his side; and (b) a written notice of
marital affairs. ACC’s evidence consists of sworn statements of either relatives termination served on the employee indicating that upon due consideration of
or friends of Thelma and Bandiola, who had personal knowledge of the illicit all the circumstances, grounds have been established to justify his termination.
relationship. This ground for termination was made known to Bandiola on the The employer must inform the employee of the charges against him and to
first communication made by ACC. He was even directed to explain why he hear his defenses. A full adversarial proceeding is not necessary as the parties
should not be terminated for violation of the Personnel Policy. But Bandiola may be heard through pleadings, written explanations, position papers,
merely denied the accusation against him and did not question the basis of memorandum or oral argument.
such termination. He merely claimed that the Personnel Policy was amended Bandiola was adequately afforded the opportunity to defend himself and
to include the ground for his termination. explain the accusation against him. ACC conducted a preliminary investigation
But the Court found that under the old policy, one of the grounds for and created an Ad Hoc Committee to investigate. He was also allowed to see
termination of an employee is "commission of acts or commission of duties
report of the Ad Hoc Committee and was advised that he was entitled to NLRC: Reversed LA. It noted that Michelle was already penalized for her
assistance of counsel. first 3 absences; hence, these could not be used by Cavite Apparel as bases
It was only after the investigation and proper notice and hearing to Bandiola to impose on her the penalty of dismissal, considering she had worked for
that ACC decided to terminate him, as embodied in a Board Resolution, a the company for 6 years. It likewise considered the penalty of dismissal too
copy of which was furnished to him. With this resolution, Bandiola was severe. The NLRC concluded that Michelle had been illegally dismissed and
adequately notified of ACC’s decision to remove him from his position. The ordered her reinstatement with backwages.
petition is GRANTED. CA affirmed the NLRC. It noted that Michelle submitted a medical certificate
for her May 8, 2000 absence, and thus disregarded Cavite Apparel’s
contrary assertion. They also agreed with the NLRC’s ruling that the penalty
17. Cavite Apparel v. Marquez was too harsh.
Doctrine: Neglect of duty, to be a ground for dismissal, must be both gross and The CA agreed with the NLRC that since Cavite Apparel had already
habitual. Gross negligence implies want of care in the performance of one’s duties. penalized Michelle for her three prior absences, to dismiss her for the same
Habitual neglect imparts repeated failure to perform one’s duties for a period of infractions and for her May 8, 2000 absence was unjust.
time, depending on the circumstances. Before SC, Cavite Apparel argues that Michelle’s penchant for incurring
unauthorized and unexcused absences despite its warning constituted gross
Recit-Ready Digest: Michelle, the employee of Cavite Apparel, incurred four and habitual neglect of duty prejudicial to its business operations. It insists
absences from December 1999 to June 2000. For this, she was fired as a habitual that by going on absence without official leave 4 times, Michelle disregarded
absentee. SC held that 4 absences in 6 years of service cannot be considered company rules and regulations; if condoned, these violations would render
gross and habitual neglect of duty, especially so since the absences were spread the rules ineffectual and would erode employee discipline.
out over a 6-month period. Furthermore, the penalty of dismissal imposed upon
her was too harsh, given that she had only violated company rules those 4 times in Issue: WON Michelle was illegally dismissed.
the past 6 years.
Held: YES, for two reasons: (1) Michelle’s four absences could not be considered
Facts: habitual; and (2) The penalty of illegal dismissal is too harsh.
Cavite Apparel is the employer; Michelle is the employee. She has been
working there for 6 years, starting in 1994. (1) On Michelle’s four absences not being habitual
Prior to her dismissal, Michelle took 3 absences without leave (AWOL); for
the first time (on Dec. 1999), she got a written warning, but for the 2nd and 3rd Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code,
offense (both in 2000), she was suspended and warned. must be both gross and habitual.
The tipping point was the 4th absence: When on May 8, 2000, Michelle got Gross negligence implies want of care in the performance of one’s duties.
sick and did not report for work. When she returned, she submitted a Habitual neglect imparts repeated failure to perform one’s duties for a period
medical certificate. Cavite Apparel, however, denied receipt of the certificate. of time, depending on the circumstances.
o Michelle did not report for work again on May 15-27, 2000 due to
illness. When she reported back to work, she submitted the medical Under the circumstances, Michelle is not guilty of gross and habitual neglect of
certificates. Nonetheless, Cavite Apparel suspended Michelle for 6 duties. Even assuming that she failed to present a medical certificate for her sick
days (June 1-7, 2000). leave on May 8, 2000, the records are bereft of any indication that apart from the 4
When Michelle returned on June 8, 2000, Cavite Apparel terminated her occasions when she did not report for work, Michelle had been cited for any
employment for habitual absenteeism. infraction since she started her employment with the company in 1994. 4 absences
Michelle filed a complaint for illegal dismissal. in her 6 years of service cannot be considered gross and habitual neglect of duty,
LA: Dismissed Michelle’s complaint especially so since the absences were spread out over a 6-month period.
a regular and not a supervisory employee. Moreover, she questioned Valle Verde’s
(2) On illegal dismissal being too harsh failure to comply with procedural requirements.
Although Michelle was fully aware of the company rules regarding leaves of The SC found that Esguerra’s dismissal was valid. There was no procedural defect
absence, and her dismissal might have been in accordance with the rules, SC is because the twin-notice rule was complied with through the issuance of the two
not bound by such rules. SC will not hesitate to disregard a penalty that is memorandums. It is only in the second notice that the intention to terminate one’s
manifestly disproportionate to the infraction committed. employment should be explicitly stated. Moreover, a formal trial-type hearing,
though preferred, is not absolutely necessary. Esguerra was able to present her
Michelle might have been guilty of violating company rules on leaves of absence defenses, and only upon proper consideration of it did Valle Verde send the
and employee discipline, still the penalty of dismissal imposed on her is unjustified second memorandum terminating her employment.
under the circumstances. Michelle had been in Cavite Apparel’s employ for 6
years, with no derogatory record other than the 4 absences without official leave in Moreover, Esguerra occupied a position of trust and confidence. There are 2
question, not to mention that she had already been penalized for the first 3 classes of positions of trust: the first class consists of managerial employees; and
absences, the most serious penalty being a 6-day suspension for her 3rd absence. the second class consists of cashiers, auditors, property custodians or those who,
While previous infractions may be used to support an employee’s dismissal from in the normal and routine exercise of their functions, regularly handle significant
work in connection with a subsequent similar offense, penalties must still be amounts of money or property. Since her position as Cost Control Superviser
commensurate to the offense involved and to the degree of the infraction. involves the duty to remit to the accounting department the cash sales proceeds
from every transaction she was assigned to, she belongs to the second class of
employees. Breach of trust is a valid ground for termination for such employees.
18. Esguerra v. Valle Verde, June 13, 2012 The act complained of must be related to the performance of the duties of the
G.R. No. 173012, June 13, 2012 dismissed employee and must show unfitness to continue working for the
employer for violation of the trust.
Doctrine
Loss of confidence as a just cause for termination of employment can be invoked In this case, Esguerra blaming her daughter for the lost amount; her failure to
when an employee holds a position of responsibility, trust and confidence. The act report the missing amount and paying it only after the accounting department
complained of must be related to the performance of the duties of the dismissed informed her reflects her irresponsibility. Moreover, it is highly unethical for an
employee and must show that he or she is unfit to continue working for the employee to bring home food intended to be sold to customers.
employer for violation of the trust reposed in him or her.
Recit-Ready Digest FACTS:

Esguerra, a Cost Control Supervisor, was dismissed from her employment at Valle Valle Verde hired Esguerra as Head Food Checker. In 1999, she was promoted to
Verde for failing to remit the proceeds of the sales of food in one of the function Cost Control Supervisor.
rooms she was supposed to oversee. She was sent a memorandum requiring her
to show cause why no disciplinary action should be taken against her, and was On January 15, 2000, the Couples for Christ held a seminar at the country club.
sent a second memorandum declaring her dismissal, after Valle Verde found Esguerra was tasked to oversee the seminar held in the two function rooms. The
Esguerra’s letter-response unsatisfactory. She filed an illegal dismissal complaint, management found out the next day that only the proceeds from one room were
which was dismissed by the Labor Arbiter. Such dismissal was also affirmed by the remitted to the accounting department. There were also unauthorized charges of
NLRC and the CA. Before the SC, Esguerra argued that she could not be food on the account of Judge Rodolfo Bonifacio, one of the participants. To resolve
dismissed based on the ground of loss of trust and confidence since she was only the issue, Valle Verde conducted an investigation; the employees who were
assigned in the two function rooms were summoned and made to explain, in
writing, what had transpired. Valle Verde sent a memorandum to Esguerra To meet the requirements of due process in the dismissal of an employee, an
requiring her to show cause as to why no disciplinary action should be taken employer must furnish the worker with two written notices: (1) a written notice
against her for the non-remittance of the Ballrooms sales. Esguerra was placed specifying the grounds for termination and giving to said employee a reasonable
under preventive suspension with pay, pending investigation. opportunity to explain his side and (2) another written notice indicating that, upon
due consideration of all circumstances, grounds have been established to justify
In her letter-response, Esguerra denied having committed any misappropriation. the employers decision to dismiss the employee.
She explained that it had been her daughter (who was assigned as a food
checker) who lost the money. To settle the matter, Esguerra paid the unaccounted Contrary to Esguerras allegation, the law does not require that an intention to
amount as soon as her daughter informed her about it. Esguerra also alleged that terminate ones employment should be included in the first notice. It is enough that
Judge Bonifacio took pity on her and told her to take home some food and to employees are properly apprised of the charges brought against them so they can
charge it on his account. properly prepare their defenses; it is only during the second notice that the
intention to terminate ones employment should be explicitly stated.
Valle Verde found Esguerras explanation unsatisfactory and, on July 26, 2000,
issued a second memorandum terminating Esguerras employment. As regards the hearing requirement, the following principles were laid down in
jurisprudence:
Esguerra filed a complaint with NLRC for illegal dismissal. The LA dismissed the
complaint, and the NLRC affirmed the same. The CA denied Esguerra’s petition for a) "ample opportunity to be heard" means any meaningful
certiorari, as well as her MR. opportunity (verbal or written) given to the employee to answer
the charges against him and submit evidence in support of his
Before the SC, Esguerra argued that the appellate court erred in ruling that she defense, whether in a hearing, conference or some other fair,
had been validly dismissed on the ground of loss of trust and confidence. She just and reasonable way.
alleges that she was only a regular employee and did not occupy a supervisory
position vested with trust and confidence. Esguerra also questions the manner of b) a formal hearing or conference becomes mandatory only
dismissal since Valle Verde failed to comply with procedural requirements. when requested by the employee in writing or substantial
evidentiary disputes exist or a company rule or practice
ISSUE: requires it, or when similar circumstances justify it.
W/N she was validly dismissed.
c) the "ample opportunity to be heard" standard in
HELD: the Labor Code prevails over the "hearing or conference"
YES. requirement in the implementing rules and regulations.
Under the Labor Code, not only must the dismissal be for a just or authorized
cause, the rudimentary requirements of due process notice and hearing must,
likewise, be observed. Without the concurrence of the two, the termination would The existence of an actual, formal "trial-type" hearing, although preferred, is not
be illegal. absolutely necessary. Esguerra was able to present her defences, and only upon
proper consideration of it did Valle Verde send the second memorandum
There was valid notice and hearing. The memorandum informed her of the terminating her employment. No procedural defect exists in Esguerras termination.
charges, and clearly directed her to show cause, in writing, why no disciplinary
action should be imposed against her. Esguerras allegation that the notice was Moreover, Esguerra occupied a position of trust and confidence. There are 2
insufficient since it failed to contain any intention to terminate her is incorrect. classes of positions of trust: the first class consists of managerial employees, or
those vested with the power to lay down management policies; and the second
class consists of cashiers, auditors, property custodians or those who, in the G.R. NO. 72303. June 6, 2011)
normal and routine exercise of their functions, regularly handle significant amounts By: M. Kalaw
of money or property.
DOCTRINE: Termination of Employment; Serious Misconduct; A series of
Esguerra, being a Cost Control Supervisor, had the duty to remit to the accounting irregularities when put together may constitute serious misconduct, which under
department the cash sales proceeds from every transaction she was assigned to. Article 282 is a just cause for dismissal. Caragdag’s dismissal being due to serious
This is not a routine task that a regular employee may perform; it is related to the misconduct, it follows that he should not be entitled to financial assistance. To rule
handling of business expenditures or finances. Thus, Esguerra occupies a position otherwise would be to reward him for the grave misconduct he committed. We
of trust and confidence of the second class. must emphasize that social justice is extended only to those who deserve its
compassion.
Loss of confidence as a just cause for termination of employment can be invoked
when an employee holds a position of responsibility, trust and confidence. The act RECIT READY:
complained of must be related to the performance of the duties of the dismissed Two consolidated petitions under Rule 45. The first assails the CA Resolutions
employee and must show that he or she is unfit to continue working for the which dismissed petitioner’s petition for review at the CA for being the wrong
employer for violation of the trust reposed in him or her. remedy. The second petition (172303), assails the Decision of the CA
modifying the judgment of the Voluntary Arbitrator.
There is no merit in the allegation that it was Esguerra’s daughter who should be
held liable. The daugher had no custody of the cash sales since it was not part of Caragdag was a waiter of Hyatt‘s Café Al Fresco and a union director. In the
her duties as a food checker. It was Esguerra’s responsibility to account for the short period from Feb 3 to March 2, 2001, he committed 4 infractions (two
cash proceeds; in case of problems, she should have promptly reported it, episodes for refusing to be frisked by hotel security despite management
regardless of who was at fault. Instead, she settled the unaccounted amount only memorandum, once for leaving his assignment without permission, and
after the accounting department informed her about the discrepancy, almost one another for intimidating his superior), and was penalized by the Hotel‘s Code
month following the incident. Esguerra’s failure to make the proper report reflects of Discipline with suspension. Additionally, because of the successive
on her irresponsibility in the custody of cash for which she was accountable. infractions in less than a span of 12 months, another provision of the COD was
violated, warranting his dismissal. His dismissal was questioned by the Union.
Esguerra’s explanation about the unauthorized charging on Judge Bonifacios The Voluntary Arbitrator ruled that the suspensions and dismissal were valid,
account cannot be favored. It is highly unethical for an employee to bring home but for humanitarian considerations, awarded Caragdag with financial
food intended to be sold to customers. At any rate, her explanation is self-serving assistance of 100k. MRs from both parties denied by the VA, the matter was
and cannot be believed; the numerous written testimonies of the other co-workers raised via petition to the CA. The Union’s R65 was dismissed for being the
never even mentioned it. wrong remedy and for being filed out of time. Hyatt’s petition for review (43)
was to whether or not the award of financial assistance was valid. The CA
PETITION DENIED. modified the VA decision by deleting the financial assistance. Thus, the
Union’s petitions to the SC. The Court ruled that because Caragdag‘s
dismissal was due to serious misconduct, he should not be entitled to financial
19. SAMASAH-NUWHRAIN v. VA Magsalin and Hotel Enterprises of the assistance. To rule otherwise would be to reward him for the grave misconduct
Philippines, Inc. he committed. Social justice is extended only to those who deserve its
G.R. No. 164939. June 6, 2011 compassion.
(Consolidated with:
SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), FULL DIGEST:
petitioner, vs. HOTEL ENTERPRISES OF THE PHILIPPINES, INC., respondent
FACTS: 4th INCIDENT: Still later, on March 2, 2001, at 9:35 a.m., Caragdag left his
1st & 2nd INCIDENT: On Jan 31, 2001, Hyatt‘s General Manager David C. work assignment during official hours without prior permission from his
Pacey issued a Memorandum informing all hotel employees that hotel security Department Head. He was required to submit an explanation, but the
have been instructed to conduct a thorough bag inspection and body frisking in explanation he submitted was found unsatisfactory. On March 17, 2001, Moral
every entrance and exit of the hotel.  On Feb 3, 2001, Angelito Caragdag, a found Caragdag liable for violating OSDA 3.07, i.e., ―leaving work
waiter at the hotel‘s Café Al Fresco and a director of the union, refused to be assignment during official working hours without prior permission from the
frisked by the security personnel. The incident was reported to HR, which department head or immediate superior, and suspended him for three days.
issued a Memo on Feb 5 requiring him to explain why no disciplinary action DISMISSAL. Because of the succession of infractions he committed, HR also
should be taken against him. The following day (Feb 6), Caragdag again required Caragdag to explain why the hotel‘s OSDA 4.32 (Committing offenses
refused to be frisked by the security personnel. Thus on Feb 8, HR issued which are penalized with three [3] suspensions during a 12-month period)
another Memo requiring him to explain. On Feb 14, HR imposed on Caragdag should not be enforced against him. An investigation board was formed but
the penalty of reprimand for the Feb 3 incident which was considered a first despite notice of the scheduled hearing, both Caragdag and the Union
offense and suspended him for 3 days for the Feb 6 incident, which was President failed to attend. Thereafter, the investigating board resolved to
considered a second offense, both in accordance with the hotel‘s Code of dismiss Caragdag for violation of OSDA 4.32. On June 1, 2001, the hotel,
Discipline.  through Atty. Juancho A. Baltazar, sent Caragdag a Notice of Dismissal.
3rd INCIDENT: Subsequently, on Feb 22, when Mike Moral, manager of Café Caragdag‘s dismissal was questioned by Samahan, and the dispute was
Al Fresco and Caragdag‘s immediate supervisor, was about to counsel two referred to voluntary arbitration upon agreement of the parties.
staff members, Larry Lacambacal and Allen Alvaro, at the training room, Voluntary Arbitrator. VA Magsalin ruled that the suspensions and the
Caragdag suddenly opened the door and yelled at the 2 with an enraged look. dismissal were VALID as union officers and members had no right to breach
In a disturbing voice he said: ―ANG TITIGAS NG ULO NIYO SINABI KO NA company rules and regulations on security and employee discipline on the
SA INYO NA HUWAG KAYONG MAKIKIPAGUSAP SA MANAGEMENT basis of certain suspicions against management and an ongoing CBA
HABANG ONGOING ANG KASO!‖ Moral asked Caragdag what the problem negotiation standoff. VA said that Carandang also threatened and intimidated
was and informed him that he was simply talking to his staff. Moral also told his superior while the latter was performing his duties. There is also reason
Caragdag that he did not have the right to interrupt and intimidate him during why Carandang didn’t arrange for arranging proper time-off with his superior.
his counseling session with his staff. On Feb 23, Moral issued a Memo BUT, for humanitarian considerations (no explanation given), the VA ordered
requiring Caragdag to explain his actions in the training room. Caragdag Hyatt to grant financial assistance to Caragdag in the amount of P100,000.
submitted his written explanation narrating that he was informed by someone Union filed for MR. Hyatt filed for partial reconsideration. Both denied.
that Lacambacal and Alvaro were requesting for his assistance because Moral CA. Samahan assailed the decision of the Voluntary Arbitrator before the CA
had invited them to the training room. Believing that he should advise the two in a petition for  certiorari. CA dismissed the petition for being the wrong
that they should be accompanied by a union officer to any inquisition, he went remedy.  Union filed on 43 as to deletion of award of financial assistance,
to the training room. However, before he could enter the door, Moral blocked which was granted. The CA cited the case of Philippine Commercial
him. Thus he told Lacambacal and Alvaro that they should be assisted by a International Bank v. Abad, which held that the grant of separation pay or
union representative before giving any statement to management. Caragdag other financial assistance to an employee dismissed for just cause is based on
also prayed that Moral be investigated for harassing union officers and union equity and is a measure of social justice, awarded to an employee who has
members. On Feb 28, Moral found the explanations unsatisfactory. He held been validly dismissed if the dismissal was not due to serious misconduct or
Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01 of the causes that reflected adversely on the moral character of the employee. In this
hotel‘s Code of Discipline, i.e. ―threatening, intimidating, coercing, and case, the CA agreed with the findings of the Voluntary Arbitrator that Caragdag
provoking to a fight your superior for reasons directly connected with his was validly dismissed due to serious misconduct. Accordingly, financial
discharge of official duty. Thus, Caragdag was imposed the penalty of seven assistance should not have been awarded to Caragdag. The CA also noted
days suspension. that it is the employer’s prerogative to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or concern, to employer. The Voluntary Arbitrator pointed out that according to the hotel‘s
provide certain disciplinary measures to implement said rules and to ensure Code of Discipline, an employee who commits three different acts of
compliance therewith. misconduct within a twelve (12)-month period commits serious
misconduct. Caragdag‘s infractions were not even spread in a period of
ISSUES: twelve (12) months, but rather in a period of a little over a month. Records
show the various violations of the hotel‘s rules and regulations were
(1) UNION: Whether or not petition for certiorari is an improper mode of committed by Caragdag. He was suspended for violating the hotel policy
appeal.   (YES) on bag inspection and body frisking. He was likewise suspended for
(2) HYATT: Whether or not the award of financial assistance for humanitarian threatening and intimidating a superior while the latter was counseling his
considerations was valid.   (NO) staff. He was again suspended for leaving his work assignment without
permission. Evidently, Caragdag‘s acts constitute serious misconduct.  
In Piedad v. Lanao del Norte Electric Cooperative, Inc., we ruled that a
HELD: series of irregularities when put together may constitute serious
misconduct, which under Article 282 of the Labor Code, as amended, is a
(1) Yes. Should be 43. In the case of Samahan v. Bacungan, we repeated just cause for dismissal.  
the well-settled rule that a decision  or award of a voluntary arbitrator is Caragdag‘s dismissal being due to serious misconduct, it follows that he
appealable to the CA via petition for review under  Rule 43 of the 1997 Rules should not be entitled to financial assistance. To rule otherwise would be
of Civil Procedure.   Hence, upon receipt of the Voluntary Arbitrator‘s to reward him for the grave misconduct he committed. We must
Resolution denying petitioner‘s motion  for reconsideration, petitioner should emphasize that social justice is extended only to  those who deserve its
compassion.
have filed with the CA, within the fifteen (15)-day  reglementary period, a
petition for review, not a petition for certiorari.   Petitioner insists on a liberal PETITIONS FOR REVIEW ON CERTIORARI DENIED.
interpretation of the rules but we find no cogent reason in  this case to deviate
from the general rule.  
20. Lopez v. Alturas Group of Companies, April 11, 2011
(2) No. The grant of separation pay or some other financial assistance to an DOCTRINE
employee dismissed for just causes is based on equity.  In PLDT v. NLRC, we - Dismissals have two facets: the legality of the act of dismissal, which
ruled that severance compensation, or whatever name it is called, on the constitutes substantive due process, and the legality of the manner of
ground of social justice shall be allowed only when the cause of the dismissal dismissal which constitutes procedural due process.
is other than serious misconduct or for causes which reflect adversely on the - the quantum of evidence of loss of trust and confidence: the loss of trust and
employee‘s moral character. Where the reason for the valid dismissal is, for confidence must be based on willful breach of the trust reposed in the
example, habitual intoxication or an offense involving moral turpitude, like theft employee by his employer. Moreover, it must be based
or illicit sexual relations with a fellow worker, the employer may not be required on substantial evidence . In order to constitute a just cause for dismissal, the
to give the dismissed employee separation pay, or financial assistance, or act complained of must be work-related and shows that the employee
whatever other name it is called, on the ground of social justice. A contrary concerned is unfit to continue working for the employer. In addition, loss of
rule would, as the petitioner correctly argues, have the effect, of rewarding confidence as a just cause for termination of employment is premised on the
rather than punishing the erring employee for his offense.   fact that the employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with confidence with
Here, Caragdag‘s dismissal was due to several instances of willful respect to delicate matters, such as the handling or care and protection of the
disobedience to the reasonable rules and regulations prescribed by his
property and assets of the employer. The betrayal of this trust is the essence Petitioner, in compliance with the Show Cause Notice, denied the
of the offense for which an employee is penalized. allegations by a handwritten explanation written in the Visayan dialect.
- to comply with the due process requirement: After receiving the first notice Finding petitioners explanation unsatisfactory, respondent company
apprising him of the charges against him, the employee may submit a written terminated his employment by Notice of Termination on the grounds of
and offer evidence in support thereof, like relevant company and the sworn loss of trust and confidence, and of violation of company rules and
statements of his witnesses. For this purpose, he may prepare his explanation regulations.
personally or with the assistance of a representative or counsel. He may also In issuing the Notice, respondent also took into account the result of an
ask the employer to provide him copy of records material to his defense. His investigation showing that petitioner had been smuggling out its cartons
written explanation may also include a request that a formal hearing or which he had sold, in conspiracy with one Alaba, for his own benefit to
conference be held. In such a case, the conduct of a formal hearing or thus prompt it to file a criminal case for Qualified Theft
conference becomes mandatory, just as it is where there exist substantial Petitioner filed a case for illegal dismissal and underpayment of wages. He
evidentiary disputes or where company rules or practice requires an actual claimed that the smuggling charge against him was fabricated to justify his
hearing as part of employment pretermination procedure. illegal dismissal; that the filing of the charge came about after he reported
the loss of the original copy of his pay slip, which report, he went on to
RECIT READY: Lopez was a truck driver of respondent. He was dismissed after claim, respondent company took to mean that he could use the pay slip as
he was allegedly caught smuggling out company’s scrap iron. Respondent issued evidence for filing a complaint for violation of labor laws; and that on
a show cause notice, to which Lopez replied (handwritten letter) and denied the account of the immediately stated concern of respondent, it forced him into
allegations. Respondent found the explanation unsatisfactory and terminated his executing an affidavit that if the pay slip is eventually found, it could not be
employment by Notice of Termination on the grounds of loss of confidence and used in any proceedings between them.
trust, taking into account that a criminal case for qualified theft was filed against LA: pendency of the criminal case involving the scrap iron did not warrant
Lopez for smuggling out its cartons . Lopez filed an illegal dismissal case. The SC the suspension of the proceedings before him, held that petitioners
ruled that Lopez was validly dismissed because of the compliance with substantive dismissal was justified, for he, a truck driver, held a position of trust and
and procedural due process. As to substantive due process, company’s loss of confidence, and his act of stealing company property was a violation of the
trust and confidence arising from petitioners smuggling out of the scrap iron, trust reposed upon him
compounded by his past acts of unauthorized selling cartons belonging to NLRC: reversed. Respondent’s evidence did not suffice to warrant the
respondent company, constituted just cause for terminating his services. As to termination of petitioners services; and that petitioners alleged admission
procedural due process, Lopez was given the opportunity to explain his side when of taking the scrap iron was belied by his vehement denial, as even the
he was informed of the charge against him and required to submit his written security guard, one Gerardo Luega, who allegedly witnessed the
explanation with which he complied. It was error for the NLRC to opine that asportation and before whom the alleged admission was made, did not
petitioner should have been afforded counsel or advised of the right to even execute an affidavit in support thereof.
counsel. The right to counsel and the assistance of one in investigations involving o petitioner should have been afforded, or at least advised of the
termination cases is neither indispensable nor mandatory, except when the right to counsel. It thus held that any evaluation which was based
employee himself requests for one or that he manifests that he wants a formal only on the explanation to the show-cause letter and any so-called
hearing on the charges against him. investigation but without confrontation of the vital witnesses, does
not suffice.
FACTS: CA: the evidence supporting the criminal charge, found after preliminary
Petitioner was hired by respondent in 1997 as truck driver investigation is sufficient to show prima facie guilt, which constitutes just
Ten years later, he was dismissed after he was allegedly caught by cause for [petitioners dismissal] based on loss of trust and confidence; and
respondents security guard in the act of attempting to smuggle out of the that petitioners subsequent acquittal in the criminal case did not
company premises 60 kilos of scrap iron
automatically preclude a determination that he is guilty of acts inimical to ground for his dismissal his attempt to smuggle out the scrap iron belonging to
the employers interest resulting in loss of trust and confidence respondent company, the same is undoubtedly work-related.
o Albeit the appellate court found that petitioners dismissal was for a Procedural Due Process
just cause, it held that due process was not observed when Procedural due process has been defined as giving an opportunity to be
respondent company failed to give him a chance to defend his heard before judgment is rendered. Perez v. Philippine Telegraph and Telephone
side in a proper hearing thus pay nominal damages Company illuminates on the correct proceedings to be followed therein in order to
comply with the due process requirement: After receiving the first notice apprising
ISSUE: W/N Lopez was validly dismissed-- YES him of the charges against him, the employee may submit a written
explanation (which may be in the form of a letter, memorandum, affidavit or
HELD: position paper) and offer evidence in support thereof, like relevant company
Dismissals have two facets: the legality of the act of dismissal, which constitutes records and the sworn statements of his witnesses. For this purpose, he may
substantive due process, and the legality of the manner of dismissal which prepare his explanation personally or with the assistance of a representative or
constitutes procedural due process. counsel. He may also ask the employer to provide him copy of records material to
his defense. His written explanation may also include a request that a formal
On Substantive Due Process hearing or conference be held. In such a case, the conduct of a formal hearing or
As to substantive due process, the Court finds that respondent companys conference becomes mandatory, just as it is where there exist substantial
loss of trust and confidence arising from petitioners smuggling out of the scrap evidentiary disputes or where company rules or practice requires an actual hearing
iron, conpounded by his past acts of unauthorized selling cartons belonging to as part of employment pretermination procedure.
respondent company, constituted just cause for terminating his services. Loss of Petitioner was given the opportunity to explain his side when he was
trust and confidence as a ground for dismissal of employees covers employees informed of the charge against him and required to submit his written explanation
occupying a position of trust who are proven to have breached the trust and with which he complied. That there might have been no hearing is of no moment,
confidence reposed on them. as long as he was given a chance to explain his side of the controversy.
In Cruz v. CA, the Court explained the quantum of evidence of loss of trust The right to counsel and the assistance of one in investigations involving
and confidence: termination cases is neither indispensable nor mandatory, except when the
- loss of trust and confidence must be based on willful breach of the employee himself requests for one or that he manifests that he wants a formal
trust reposed in the employee by his employer. hearing on the charges against him. In petitioners case, there is no showing that
- it must be based on substantial evidence he requested for a formal hearing to be conducted or that he be assisted by
- the act complained of must be work-related and shows that the counsel.
employee concerned is unfit to continue working for the employer. As for the subsequent dismissal of the criminal cases filed against
- In addition, loss of confidence as a just cause for termination of petitioner, criminal and labor proceedings are distinct and separate from each
employment is premised on the fact that the employee concerned other. Each requires a different quantum of proof, arising though they are from the
holds a position of responsibility, trust and confidence or that the same set of facts or circumstances.
employee concerned is entrusted with confidence with respect to
delicate matters, such as the handling or care and protection of the
property and assets of the employer. 21. Puncia v. Toyota Shaw
Petitioner, a driver assigned with a specific vehicle, was entrusted with the DOCTRINE: Procedural due process requirements for termination of employment
transportation of respondent companys goods and property, and consequently with due to just cause:
its handling and protection, hence, even if he did not occupy a managerial position, (1) The first written notice to be served on the employees should
he can be said to be holding a position of responsibility. As to his actprincipal contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to submit their
written explanation within a reasonable period. "Reasonable opportunity" violations of the company rules on attendance from 2006 to 2010 and his failure to
under the Omnibus Rules means every kind of assistance that meet the required monthly quota. NLRC: reversed the LA ruling and, accordingly,
management must accord to the employees to enable them to prepare declared Puncia to have been illegally dismissed and that Toyota did not comply
adequately for their defense. This should be construed as a period of at with due process requirements. CA: Set aside NLRC ruling saying there was just
least five (5) calendar days from receipt of the notice to give the cause for termination. SC: Toyota complied with substantive due process because
employees an opportunity to study the accusation against them, consult a there was just cause for dismissal, however, it was not able to comply with
union official or lawyer, gather data and evidence, and decide on the procedural due process. Puncia miserably failed in satisfying his monthly sales
defenses they will raise against the complaint. Moreover, in order to quota, only selling a measly 5 vehicles out of the 34 he was required to sell over
enable the employees to intelligently prepare their explanation and the course of said period this is tantamount to gross inefficiency which is
defenses, the notice should contain a detailed narration of the facts analogous to gross neglect of duty and therefore a just cause for termination. In
and circumstances that will serve as basis for the charge against the violating procedural due process, Toyota afforded Puncia the opportunity to refute
employees. A general description of the charge will not suffice. the charge of gross inefficiency against him, however, the latter was completely
Lastly, the notice should specifically mention which company rules, if any, deprived of the same when he was dismissed for gross insubordination.
are violated and/or which among the grounds under Art. 282 is being
charged against the employees. FACTS:
Puncia alleged that since 2004, he worked as a messenger/collector for
(2) After serving the first notice, the employers should schedule and Toyota and was later on appointed as a Marketing Professional tasked to
conduct a hearing or conference wherein the employees will be given the sell 7 vehicles as monthly quota.
opportunity to: (1) explain and clarify their defenses to the charge against However, Puncia failed to comply and sold only one 1 vehicle for the
them; (2) present evidence in support of their defenses; and (3) rebut the month of July and none for August, prompting Toyota to send him a Notice
evidence presented against them by the management. During the hearing to Explain. In reply, Puncia stated that as a trainee, he was only required
or conference, the employees are given the chance to defend themselves to sell three 3 vehicles per month; that the month of May has always been
personally, with the assistance of a representative or counsel of their a lean month; and that he was able to sell four 4 vehicles in the month of
choice. Moreover, this conference or hearing could be used by the parties September. Thereafter, a hearing was conducted but Puncia failed to
as an opportunity to come to an amicable settlement. appear despite notice.
Toyota sent him a Notice of Termination, dismissing him on the ground of
(3) After determining that termination of employment is justified, the insubordination for his failure to attend the scheduled hearing and justify
employers shall serve the employees a written notice of termination his absence.
indicating that: (1) all circumstances involving the charge against the Puncia files a complaint for illegal dismissal with prayer for reinstatement
employees have been considered; and (2) grounds have been and payment of backwages, unfair labor practice, damages, and attorney's
established to justify the severance of their employment. fees against Toyota and its officers, claiming that Toyota dismissed him
after discovering that he was a director of the Toyota-Shaw Pasig Workers
Union-Automotive Industry Worker's Alliance; and that he was terminated
RECIT READY: Puncia failed to comply with his sales quota of 7 vehicles per on the ground of insubordination and not due to his failure to meet his
month. Toyota sent him a notice of termination dismissing him on the ground of quota as contained in the Notice to Explain.
insubordination for his failure to attend the scheduled hearing to justify his Toyota denied the charges and claimed that there was a valid cause to
absence. Puncia files a complaint illegal dismissal claiming that he was dismissed dismiss Puncia, considering his failure to comply with the company's strict
because Toyota found out he was the director of the Union. LA: Found that Puncia requirements on sales quota. It likewise stated that Puncia has
was dismissed not because of his involvement in the labor union, but was consistently violated the company rules on attendance and timekeeping as
terminated for a just cause due to his inefficiency brought about by his numerous several disciplinary actions were already issued against him.
LA: dismissed Puncia's complaint, but nevertheless, ordered Toyota to pay perform his duties -i.e., reaching his monthly sales quota - for such a
Puncia his money claims consisting of his earned commissions, 13th period of time falls under the concept of gross inefficiency.
month pay for 2011, sick leave, and vacation leave benefits. Found that Case law instructs that "gross inefficiency" is analogous to "gross neglect
Puncia was dismissed not because of his involvement in the labor union, of duty," a just cause of dismissal under Article 297 of the Labor Code, for
but was terminated for a just cause due to his inefficiency brought about both involve specific acts of omission on the part of the employee resulting
by his numerous violations of the company rules on attendance from 2006 in damage to the employer or to his business. In Aliling v. Feliciano, the
to 2010 and his failure to meet the required monthly quota. Court held that an employer is entitled to impose productivity standards for
NLRC: reversed the LA ruling and, accordingly, declared Puncia to have its employees, and the latter's non-compliance therewith can lead to his
been illegally dismissed by Toyota, thus, entitling him to reinstatement and termination from work, viz.:
backwages. Toyota also did not comply with due process requirements. The practice of a company in laying off workers because they failed to
CA: set aside the NLRC ruling and reinstating that of the LA. It held that make the work quota has been recognized in this jurisdiction, x x x. In the
Toyota was able to present substantial evidence in support of its case at bar, the petitioners' failure to meet the sales quota assigned
contention that there was just cause in Puncia's dismissal from to each of them constitute a just cause of their dismissal, regardless
employment and that it was done in compliance with due process, of the permanent or probationary status of their employment. Failure to
considering that: (a) Puncia's repeated failure to meet his sales quota observe prescribed standards of work, or to fulfill reasonable work
constitutes gross inefficiency and gross neglect of duties; and (b) Puncia assignments due to inefficiency may constitute just cause for
was afforded due process as he was able to submit a written explanation dismissal. Such inefficiency is understood to mean failure to attain
within the period given to him by Toyota. work goals or work quotas, either by failing to complete the same
within the allotted reasonable period, or by producing unsatisfactory
ISSUES: results
1. WON Puncia was dismissed from employment for just cause. Thus, Toyota was able to comply with the substantive due process
because there was just cause for dismissal, however, it was not able to
HELD: comply with procedural due process.
It is settled that "for a dismissal to be valid, the rule is that the employer For termination due to just cause the following procedure should be
must comply with both substantive and procedural due process followed:
requirements. Substantive due process requires that the dismissal must be (1) The first written notice to be served on the employees should
pursuant to either a just or an authorized cause under Articles 297, 298 or contain the specific causes or grounds for termination against them,
299 of the Labor Code. Procedural due process, on the other hand, and a directive that the employees are given the opportunity to submit their
mandates that the employer must observe the twin requirements of notice written explanation within a reasonable period. "Reasonable opportunity"
and hearing before a dismissal can be effected." under the Omnibus Rules means every kind of assistance that
records reveal that as a Marketing Professional, Puncia had a monthly management must accord to the employees to enable them to prepare
sales quota of 7 vehicles from March 2011 to June 2011. As he was adequately for their defense. This should be construed as a period of at
having trouble complying with said quota, Toyota even extended him a least five (5) calendar days from receipt of the notice to give the
modicum of leniency by lowering his monthly sales quota to just three 3 employees an opportunity to study the accusation against them, consult a
vehicles for the months of July and August 2011; but even then, he still union official or lawyer, gather data and evidence, and decide on the
failed to comply. defenses they will raise against the complaint. Moreover, in order to
In that six 6-month span, Puncia miserably failed in satisfying his monthly enable the employees to intelligently prepare their explanation and
sales quota, only selling a measly 5 vehicles out of the 34 he was required defenses, the notice should contain a detailed narration of the facts
to sell over the course of said period. Verily, Puncia's repeated failure to and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if any, Doctrine: In terminating the employment of an employee by enforcing the union
are violated and/or which among the grounds under Art. 282 is being security clause, the employer needs only to determine and prove that: (1) the
charged against the employees. union security clause is applicable; (2) the union is requesting for the enforcement
of the union security provision in the CBA; and (3) there is sufficient evidence to
(2) After serving the first notice, the employers should schedule and support the unions decision to expel the employee from the union. These
conduct a hearing or conference wherein the employees will be given the requisites constitute just cause for terminating an employee based on the CBAs
opportunity to: (1) explain and clarify their defenses to the charge against union security provision.
them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management. During the hearing Recit-ready: Petitioner Alabang Country Club, Inc. (Club) and Alabang Country
or conference, the employees are given the chance to defend themselves Club Independent Employees Union (Union) entered into a CBA, which provided
personally, with the assistance of a representative or counsel of their for a union shop and maintenance of membership shop. The Union discovered
choice. Moreover, this conference or hearing could be used by the parties some irregularly recorded entries, unaccounted expenses and disbursements, and
as an opportunity to come to an amicable settlement. uncollected loans from the Union funds by respondents Pizarro, Braza, and
Castueras, who were the previous set of Union officers. Despite their explanations,
(3) After determining that termination of employment is justified, the respondents Pizarro, Braza, and Castueras were expelled from the Union.
employers shall serve the employees a written notice of termination Invoking the Security Clause of the CBA, the Union demanded that the Club
indicating that: (1) all circumstances involving the charge against the dismiss respondents Pizarro, Braza, and Castueras in view of their expulsion from
employees have been considered; and (2) grounds have been the Union. The respondents question the lawfulness of their dismissal from the
established to justify the severance of their employment. Club. The SC held that: (1) there is sufficient cause for the respondents’
employment termination, and (2) respondents were afforded due process.
A closer look at the records reveals that in the Notice to Explain, Puncia
was being made to explain why no disciplinary action should be imposed Basis of the SC ruling: One cause for termination is dismissal from employment
upon him for repeatedly failing to reach his monthly sales quota, which act, due to the enforcement of the union security clause in the CBA. Here, Art. II of the
as already adverted to earlier, constitutes gross inefficiency. On the other CBA on Union security contains the provisions on the Union shop and
hand, a reading of the Notice of Termination shows that Puncia was maintenance of membership shop.
dismissed not for the ground stated in the Notice to Explain, but for gross
insubordination on account of his non-appearance in the scheduled There is union shop when all new regular employees are required to join the union
October 17, 2011 hearing without justifiable reason. In other words, while within a certain period as a condition for their continued employment. There is
Toyota afforded Puncia the opportunity to refute the charge of gross maintenance of membership shop when employees who are union members as of
inefficiency against him, the latter was completely deprived of the same the effective date of the agreement, or who thereafter become members, must
when he was dismissed for gross insubordination - a completely different maintain union membership as a condition for continued employment until they are
ground from what was stated in the Notice to Explain. As such, Puncia's promoted or transferred out of the bargaining unit or the agreement is terminated.
right to procedural due process was violated.
In terminating the employment of an employee by enforcing the union security
clause, the employer needs only to determine and prove that: (1) the union
Union Security Clause security clause is applicable; (2) the union is requesting for the enforcement of the
22. Alabang Country Club v. NLRC union security provision in the CBA; and (3) there is sufficient evidence to support
G.R. No. 170287 the unions decision to expel the employee from the union. These requisites
Feb. 14, 2008 constitute just cause for terminating an employee based on the CBAs union
security provision.
Respondents were expelled from and by the Union after due investigation for acts In a letter dated October 18, 2001, the Union, invoking the Security
of dishonesty and malversation of Union funds. In accordance with the CBA, the Clause of the CBA, demanded that the Club dismiss respondents
Union properly requested the Club to enforce the Union security provision in their Pizarro, Braza, and Castueras in view of their expulsion from
CBA and terminate said respondents. Then, in compliance with the Union’s the Union.
request, the Club reviewed the documents submitted by the Union, requested said The Club required respondents to show cause in writing within 48 hours
respondents to submit written explanations, and thereafter afforded them from notice why they should not be dismissed.
reasonable opportunity to present their side. After it had determined that there was Respondents submitted their written explanations.
sufficient evidence that said respondents malversed Union funds, the Club After a few days from submission, the Club’s general manager called
dismissed them from their employment conformably with Sec. 4(f) of the CBA. respondents for an informal conference inquiring about the charges
against them. Said respondents gave their explanation and asserted that
Facts: the Union funds allegedly malversed by them were even over the total
Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit amount collected during their tenure as Union officers. They claimed the
corporation with principal office at Country Club Drive, Ayala charges are baseless.
Alabang, Muntinlupa City. Alabang Country Club Independent Employees The general manager announced he would conduct a formal investigation.
Union (Union) is the exclusive bargaining agent of the Club’s rank-and-file Nonetheless, after weighing the verbal and written explanations of the
employees. three respondents, the Club concluded that respondents failed to refute
In April 1996, respondents Christopher Pizarro, Michael Braza, and the validity of their expulsion from the Union. Thus, it was constrained to
Nolasco Castueras were elected Union President, Vice-President, and terminate the employment of said respondents.
Treasurer, respectively. On December 26, 2001, said respondents received their notices of
In June 1999, the Club and the Union entered into a CBA, which provided termination from the Club.
for a union shop and maintenance of membership shop. Moreover, Sec. 4 Respondents challenged their dismissal from the Club in an illegal
of the said CBA, entitled “TERMINATION UPON UNION DEMAND,” dismissal complaint filed with the NLRC.
provides that upon written demand of the Union and after observing due The LA ruled in favor of the Club, and found that there was justifiable
process, the Club shall dismiss a regular rank-and-file employee on any of cause in terminating said respondents.
the given 8 grounds, one of which is malversation of union funds. The NLRC granted respondents’ appeal. It held that the dismissal is illegal
In July 2001, an election was held and a new set of officers was elected. and ordered that the respondents be reinstated to their former positions
The new officers conducted an audit of the Union funds. without loss of seniority rights and other privileges with full backwages
They discovered some irregularly recorded entries, unaccounted expenses from the time they were dismissed up to their actual reinstatement.
and disbursements, and uncollected loans from the Union funds. o Relying heavily on Sec. 2, Rule XVIII of the Rules Implementing
The Union notified respondents Pizarro, Braza, and Castueras of the audit Book V of the Labor Code, it ruled that there was no justifiable
results and asked them to explain the discrepancies in writing. cause for the termination of respondents.
Thereafter, in a meeting called by the Union, respondents Pizarro, Braza, o Held that respondents’ expulsion from the Union was illegal since
and Castueras explained their side. the DOLE had not yet made any definitive ruling on their liability
Despite their explanations, respondents were expelled from the Union, and regarding the administration of the Unions funds.
were furnished individual letters of expulsion for malversation of Union The CA upheld the NLRC Ruling that the respondents were deprived due
funds. process
Attached to the letters were copies of the Panawagan ng mga Opisyales o It found that said respondents were not given the opportunity to be
ng Unyon signed by 37 out of 63 Union members and officers, and a heard in a separate hearing as required by Sec. 2(b), Rule XXIII,
Board of Directors Resolution expelling them from the Union. Book V of the Omnibus Rules Implementing the Labor Code.
o It also held that dismissal of the respondents was contrary to the the duration of the CBA. By preventing member disaffiliation with the threat
doctrine laid down in Malayang Samahan ng mga Manggagawa of expulsion from the union and the consequent termination of
sa M. Greenfield v. Ramos (Malayang Samahan), where it was employment, the authorized bargaining representative gains more
ruled that even on the assumption that the union had valid numbers and strengthens its position as against other unions which may
grounds to expel the local union officers, due process requires that want to claim majority representation.
the union officers be accorded a separate hearing by the employer In terminating the employment of an employee by enforcing the union
company. security clause, the employer needs only to determine and prove that: (1)
The Club avers that: (1) the dismissal of the respondents was in the union security clause is applicable; (2) the union is requesting for the
accordance with the Union security provisions in their CBA, and (2) the enforcement of the union security provision in the CBA; and (3) there is
respondents were afforded due process, since the Club conducted an sufficient evidence to support the unions decision to expel the employee
investigation separate and independent from that conducted by the Union. from the union. These requisites constitute just cause for terminating an
employee based on the CBAs union security provision.
Issue: The language of Art. II of the CBA that the Union members must maintain
1. W/N there was just cause to dismiss private respondents (YES) their membership in good standing as a condition sine qua non for their
2. W/N they were afforded due process in accordance with the continued employment with the Club is unequivocal. It is also clear that
standards provided for by the Labor Code and its Implementing upon demand by the Union and after due process, the Club shall terminate
Rules (YES) the employment of a regular rank-and-file employee who may be found
liable for a number of offenses, one of which is malversation of Union
Held: funds
1. Yes, there is sufficient cause for their termination. Gleaned from the above, the respondents were expelled from and by
Under the Labor Code, an employee may be validly terminated on the the Union after due investigation for acts of dishonesty and malversation of
following grounds: (1) just causes under Art. 282; (2) authorized causes Union funds.
under Art. 283; (3) termination due to disease under Art. 284; and (4) In accordance with the CBA, the Union properly requested the Club,
termination by the employee or resignation under Art. 285. through the October 18, 2001 letter signed by the Union President, and
Another cause for termination is dismissal from employment due to the addressed to the Club’s HRD Manager, to enforce the Union security
enforcement of the union security clause in the CBA. provision in their CBA and terminate said respondents.
Here, Art. II of the CBA on Union security contains the provisions on the Then, in compliance with the Union’s request, the Club reviewed the
Union shop and maintenance of membership shop. documents submitted by the Union, requested said respondents to submit
o There is union shop when all new regular employees are required written explanations, and afforded them reasonable opportunity to present
to join the union within a certain period as a condition for their their side.
continued employment. After it had determined that there was sufficient evidence that said
o There is maintenance of membership shop when employees who respondents malversed Union funds, the Club dismissed them from their
are union members as of the effective date of the agreement, or employment conformably with Sec. 4(f) of the CBA.
who thereafter become members, must maintain union
membership as a condition for continued employment until they 2. YES, the Club substantially complied with the due process requirements
are promoted or transferred out of the bargaining unit or the before it dismissed the respondents.
agreement is terminated. The respondents aver that the Club violated their rights to due process as
Termination of employment by virtue of a union security clause embodied enunciated in Malayang Samahan, when it failed to conduct an
in a CBA is recognized and accepted in our jurisdiction. This practice independent and separate hearing before they were dismissed from
strengthens the union and prevents disunity in the bargaining unit within service.
o In the above case, the SC held that while the company, under a the EBR and joined another union. Thus, the EBR sought their dismissal by the
maintenance of membership provision of the CBA, is bound to employer. They were dismissed from employment at the EBR’s request. According
dismiss any employee expelled by the union for disloyalty upon its to the Supreme Court, the dismissal was valid because it was done pursuant to a
written request, the undertaking should not be done hastily and
valid union security clause. In terminating the employment of an employee by
summarily. The company acts in bad faith in dismissing a worker
without giving him the benefit of a hearing. The employer is bound enforcing the Union Security Clause, the employer needs only to determine and
to exercise caution in terminating the services of the employees prove that: (1) the union security clause is applicable; (2) the union is requesting
especially so when it is made upon the request of a labor union for the enforcement of the union security provision in the CBA; and (3) there is
pursuant to the CBA. sufficient evidence to support the union's decision to expel the employee from the
The CA and the respondents err in relying on Malayang Samahan, as its union or company. The Court holds that all the requisites have been complied with.
ruling has no application to this case. However, the facts of the case reveal that the 2-notice and hearing requirement
o In Malayang Samahan, the union members were expelled from
were not complied with. Thus, while the termination remained valid for having been
the union and were immediately dismissed from the company
without any semblance of due process. Both the union and the made pursuant to a valid union security clause, the employer shall be liable to the
company did not conduct administrative hearings to give the employees for nominal damages.
employees a chance to explain themselves.
o In the present case, the Club has substantially complied with due Facts:
process. The respondents were notified that their dismissal was First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the
being requested by the Union, and their explanations were manufacturing of weighing scales, employed Bergante and Inguillo as
heard. Then, the Club, through its President, conferred with said assemblers on August 15, 1977 and September 10, 1986, respectively.
respondents during the last week of October 2001.The In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)
respondents were dismissed only after the Club reviewed and entered into a Collective Bargaining Agreement (CBA), the duration of
considered the documents submitted by the Union vis-a-vis the which was for a period of five (5) years starting on September 12, 1991.
written explanations submitted by said respondents. Under these Bergante and Inguillo ratified the document.
circumstances, the Club had afforded the respondents a During the lifetime of the CBA, Bergante, Inguillo and several FPSI
reasonable opportunity to be heard and defend themselves. employees joined another union, the Nagkakaisang Lakas ng
Manggagawa (NLM).
Subsequently, NLM-KATIPUNAN filed with the Department of Labor and
23. Inguillo v. First Philippine Scales, June 5, 2009 Employment (DOLE) an intra-union dispute against FPSILU and FPSI. In
Doctrine: A dismissal pursuant to a union security clause in the CBA is binding said case, the Med-Arbiter decided in favor of FPSILU.
upon all the members who ratified it. However, while there is just cause for Later, the general manager of FPSI sought the termination of services of
dismissal, the employer must still comply with the 2-notice rule and hearing for the several employees, including Bergante and Inguillo, for the ground of
dismissal to be procedurally valid. Failure to comply with procedural due process disloyalty to their union FPSILU; dereliction of duty for failing to call
will not render the dismissal illegal but will only render the employer liable for periodic membership meetings and to give financial reports; failure to
nominal damages. deposit Union funds in the name of FPSILLU; causing damage to FPSI by
deliberately slowing down production and preventing the Union to even
attempt to ask for an increase in benefits from the company; and for
Recit Ready Digest: poisoning the minds of the rest of the members of the Union so that they
Petitioners were members of the EBR and ratified a CBA that contained a union would be enticed to join the rival union.
security clause. While the CBA remained effective, the petitioners disaffiliated from
When they were dismissed from employment, the dismissed employees duration of the agreement, remains a member in good standing of a union
filed a complaint for illegal termination with the NLRC. Some of the entirely comprised of or of which the employees in interest are a part.
employees opted to settle with FPSI; however, Bargante and Inguillo’s Under the CBA signed by the petitioners, there id a union security clause
complaints remained. which states: All bonafide union members as of the effective date of this
The respondents maintained that Bergante and Inguillo's dismissal was agreement and all those employees within the bargaining unit who shall
justified, as the same was done upon the demand of FPSILU. The subsequently become members of the UNION during the period of this
dismissal was in accordance with the Union Security Clause in the CBA, agreement shall, as a condition to their continued employment, maintain
the existence and validity of which was not disputed by Bergante and their membership with the UNION under the FIRST PHIL. SCALES
Inguillo. INDUSTRIES LABOR UNION Constitution and By-laws and this
The LA, NLRC, and CA all agreed that Bergante and Inguillo were not Agreement
illegally dismissed on the basis of the union security clause in the CBA. In terminating the employment of an employee by enforcing the Union
Security Clause, the employer needs only to determine and prove that: (1)
Issue: Whether or not petitioners Berganted and Inguillo were illegally dismissed. the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the union's decision to expel the employee
Held/Ratio: No, the dismissal was valid.
from the union or company. The Court holds that all the requisites have
Under the Labor Code, an employee may be validly terminated due to (1) been complied with.
any of the just causes under Article 282; (2) any of the authorized causes While dismissal pursuant to a union security clause may be valid, it is only
under Article 283; (3) disease under Article 284; and (4) resignation by the legal when the due process requirements of notice and hearing are
employee under Article 285. While the said provisions did not mention as complied with.
ground the enforcement of the Union Security Clause in the CBA, the Procedural due process in the dismissal of employees requires notice and
dismissal from employment based on the same is recognized and hearing. The employer must furnish the employee two written notices
accepted in our jurisdiction. before termination may be effected. The first notice apprises the employee
Union security is a generic term, which is applied to and comprehends of the particular acts or omissions for which his dismissal is sought, while
closed shop, union shop, maintenance of membership or any other form of the second notice informs the employee of the employers decision to
agreement which imposes upon employees the obligation to acquire or dismiss him. The requirement of a hearing, on the other hand, is complied
retain union membership as a condition affecting employment. with as long as there was an opportunity to be heard, and not necessarily
There is union shop when all new regular employees are required to join that an actual hearing was conducted.
the union within a certain period as a condition for their continued The first written notice to be served on the employees should contain
employment. the specific causes or grounds for termination against
There is maintenance of membership shop when employees, who are them, and a directive that the employees are given the opportunity to
union members as of the effective date of the agreement, or who submit their written explanation within a reasonable period.
thereafter become members, must maintain union membership as a After serving the first notice, the employers should schedule and
condition for continued employment until they are promoted or transferred conduct a hearing or conference wherein the employees will be
out of the bargaining unit or the agreement is terminated. given the opportunity to: (1) explain and clarify their defenses to
A closed-shop, on the other hand, may be defined as an enterprise in the charge against them; (2) present evidence in support of their
which, by agreement between the employer and his employees or their defenses; and (3) rebut the evidence presented against them by
representatives, no person may be employed in any or certain agreed the management.During the hearing or conference, the employees
departments of the enterprise unless he or she is, becomes, and, for the are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties
as an opportunity to come to an amicable settlement.
After determining that termination of employment is justified, the 24. General Milling Corp. v. Casio, March 10, 2010
employers shall serve the employees a written notice of G.R. No. 149552 : March 10, 2010
termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and DOCTRINE:
(2) grounds have been established to justify the severance of their
employment.
In the present case, the required two notices that must be given to The rights of an employee to be informed of the charges against him and
herein petitioners Bergante and Inguillo were lacking. The to reasonable opportunity to present his side in a controversy with either
“petisyon” submitted by FPSILU cannot be considered proper the company or his own union are not wiped away by a union security
notice as contemplated by law. For as agreed upon by FPSI and clause or a union shop clause in a collective bargaining agreement. An
FPSILU in their CBA, the latter may only recommend to the former employee is entitled to be protected not only from a company which
a Union member's suspension or dismissal.Nowhere in the disregards his rights but also from his own union the leadership of which
controverted Union Security Clause was there a mention that once could yield to the temptation of swift and arbitrary expulsion from
the union gives a recommendation, the employer is bound outright membership and hence dismissal from his job.
to proceed with the termination. In terminating the employment of an employee by enforcing the union
Even assuming that the Petisyon amounts to a first notice, the employer security clause, the employer needs only to determine and prove that: (1)
cannot be deemed to have substantially complied with the procedural the union security clause is applicable; (2) the union is requesting for the
requirements. True, FPSILU enumerated the grounds in said Petisyon.But enforcement of the union security provision in the CBA; and (3) there is
a perusal of each of them leads Us to conclude that what was stated were sufficient evidence to support the decision of the union to expel the
general descriptions, which in no way would enable the employees to employee from the union. These requisites constitute just cause for
intelligently prepare their explanation and defenses. In addition, the terminating an employee based on the union security provision of the
Petisyon did not provide a directive that the employees are given CBA.
opportunity to submit their written explanation within a reasonable
period. Finally, even if We are to assume that the Petisyon is a second
notice, still, the requirement of due process is wanting. For as We have RECIT READY: Casio, et al. were regular employees of GMC with daily earnings
said, the second notice, which is aimed to inform the employee that his ranging from P173.75 to P201.50, and length of service varying from eight to 25
service is already terminated, must state that the employer has considered years. Casio was elected IBM-Local 31 (The union) President for a three-year term
all the circumstances which involve the charge and the grounds in the first in June 1991, while his co-respondents were union shop stewards. Subsequently,
notice have been established to justify the severance of employment.
on February 29, 1992, Pino, et al., as officers and members of the IBM-Local 31,
In fine, We hold that while Bergante and Inguillo's dismissals were valid
pursuant to the enforcement of Union Security Clause, respondents issued a Resolution expelling Casio, et al. from the union. Gabiana then wrote a
however did not comply with the requisite procedural due process. As in letter dated March 10, 1992, addressed to Eduardo Cabahug (Cabahug), GMC
the case of Agabon v. National Labor Relations Commission,[57] where the Vice-President for Engineering and Plant Administration, informing the company of
dismissal is for a cause recognized by the prevailing jurisprudence, the the expulsion of Casio, et al. from the union pursuant to the Resolution dated
absence of the statutory due process should not nullify the dismissal or February 29, 1992 of IBM-Local 31 officers and board members. Gabiana likewise
render it illegal, or ineffectual. Accordingly, for violating Bergante and requested that Casio, et al. be immediately dismissed from their work for the
Inguillo's statutory rights, respondents should indemnify them the amount
of P30,000.00 each as nominal damages. interest of industrial peace in the plant. He was subsequently dismissed.
ISSUE: Is the dismissal illegal? GMC. On November 30, 1991, IBM-Local 31, through its officers and board
members entered into a CBA with GMC. The effectivity of the said CBA was
HELD: YES. Union security clauses are recognized and explicitly allowed under retroactive to August 1, 1991.
Article 248(e) of the Labor. For this reason, the law has allowed stipulations for
union shop and closed shop as means of encouraging workers to join and support The CBA contained the following union security provisions:
the union of their choice in the protection of their rights and interest vis--vis the
employer. In terminating the employment of an employee by enforcing the union Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed
security clause, the employer needs only to determine and prove that: (1) the by the Company with the exception of those who are specifically excluded by law
union security clause is applicable; (2) the union is requesting for the enforcement and by the terms of this Agreement must be members in good standing of the
of the union security provision in the CBA; and (3) there is sufficient evidence to Union within 30 days upon the signing of this agreement and shall maintain such
support the decision of the union to expel the employee from the union. These membership in good standing thereof as a condition of their employment or
requisites constitute just cause for terminating an employee based on the union continued employment.
security provision of the CBA.
Section 6. The Company, upon written request of the Union, shall terminate the
There is no question that in the present case, the CBA between GMC and IBM- services of any employee/worker who fails to fulfill the conditions set forth in
Local 31 included a maintenance of membership and closed shop clause. IBM- Sections 3 and 4 thereof, subject however, to the provisions of the Labor Laws and
Local 31, by written request, can ask GMC to terminate the employment of the their IRR. The Union shall absolve the Company from any and all liabilities,
employee/worker who failed to maintain its good standing as a union member. It is pecuniary or otherwise, and responsibilities to any employee or worker who is
similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional dismissed or terminated in pursuant thereof.
Director for Visayas and Mindanao, twice requested GMC, in the letters dated
March 10 and 19, 1992, to terminate the employment of Casio, et al. as a Casio, et al. were regular employees of GMC. Casio was elected IBM-Local 31
necessary consequence of their expulsion from the union. It is the third requisite President for a three-year term in June 1991, while his co-respondents were union
that there is sufficient evidence to support the decision of IBM-Local 31 to expel shop stewards.
Casio, et al. which appears to be lacking in this case. Irrefragably, GMC cannot
dispense with the requirements of notice and hearing before dismissing Casio, et In a letter dated February 1992, Rodolfo Gabiana, the IBM Regional Director,
al. even when said dismissal is pursuant to the closed shop provision in the CBA. furnished Casio, et al. with copies of the Affidavits of 2 GMC employees, charging
The rights of an employee to be informed of the charges against him and to Casio, et al. with "acts inimical to the interest of the union." Through the same
reasonable opportunity to present his side in a controversy with either the letter, Gabiana gave Casio, et al. three days from receipt thereof within which to
company or his own union are not wiped away by a union security clause or a file their answers or counter-affidavits. However, Casio, et al. refused to
union shop clause in a collective bargaining agreement. acknowledge receipt of Gabiana’s letter.
Facts: Subsequently, Pino, et al., as officers and members of the IBM-Local 31, issued a
Resolution expelling Casio, et al. from the union.
The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31)
was the sole and exclusive bargaining agent of the rank and file employees of
Gabiana then wrote a letter addressed to Eduardo Cabahug (Cabahug), GMC Issue: W/N Casio, et al. were illegally dismissed. YES
Vice-President for Engineering and Plant Administration, informing the company of
the expulsion of Casio, et al. from the union pursuant to the Resolution. Gabiana Ratio:
likewise requested that Casio, et al. "be immediately dismissed from their work for
the interest of industrial peace in the plant. The dismissal of Casio, et al. was indeed illegal, having been done without just
cause and the observance of procedural due process.
Gabiana followed-up with another letter inquiring from Cabahug why Casio, et al.
were still employed with GMC despite the request of IBM-Local 31 that Casio, et In Alabang Country Club, Inc. v. NLRC, the Court laid down the grounds for which
al. be immediately dismissed from service pursuant to the closed shop provision in an employee may be validly terminated, thus:
the existing CBA. Gabiana reiterated the demand of IBM-Local 31 that GMC
dismiss Casio, et al., with the warning that failure of GMC to do so would constitute Under the Labor Code, an employee may be validly terminated on the following
gross violation of the existing CBA and constrain the union to file a case for ULP grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3)
against GMC. termination due to disease under Art. 284, and (4) termination by the employee or
resignation under Art. 285.
Pressured by the threatened filing of a suit for ULP, GMC acceded to Gabiana’s
request to terminate the employment of Casio, et al. Another cause for termination is dismissal from employment due to the
enforcement of the union security clause in the CBA. x x x.
Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the NCMB.
Casio, et al. alleged as bases for the strike the illegal dismissal of union officers "Union security" is a generic term, which is applied to and comprehends
and members, discrimination, coercion, and union busting. The NCMB-held "closed shop," "union shop," "maintenance of membership," or any other
conciliation proceedings, but no settlement was reached among the parties. form of agreement which imposes upon employees the obligation to acquire
or retain union membership as a condition affecting employment. There is
Casio, et al. next sought recourse from the NLRC by filing a Complaint against union shop when all new regular employees are required to join the union within a
GMC and Pino, et al. for unfair labor practice, particularly, the termination of certain period as a condition for their continued employment. There is
legitimate union officers, illegal suspension, illegal dismissal, and moral and maintenance of membership shop when employees, who are union members as
exemplary damages. of the effective date of the agreement, or who thereafter become members, must
maintain union membership as a condition for continued employment until they are
Voluntary Arbitrator Canonoy-Morada rendered a Voluntary Arbitration Award promoted or transferred out of the bargaining unit or the agreement is terminated.
dismissing the Complaint for lack of merit, but granting separation pay and A closed shop, on the other hand, may be defined as an enterprise in which, by
attorneys fees to Casio, et al. Dissatisfied with the Voluntary Arbitration Award, agreement between the employer and his employees or their representatives, no
Casio, et al. went to the CA. CA set aside the Voluntary Arbitration Award. CA person may be employed in any or certain agreed departments of the enterprise
ruled that while the dismissal of Casio, et al., was made by GMC pursuant to a unless he or she is, becomes, and, for the duration of the agreement, remains a
valid closed shop provision under the CBA, the company, however, failed to member in good standing of a union entirely comprised of or of which the
observe the elementary rules of due process in implementing the said dismissal. employees in interest are a part.
Union security clauses are recognized and explicitly allowed under Article 248(e) It is apparent from the letter that GMC terminated the employment of Casio, et al.
of the Labor Code. It is State policy to promote unionism to enable workers to relying upon the Resolution of Pino, et al. expelling Casio, et al. from IBM-Local
negotiate with management on an even playing field and with more 31; Gabiana’s Letters demanding that GMC terminate the employment of Casio, et
persuasiveness than if they were to individually and separately bargain with the al. on the basis of the closed shop clause in the CBA; and the threat of being sued
employer. For this reason, the law has allowed stipulations for "union shop" and by IBM-Local 31 for unfair labor practice. The letter made no mention at all of the
"closed shop" as means of encouraging workers to join and support the union of evidence supporting the decision of IBM-Local 31 to expel Casio, et al. from the
their choice in the protection of their rights and interest vis-à-vis the employer. union. GMC never alleged nor attempted to prove that the company actually
looked into the evidence of IBM-Local 31 for expelling Casio, et al. and made a
Moreover, a stipulation in the CBA authorizing the dismissal of employees are of determination on the sufficiency thereof. Without such a determination, GMC
equal import as the statutory provisions on dismissal under the Labor Code, since cannot claim that it had terminated the employment of Casio, et al. for just cause.
"a CBA is the law between the company and the union and compliance therewith
is mandated by the express policy to give protection to labor." The records of this case are absolutely bereft of any supporting evidence to
substantiate the bare allegation of GMC that Casio, et al. were accorded due
In terminating the employment of an employee by enforcing the union process by IBM-Local 31. There is nothing on record that would indicate that IBM-
security clause, the employer needs only to determine and prove that: (1) the Local 31 actually notified Casio, et al. of the charges against them or that they
union security clause is applicable; (2) the union is requesting for the were given the chance to explain their side. All that was stated in the IBM-Local 31
enforcement of the union security provision in the CBA; and (3) there is Resolution, expelling Casio, et al. from the union, was that "a copy of the said
sufficient evidence to support the decision of the union to expel the letter complaint was dropped or left in front of E. Casio." It was not established that
employee from the union. These requisites constitute just cause for said letter-complaint charging Casio, et al. with acts inimical to the interest of the
terminating an employee based on the union security provision of the CBA. union was properly served upon Casio, that Casio willfully refused to accept the
said letter-notice, or that Casio had the authority to receive the same letter-notice
There is no question that in the present case, the CBA between GMC and IBM- on behalf of the other employees similarly accused. It’s worthy to note that Casio,
Local 31 included a maintenance of membership and closed shop clause as can et al. were expelled only five days after the issuance of the letter-complaint against
be gleaned from Sections 3 and 6 of Article II. IBM-Local 31, by written request, them. The Court cannot find proof on record when the three-day period, within
can ask GMC to terminate the employment of the employee/worker who failed to which Casio, et al. was supposed to file their answer or counter-affidavits, started
maintain its good standing as a union member. to run and had expired. The Court is likewise unconvinced that the said three-day
period was sufficient for Casio, et al. to prepare their defenses and evidence to
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional refute the serious charges against them.
Director for Visayas and Mindanao, twice requested GMC to terminate the
employment of Casio, et al. as a necessary consequence of their expulsion from The twin requirements of notice and hearing constitute the essential elements of
the union. procedural due process. The law requires the employer to furnish the employee
sought to be dismissed with two written notices before termination of employment
It is the third requisite that there is sufficient evidence to support the decision of can be legally effected.
IBM-Local 31 to expel Casio, et al. which appears to be lacking in this case.
Irrefragably, GMC cannot dispense with the requirements of notice and hearing Recit-Ready Digest:
before dismissing Casio, et al. even when said dismissal is pursuant to the closed Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove
shop provision in the CBA. The rights of an employee to be informed of the (SSCW), a Catholic educational institution, as a non-teaching personnel, engaged
in pre-marital sexual relations, got pregnant out of wedlock, married the father of
charges against him and to reasonable opportunity to present his side in a
her child, and was dismissed by SSCW, in that order.
controversy with either the company or his own union are not wiped away by
a union security clause or a union shop clause in a collective bargaining WON Leus’ conduct constitutes a ground for her dismissal. (NO)
agreement. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own union the leadership of The petitioner’s pregnancy out of wedlock is not a disgraceful or
which could yield to the temptation of swift and arbitrary expulsion from immoral conduct since she and the father of her child have no
membership and hence dismissal from his job. impediment to marry each other. It bears stressing that the petitioner and her
boyfriend, at the time they conceived a child, had no legal impediment to marry.
Indeed, even prior to her dismissal, the petitioner married her boyfriend, the father
In the case at bar, Casio, et al. did not receive any other communication from of her child. The petitioner’s dismissal is therefore not a valid exercise of SSCW’s
GMC, except the written notice of termination. GMC, by its own admission, did not management prerogative.
conduct a separate and independent investigation to determine the sufficiency of
the evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It straight Facts:
away acceded to the demand of IBP-Local 31 to dismiss Casio, et al. SSCW hired Leus as an Assistant to SSCW’s Director of the Lay Apostolate and
Community Outreach Directorate.
In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only Leus and her boyfriend conceived a child out of wedlock. When SSCW learned of
did GMC fail to make a determination of the sufficiency of evidence to support the the pregnancy, Sr. Quiambao (SSCW’s Directress), advised her to file a
decision of IBM-Local 31 to expel Casio, et al., but also to accord the expelled resignation letter. In response, Leus informed Sr. Quiambao that she would not
union members procedural due process, i.e., notice and hearing, prior to the resign from her employment just because she got pregnant without the benefit of
termination of their employment marriage. Sr. Quiambao then formally directed Leus to explain in writing why she
should not be dismissed for engaging in pre-marital sexual relations and getting
pregnant as a result thereof, which amounts to serious misconduct and conduct
unbecoming of an employee of a Catholic school.
Pregnancy
25. Leus v. St. Scholastica’s College Westgrove, January 28, 2015 Leus: pregnancy out of wedlock does not amount to misconduct or conduct
G.R. No. 187226 unbecoming of an employee. Averred that she is unaware of any school policy
28 January 2015 considering such pregnancy as serious misconduct; thus, a ground for dismissal.
Reyes She then requested a copy of SSCW’s policy and guidelines.
Doctrine: Pending promulgation of “Support Staff Handbook”, Sr. Quiambao informed her
Pre-marital sexual relations between two consenting adults who have no that SSCW follows the 1992 Manual of Regulations for Private Schools (1992
impediment to marry each other, and, consequently, conceiving a child out of MRPS) on causes for termination of employment. That Section 94(e) of the 1992
wedlock, gauged from a purely public and secular view of morality, does not MRPS cites "disgraceful or immoral conduct" as a ground for dismissal in addition
amount to a disgraceful or immoral conduct under Section 94(e) of the 1992 to the just causes for termination of employment.
MRPS.
Consequently, Sr. Quiambao informed Leus that her employment with SSCW is and non-teaching personnel of private schools based on their incompetence,
terminated on the ground of serious misconduct. She stressed that pre-marital inefficiency, or some other disqualification
sexual relations between two consenting adults with no impediment to marry, even
if they subsequently married, amounts to immoral conduct. She further pointed out SECOND ISSUE: Pregnancy out of wedlock as a cause for termination
that SSCW finds unacceptable the scandal brought about by the petitioner’s
pregnancy out of wedlock as it ran counter to the moral principles that SSCW The fact of the petitioner’s pregnancy out of wedlock, without more, is not enough
stands for and teaches its students. to characterize the petitioner’s conduct as disgraceful or immoral. There must be
substantial evidence to establish that pre-marital sexual relations and,
Leus filed a complaint for illegal dismissal before the NLRC. LA dismissed the consequently, pregnancy out of wedlock, are indeed considered disgraceful or
complaint; found that there was a valid ground for dismissal, that her pregnancy immoral. To constitute immorality, the circumstances of each particular case must
out of wedlock is considered as a “disgraceful and immoral conduct.” The LA be holistically considered and evaluated in light of the prevailing norms of conduct
further held that teachers and school employees, both in their official and personal and applicable laws.
conduct, must display exemplary behavior and act in a manner that is beyond
reproach. It is not the totality of the circumstances surrounding the conduct per se that
determines whether the same is disgraceful or immoral, but the conduct that is
NLRC affirmed the LA Ruling. Certiorari to CA. Certiorari denied. CA held that it is generally accepted by society as respectable or moral. If the conduct does not
the provisions of the 1992 MRPS and not the Labor Code which governs the conform to what society generally views as respectable or moral, then the conduct
termination of employment of teaching and non-teaching personnel of private is considered as disgraceful or immoral. Tersely put, substantial evidence must be
schools. The CA further held that the petitioner’s dismissal was a valid exercise of presented, which would establish that a particular conduct, viewed in light of the
SSCW’s management prerogative to discipline and impose penalties on erring prevailing norms of conduct, is considered disgraceful or immoral.
employees pursuant to its policies, rules and regulations.
Two-Step Process in the determination of whether a conduct is disgraceful or
Issue/s: immoral: FIRST, a consideration of the totality of the circumstances surrounding
1. WON 1992 MRPS governs the termination of employment of teaching and the conduct; and SECOND, an assessment of the said circumstances vis-à-vis the
non-teaching personnel of private schools, and not the Labor Code. (YES) prevailing norms of conduct.
2. WON Leus’ pregnancy out of wedlock constitutes a valid ground to terminate
her employment. (NO) That Leus was employed by a Catholic educational institution per se does not
absolutely determine whether her pregnancy out of wedlock is disgraceful or
Held/Ratio: immoral. There is still a necessity to determine whether the petitioner’s pregnancy
FIRST ISSUE: Applicability of 1992 MRPS out of wedlock is considered disgraceful or immoral in accordance with the
prevailing norms of conduct.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was
issued by the Secretary of Education pursuant to BP 232. The qualifications of When the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to
teaching and non-teaching personnel of private schools, as well as the causes for public and secular morality; it refers to those conducts which are proscribed
the termination of their employment, are an integral aspect of the educational because they are detrimental to conditions upon which depend the existence and
system of private schools. Indubitably, ensuring that the teaching and non-teaching progress of human society.
personnel of private schools are not only qualified, but competent and efficient as
well goes hand in hand with the declared objective of BP 232 – establishing and For a particular conduct to constitute "disgraceful and immoral" behavior under civil
maintaining relevant quality education. It is thus within the authority of the service laws, it must be regulated on account of the concerns of public and secular
Secretary of Education to issue a rule, which provides for the dismissal of teaching morality. It cannot be judged based on personal bias, specifically those colored by
particular mores. Nor should it be grounded on "cultural" values not convincingly wedlock, gauged from a purely public and secular view of morality, does not
demonstrated to have been recognized in the realm of public policy expressed in amount to a disgraceful or immoral conduct under Section 94(e) of the 1992
the Constitution and the laws. MRPS.
Under these tests, two things may be concluded from the fact that an The petitioner’s dismissal is therefore not a valid exercise of SSCW’s management
unmarried woman gives birth out of wedlock: prerogative.
(1) If the father of the child is himself unmarried, the woman is not ordinarily In sum, the Court finds that the petitioner was illegally dismissed as there was no
administratively liable for disgraceful and immoral conduct. It may be a not-so-ideal just cause for the termination of her employment. SSCW failed to adduce
situation and may cause complications for both mother and child but it does not substantial evidence to establish that the petitioner’s conduct, i.e., engaging in pre-
give cause for administrative sanction. There is no law which penalizes an marital sexual relations and conceiving a child out of wedlock, assessed in light of
unmarried mother under those circumstances by reason of her sexual conduct or the prevailing norms of conduct, is considered disgraceful or immoral.
proscribes the consensual sexual activity between two unmarried persons. Neither
does the situation contravene any fundamental state policy as expressed in the The petitioner is entitled to separation pay, in lieu of actual reinstatement, full
Constitution, a document that accommodates various belief systems irrespective of backwages and attorney’s fees, but not to moral and exemplary damages.
dogmatic origins.
(2) If the father of the child born out of wedlock is himself married to a woman 26. Capin-Cadiz v. Brent Hospital and Colleges, February 24, 2016
other than the mother, then there is a cause for administrative sanction against Doctrine
either the father or the mother. In such a case, the "disgraceful and immoral Where reinstatement is no longer viable as an option, separation pay should be
conduct" consists of having extramarital relations with a married person. The awarded as an alternative and as a form of financial assistance. In the computation
sanctity of marriage is constitutionally recognized and likewise affirmed by our of separation pay, the Court stresses that it should not go beyond the date an
statutes as a special contract of permanent union. Accordingly, judicial employees employee was deemed to have been actually separated from employment, or
have been sanctioned for their dalliances with married persons or for their own beyond the date when reinstatement was rendered impossible.
betrayals of the marital vow of fidelity.
Recit Ready
In this case, it was not disputed that, like respondent, the father of her child was Cadiz was dismissed for unprofessionalism and unethical behavior because she
unmarried. Therefore, respondent cannot be held liable for disgraceful and got pregnant without the benefit of marriage. She filed a case against Brent for
immoral conduct simply because she gave birth to the child Christian Jeon out of ULP, constructive dismissal.
wedlock.
The Supreme court ruled that Cadiz’s actions are not immoral or disgraceful. The
The petitioner’s pregnancy out of wedlock is not a disgraceful or court came to this conclusion using this two-step process: first, a consideration of
immoral conduct since she and the father of her child have no the totality of the circumstances surrounding the conduct; and second, an
impediment to marry each other. It bears stressing that the petitioner and her assessment of the said circumstances vis-a-vis the prevailing norms of conduct,
boyfriend, at the time they conceived a child, had no legal impediment to marry. i.e., what the society generally considers moral and respectable.
Indeed, even prior to her dismissal, the petitioner married her boyfriend, the father
of her child. Thus, the court ruled that Cadiz was entitled to reinstatement without loss of
seniority rights and backwages computed from the time compensation was
Pre-marital sexual relations between two consenting adults who have no withheld up to the date of actual reinstatement.
impediment to marry each other, and, consequently, conceiving a child out of
Facts The circumstances of this case do not readily equate to disgraceful and immoral
Cadiz was the Human Resource Officer of respondent Brent Hospital and conduct. Brent's Policy Manual and Employee's Manual of Policies do not define
Colleges, Inc. (Brent) at the time of her indefinite suspension from employment in what constitutes immorality; it simply stated immorality as a ground for disciplinary
2006. The cause of suspension was Cadiz's Unprofessionalism and Unethical action. Instead, Brent erroneously relied on the standard dictionary definition of
Behavior Resulting to Unwed Pregnancy. It appears that Cadiz became pregnant fornication as a form of illicit relation and proceeded to conclude that Cadiz's acts
out of wedlock, and Brent imposed the suspension until such time that she marries fell under such classification, thus constituting immorality
her boyfriend in accordance with law.
Jurisprudence has already set the standard of morality with which an act should be
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, gauged - it is public and secular, not religious. Whether a conduct is considered
Constructive Dismissal, Non-Payment of Wages and Damages with prayer for disgraceful or immoral should be made in accordance with the prevailing norms of
Reinstatement. conduct, which, as stated in Leus, refer to those conducts which are proscribed
because they are detrimental to conditions upon which depend the existence
LA found that Cadiz's indefinite suspension amounted to a constructive dismissal; and progress of human society.
nevertheless, the LA ruled that Cadiz was not illegally dismissed as there was just
cause for her dismissal, that is, she engaged in premarital sexual relations with her The fact that a particular act does not conform to the traditional moral views of a
boyfriend resulting in a pregnancy out of wedlock. The LA also ruled that she was certain sectarian institution is not sufficient reason to qualify such act as immoral
not entitled to reinstatement "at least until she marries her boyfriend," to unless it, likewise, does not conform to public and secular standards. More
backwages and vacation/sick leave pay importantly, there must be substantial evidence to establish that premarital
sexual relations and pregnancy out of wedlock is considered disgraceful or
NLRC affirmed the LA’s decision; the CA dismissed her appeal due to technical immoral.
defects
Brent, likewise, cannot resort to the MRPS because the Court already stressed in
Issue: WON Cadiz's premarital relations with her boyfriend and the resulting Leus that "premarital sexual relations between two consenting adults who have no
pregnancy out of wedlock constitute immorality impediment to marry each other, and, consequently, conceiving a child out of
wedlock, gauged from a purely public and secular view of morality, does not
amount to a disgraceful or immoral conduct under Section 94(e) of the 1992
Held NO MRPS."
The LA opined that since Cadiz was Brent's ITuman Resource Officer in charge of Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and
implementing its rules against immoral conduct, she should have been the payment of backwages computed from the time compensation was withheld up to
"epitome of proper conduct." the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay should be awarded as an alternative and as a form of
However, the court has already ruled in the case of Cheryl Santos Leus v St. financial assistance. In the computation of separation pay, the Court stresses
Scholatica’s College Westgrove and/or Sr. Edna Quiambao, that the determination that it should not go beyond the date an employee was deemed to have been
of whether a conduct is disgraceful or immoral involves a two-step process: first, a actually separated from employment, or beyond the date when reinstatement
consideration of the totality of the circumstances surrounding the conduct; was rendered impossible.
and second, an assessment of the said circumstances vis-a-vis the prevailing
norms of conduct, i.e., what the society generally considers moral and respectable. Court also finds that Cadiz is only entitled to limited backwages. Generally, the
computation of backwages is reckoned from the date of illegal dismissal until
actual reinstatement. In case separation pay is ordered in lieu of reinstatement or
reinstatement is waived by the employee, backwages is computed from the time of In 2006, Respondent adopted a Non-Fraternization Policy (The Policy) which
dismissal until the finality of the decision ordering separation pay. Jurisprudence read;
further clarified that the period for computing the backwages during the period of CFCA Policy 4.2.2.3. Non-Fraternization Policy
appeal should end on the date that a higher court reversed the labor arbitration
ruling of illegal dismissal. While CFCA does not wish to interfere with the off-duty and personal
conduct of its employees, to prevent unwarranted sexual harassment
claims, uncomfortable working relationships, morale problems among
27. Inocente v. St. Vincent Foundation for Children and Aging other employees, and even the appearance of impropriety, employees
G.R. No. 202621 who direct and coordinate the work of others are strongly discouraged
June 22, 2016 from engaging in consensual romantic or sexual relationships with any
Doctrine: employee or volunteer of CFCA
In determining whether the acts complained of constitute "disgraceful and immoral" Petitioner and Marlon continued their relationship even until after Marlon’s
behavior under our laws, the distinction between public and secular morality on the resignation from Respondent’s employ in 2008.
one hand, and religious morality, on the other hand, should be kept in mind. This In 2009, Petitioner was brought to the hospital for a miscarriage. Respondent
distinction as expressed - albeit not exclusively - in the law, on the one hand, and was made aware of the situation, initially gave Petitioner Maternity Leave, but
religious morality, on the other, is important because the jurisdiction of the eventually sent a letter demanding explanation on various charges (See “Held” for
Court extends only to public and secular morality. the various charges)
Recit-ready: Petitioner defended herself saying (1) Relationship started before the policy took
Petitioner was hired single. She got into a low-key relationship with a co-worker. effect, (2) Marlon no longer an employee, (3) relationship not immoral as both were
Respondent (A Religious foundation) imposed a Non-Fraternization Policy (AKA of legal age without impediments to marry, (4) relationship was private, (5) Marlon
No Romantic/Sexual stuff. ALSO note the relationship was before implementation stayed with her only to take care of her, (6) they planned to marry.
of the policy). Petitioner had a relationship with the co-worker even until the latter Respondent terminated Petitioner’s employment for immorality, gross
resigned. Petitioner had a miscarriage which Respondent was notified of (And thus misconduct and violation of its Code of Conduct.
notified of the relationship). Respondent charges Petitioner with various grounds Petitioner filed for illegal dismissal. LA, NLRC and CA all decided the case against
for termination, but all of them hinged on the relationship being (1) immoral, and Petitioner, saying the relationship was immoral and prejudicial to
(2) against the policy. Petitioner filed for illegal dismissal. LA, NLRC, CA all against Respondent, and amounting to serious misconduct. Her failure to disclose the
Petitioner. SC reversed saying relationship not immoral. While it may be immoral relationship given the existence of the policy was also held to be an act of
by religious standards, the relationship must be measured against secular dishonesty.
standards. Also, the policy only “strongly discouraged” such relationships: did not Issue:
strictly prohibit. As for other charges, SC said since the relationship was not MAIN:
immoral, the other charges were left unsubstantiated. W/N Petitioner’s relationship was immoral and amounting to serious misconduct
Facts: (No)
In 2000, Petitioner Zaida Febrer Ranido (At the time single) was employed as
Program Assistant (And then promoted to Program Officer) by Respondent St. W/N Petitioner’s relationship violated the policy (No)
Vincent Foundation for Children and Aging, Inc., funded by a Kansas-based SIDE:
Catholic foundation dedicated to promoting Christian values and uplifting the W/N the other related charges (Code of Conduct, Serious misconduct, Willful
welfare of children. breach of confidence) (No)
In 2001, Petitioner met Marlon Inocente who was also an employee of Held:
Respondent. (SUMMARY: Basically, the decision rests upon two determinations: W/N the
relationship was immoral AND W/N it violated the Policy. (1) SC held that based on
a secular standard, it was not immoral. (2) Policy only strongly discouraged, not While their actions might not have strictly conformed with the beliefs, ways,
prohibitted. As for the side issues, the SC basically said that they ALL depended and mores of St. Vincent - which is governed largely by religious morality -
on the first determination. Finding that it was not immoral, SC held that the side or with the personal views of its officials, these actions are not prohibited
issues were not substantiated) under any law nor are they contrary to conduct generally accepted by
society as respectable or moral.
There was a procedural issue about Rule 45 of CA’s Rule 65 decision, dwelling on
the propriety of ruling on questions of fact necessary in answering questions of MAIN: On the charge of violation of the policy
law. Basically, SC said they can rule on CA’s error. As explicitly worded, the Policy "does not wish to interfere with the off-duty
and personal conduct of its employees," and only strongly discourages
Burden of proof (thus still technically allows) consensual romantic or sexual relationships; it
Burden of proof in dismissal cases of just or authorized causes are on the does not prohibit such relationships.
Employee. There must be a valid cause, and observance of due process.
However, the presence or absence of just or authorized cause is the more crucial. On the charge of violations of the Code of Conduct
The absence of a valid cause automatically renders any dismissal action Charges were premised on the alleged immoral and indecent acts committed by
invalid, regardless of the employer's observance of the procedural due process Zaida in engaging in consensual romantic or sexual relationship with Marlon. Since
requirements. Zaida did not violate the Non-Fraternization Policy, these other charges were
clearly unwarranted and baseless.
MAIN: On the charge of immorality and conduct prejudicial to interest
The determination of whether a particular conduct is immoral involves: (1) a On the charge of serious misconduct
consideration of the totality of the circumstances surrounding the conduct; and The misconduct or improper behavior is: (1) serious; (2) relate to the performance
(2) an assessment of these circumstances in the light of the prevailing norms of of the employee's duties; and (3) show that the employee has become unfit to
conduct, i.e., what the society generally considers moral and respectable, and of continue working for the employer
the applicable laws.
Zaida's relationship with Marlon is neither illegal nor immoral; it also did not violate
In general, in determining whether the acts complained of constitute "disgraceful the Non-Fraternization Policy. In other words, Zaida did not commit any
and immoral" behavior under our laws, the distinction between public and misconduct, serious or otherwise, that would justify her dismissal based on serious
secular morality on the one hand, and religious morality, on the other hand, misconduct.
should be kept in mind. This distinction as expressed - albeit not exclusively - in
the law, on the one hand, and religious morality, on the other, is important On the charge of willful breach of trust and confidence
because the jurisdiction of the Court extends only to public and secular In Vitarich Corp. v. NLRC, guidelines for the application of the doctrine of loss of
morality. confidence, namely: (1) the loss of confidence should not be simulated; (2) it
should not be used as a subterfuge for causes which are improper, illegal or
Both Zaida and Marlon at all times had no impediments to marry each other. The unjustified; (3) it should not be arbitrarily asserted in the face of overwhelming
intimate sexual relations between them were consensual, borne by their love for evidence to the contrary; and (4) it must be genuine, not a mere afterthought to
one another and which they engaged in discreetly and in strict privacy. They justify earlier action taken in bad faith. In short, there must be an actual breach of
continued their relationship even after Marlon left St. Vincent in 2008. They took duty which must be established by substantial evidence.
their marriage vows soon after Zaida recovered from her miscarriage, thus
validating their union in the eyes of both men and God. Zaida indeed held a position of trust and confidence. Nonetheless, we cannot
support the NLRC's findings that she committed act/s that breached St. Vincent's
trust. Zaida did not commit any act or misconduct that willfully, intentionally, or Issue: W/N employees voluntarily resigned (No, they were constructively
purposely breached St. Vincent's trust. dismissed)
On compliance with due process Ratio: Circumstances show the employees did not resign voluntarily. They acted
The specification of these facts and matters is necessary in order to fully apprise under threat of losing their benefits and being terminated, instead of being allowed
her of all of the charges against her and enable her to present evidence in her to simply take a maternity leave. The very nature of a maternity leave is that it is
defense. St. Vincent's failure to make this crucial specification in the notice to temporary, meaning the employee still wants to work. They were only pressured to
explain and in the termination letter clearly deprived Zaida of due process. resign, thus termination is illegal.
WHEREFORE, we hereby GRANT the petition.
FACTS:
Respondents (employees) were recruited and hired by Saudi Airlines
28.Saudi Arabian Airlines [SAUDIA] v. Rebesencio Temporary Flight Attendants.
DOCTRINES: After undergoing seminars required by the POEA for deployment
1. For voluntary resignation, essential to the act of resignation is overseas, as well as training modules offered by Saudia, respondents
voluntariness. It must be the result of an employee's exercise of his or her became Permanent Flight Attendants.
own will. The different respondents entered into Cabin Attendant Contracts with
2. Mere compliance with standard procedures or processes, such as the Saudia on various years (1990, 1993, 1995) and continued their
completion of their exit interviews, neither negates compulsion nor employment with Saudia until they were separated from service on various
indicates voluntariness. dates in 2006.
3. Constructive dismissal: it is the cessation of work because 'continued Employees allege termination was illegal, since it was only because they
employment is rendered impossible, unreasonable or unlikely, as an offer were pregnant.
involving a demotion in rank or a diminution in pay' and other benefits. The o They allege they went through necessary procedurs for maternity
gauge is whether a reasonable person in the employee's position would leaves, which Saudi initially approved then later disapproved,
feel compelled to give up his employment under the prevailing requiring them to file resignation letters.
circumstances. o They were told that if they don’t resign, Saudia would terminate
them just the same, with loss of benefits (separation pay and ticket
RECIT READY: discounts).
Employees are female flight attendants of Saudi Airlines. They only wanted o Saudia grounds its disapproval of maternity leave on its “Unified
maternity leaves, but they were denied maternity leaves by the company because Contract for Female Cabin Attendants,” where there is a clause
their employment contract has a clause that renders employment void if the female that says the employment of a Flight Attendant who becomes
flight attendant gets pregnant. Saudi Airlines argues that this is necessary for pregnant is rendered void.3
fitness and flight stewards have to be physically fit, etc. Employees argue that they
were forced to resign because Saudi threatened to terminate them and withhold
3 “(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to
benefits if they did not tender their resignation letters. Employees executed first
provide various services required in normal or emergency cases on both
tried to write appeal letters, but the company refused, thus they tendered
resignation letters (in the letterhead of the airline company, which the SC will say domestic/international flights beside her role in maintaining continuous safety and security
indicates the company exerted pressure), under desperation as they did not want of passengers, and since she will not be able to maintain the required medical fitness while
to lose their benefits. at work in case of pregnancy, accordingly, if the Air Hostess becomes pregnant at any time
during the term of this contract, this shall render her employment contract as void and she
will be terminated due to lack of medical fitness.”
Employees say this Unified Contract took effect well after they had filed contract, the Philippine tribunals, acting as the forum court, will
their approved maternity leaves. So instead of tendering resignation generally defer to the parties’ choice as stipulated. This is in line
letters, employees filed separate appeal letters, all of which were rejected. with principle of autonomy of contracts.
Faced with the dilemma of resigning or totally losing their benefits, o However, counterbalanced with the principle of autonomy
respondents executed handwritten resignation letters. of contracts is the principle that provisions relating to
Their resignations were executed on Saudia's blank letterheads that matters affected with public policy are deemed written into
Saudia had provided. These letterheads already had the word the contract. Parties may not contract away applicable
"RESIGNATION" typed on the subject portions of their headings when provisions of law dealing with matters heavily impressed
these were handed to respondent employees. with public interest. (Pakistan International Airlines v.
Respondents then file a Complaint against Saudia and its offcers for illegal Ople)
dismissal and for underpayment of salary, overtime pay, premium pay for o In this case, the Constitution provides that the State “shall
holiday, rest day, premium, service incentive leave pay, 13th month pay, ensure the fundamental equality before the law of women
separation pay, night shift differentials, medical expense reimbursements, and men.” Further, “no person shall be denied equal
retirement benefits, illegal deduction, lay-over expense and allowances, protection of the laws.” The Convention on the Elimination
moral and exemplary damages, and attorney's fees. of forms of Discrimination Against Women (CEDAW)
LA: dismissed the illegal dismissal complaint for lack of jurisdiction. gives effect to these Constitutional policies. Under
(Saudia had argued that all the determining points of contact referred to CEDAW, “discrimination against women” means
foreign law and insisted that the Complaint ought to be dismissed on the (generally) “any distinction, exclusion or restriction made
ground of forum non conveniens, plus respondents had no cause of action on the basis of sex.” Also, our own Civil Code provides
as they resigned voluntarily.) that contracts of labor and employment are impressed
NLRC: says it has jurisdiction to hear the complaint for illegal termination, with public interest, and must yield to the common good.
since the complainants are all OFWs. Further, nothing on record supports o Given this backdrop, Saudia’s policy is glaringly
Saudia’s claim that employees resigned voluntarily. discriminatory. Saudia's policy entails the termination of
CA: agreed with NLRC and allowed payment of separation pay and employment of flight attendants who become pregnant.
backwages. Saudia's policy excludes from and restricts employment
on the basis of no other consideration but sex.
o Thus, as the present dispute relates to (what the
ISSUES:
respondents allege to be) the illegal termination of
respondents' employment, this case is immutably a matter
1. W/N Labor Arbiter and NLRC have jurisdiction over Saudi Arabian Airlines
of public interest and public policy. Consistent with clear
and can apply Philippine law in the present dispute (YES)
pronouncements in law and jurisprudence, Philippine laws
2. W/N respondent employees voluntarily resigned (NO. They were
properly and application in and govern this case.
constructively dismissed, thus illegally terminated.)
Moreover, as this premise for Saudia's insistence on the
application forum non conveniens has been shattered, it
RATIO:
follows that Philippine tribunals may properly assume
1. Summons were validly served on Saudia and jurisdiction over it validly jurisdiction over the present controversy.
acquired.
2. Employees were constructively dismissed. Thus, their termination
o Forum non conveniens does not apply in this case and cannot was illegal.
divest Philippine courts of jurisdiction.
o Voluntary resignation means: “the voluntary act of an employee who is in a
o Contract law allows parties to stipulate and recognizes the validity
situation where one believes that personal reasons cannot be sacrificed in
of contractual choice of law. When these provisions are in the
favor of the exigency of the service, and one has no other choice but to Constructive dismissal: it is the cessation of work because
dissociate oneself from employment. It is a formal pronouncement or 'continued employment is rendered impossible,
relinquishment of an office, with the intention of relinquishing the once unreasonable or unlikely, as an offer involving a demotion
accompanied by the act of relinquishment.” Essential to the act of in rank or a diminution in pay' and other benefits. The
resignation is voluntariness. It must be the result of an employee's gauge is whether a reasonable person in the employee's
exercise of his or her own will. position would feel compelled to give up his employment
o Below are the reasons why this case is not one of voluntary under the prevailing circumstances.
resignation:
Respondents iintended to remain employed with Saudia.
All they did was avail of their maternity leaves. Evidently,
Criminal case
the very nature of a maternity leave means that a
29. United Tourist Promotion v. Kemplin
pregnant employee will not report for work only
G.R. No. 205453, February 05, 2014
temporarily and that she will resume the performance of
her duties as soon as the leave allowance expires.
Respondents exerted all efforts to remain employed with DOCTRINE:
Saudia. Each of them repeatedly filed appeal letters
asking Saudia to reconsider the ultimatum that they resign An employee’s guilt or innocence in a criminal case is not determinative of the
or be terminated along with the forfeiture of their benefits. existence of a just or authorized cause for his dismissal. The pendency of a
Some of them even went to Saudia's office to personally criminal suit against an employee, does not, by itself, sufficiently establish a
seek reconsideration. ground for an employer to terminate the former.
The threat of termination and forfeiture of benefits is
enough to compel a reasonable person in respondents' RECIT READY:
position to give up his or her employment.
Saudia draws attention to how respondents' resignation UTP, a sole proprietorship, and its registered owner, Jersey, are now before SC to
letters were supposedly made in their own handwriting. appeal the finding that Harland B. Kemplin (Kemplin) was illegally dismissed as
This minutia fails to surmount all the other indications
President of UTP. In 2002, UTP employed Kemplin to be its President for a period
negating any voluntariness on respondents' part. If at all,
of five years, to commence on March 1, 2002 and to end on March 1, 2007,
these same resignation letters are proof of how any “renewable for the same period, subject to new terms and conditions”.
supposed resignation did not arise from respondents' own
initiative. As earlier pointed out, respondents' resignations
Kemplin continued to render his services to UTP even after his fixed term contract
were executed on Saudia's blank letterheads that Saudia
of employment expired. Records show that on May 12, 2009, Kemplin, signing as
had provided.
President of UTP, entered into advertisement agreements with Pizza Hut and M.
Saudia argues that employees supposedly completed exit
Lhuillier.
interviews, executed quitclaims, received their separation
pay, and took more than a year to file their Complaint for
On July 30, 2009(over 2 years after expiration of employment contract),UTP’s legal
illegal dismissal. This is irrelevant. Mere compliance with
counsel sent Kemplin a letter, informing him of the expiration of his contract
standard procedures or processes, such as the
completion of their exit interviews, neither negates
compulsion nor indicates voluntariness. Kemplin filed in the NLRC a Complaint against UTP and its officers, namely,
Thus, this is a case of constructive dismissal. Jersey, Lorena Lindo and Larry Jersey, for illegal dismissal.
In Kemplin’s Position Paper filed before LA, he claimed that even after the against him as no hearing and investigation were conducted. Corollarily, in the
expiration of his employment contract he rendered his services as President and absence of a hearing and investigation, the existence of just cause to terminate
General Manager of UTP and that on July 30, 2009, he received a notice from Kemplin could not have been sufficiently established.
UTP’s counsel ordering him to cease and desist from entering the premises of
UTP.
FACTS:
UTP, on its part, argued that the termination letter sent to Kemplin on July 30,
2009 was based on (a) the expiration of the fixed term employment contract they
United Tourist Promotions (UTP), a sole proprietorship business entity engaged in
had entered into, and (b) an employer’s prerogative to terminate an employee, who
the printing and distribution of promotional brochures and maps for tourists, and its
commits criminal and illegal acts prejudicial to business. UTP alleged that Kemplin registered owner, Ariel D. Jersey (Jersey), are now before us to appeal the finding
bad–mouthed, treated his co–workers as third class citizens, and called them
that Harland B. Kemplin (Kemplin) was illegally dismissed as President of UTP.
“brown monkeys”. Kemplin’s presence in the premises of UTP was merely
tolerated and he was given allowances due to humanitarian considerations.
In 1995, Jersey, with the help of two American expatriates, Kemplin and the late
ISSUE: W/N Kemplin was illegally dismissed Mike Dunne, formed UTP.
SC held that Kemplin, who signed the documents with Pizza Hut and M. Lhuiller as In 2002, UTP employed Kemplin to be its President for a period of five years, to
President of UTP on May 12, 2009, or more than two years after the supposed commence on March 1, 2002 and to end on March 1, 2007, “renewable for the
expiration of his employment contract, validate Kemplin’s claim that he continued same period, subject to new terms and conditions”.4
to render his services as President of UTP well beyond March 2, 2007. Moreover,
in the letter dated July 30, 2009, Kemplin was ordered to cease and desist from Kemplin continued to render his services to UTP even after his fixed term contract
entering the premises of UTP which did not follow proper procedural requirements of employment expired. Records show that on May 12, 2009, Kemplin, signing as
for terminating an employee. The 3 requisites are as follows: The first written President of UTP, entered into advertisement agreements with Pizza Hut and M.
notice to be served on the employees should contain the specific causes or Lhuillier.5
grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within a reasonable period. After On July 30, 2009,UTP’s legal counsel sent Kemplin a letter, 6 which, in part,
serving the first notice, the employers should schedule and conduct a hearing reads:chanRoblesvirtualLawlibrary
or conference wherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by We would like to inform you that your Employment Contract had been expired
the management. After determining that termination of employment is justified, the sinceMarch 1, 2007 and never been renewed. It is clear [that] you are no longer
employers shall serve the employees a written notice of termination indicating [an] employee as President of [UTP] considering the expiration of your
that: (1) all circumstances involving the charge against the employees have been employment contract. However, because of your past services to our client’s
considered; and (2) grounds have been established to justify the severance of their company despite [the fact that] your service is no longer needed by his company[,]
employment. Also, Kemplin should have been promptly apprised of the issue as token[,] he tolerated you to come in the office [and] as such[,] you were given
of loss of trust and confidence in him before and not after he was already monthly commissions with allowances.
dismissed. The issue was only raised in the Position Paper which they filed
before LA Jose. It also bears stressing that the letter failed to categorically indicate But because of your inhuman treatment of the rank and file employees, which
which of the policies of UTP did Kemplin violate to warrant his dismissal from caused great damage and prejudices to the company as evidenced [by] those
service. Further, Kemplin was never given the chance to refute the charges cases filed against you[,] specifically[:] (1) for Grave Oral [T]hreat pending for
Preliminary Investigation, Pasay City Prosecutor’s Office (2) for Summary first time on appeal; and
Deportation[,] BID, Pasay City Prosecutor’s Office; and (3) x x x for Grave
Coercion and Grave Threats, we had no other recourse but to give you this (d) failed to apply the doctrine of strained relations in lieu of reinstatement.
notice to cease and desist from entering the premises of the main office[,] as well
as the branch offices of [UTP] from receipt hereof for the protection and safety of HELD:
the company[,] as well as to the employees and to avoid further great damages
that you may cause to the company. The instant petition is partially meritorious.
8
On August 10, 2009, Kemplin filed in the NLRC a Complaint against UTP and its In the case before us now, the LA, NLRC and CA uniformly ruled that Kemplin was
9 10
officers, namely, Jersey, Lorena Lindo and Larry Jersey, for illegal dismissal. dismissed without substantive and procedural due process. The rulings of the
appellate court and the labor tribunals as amply supported by substantial
11
In Kemplin’s Position Paper, which he filed before LA Jose, he claimed that even evidence.
after the expiration of his employment contract on March 1, 2007, he rendered his
services as President and General Manager of UTP. In December of 2008, he Specifically, we note the advertisement agreements with Pizza Hut and M. Lhuillier
began examining the company’s finances, with the end in mind of collecting from entered into by Kemplin, who signed the documents as President of UTP on May
delinquent accounts of UTP’s distributors. After having noted some accounting 12, 2009, or more than two years after the supposed expiration of his employment
discrepancies, he sent e–mail messages to the other officers but he did not receive contract. They validate Kemplin’s claim that he, indeed, continued to render his
direct replies to his queries. Subsequently, on July 30, 2009, he received a notice services as President of UTP well beyond March 2, 2007.
from UTP’s counsel ordering him to cease and desist from entering the premises
of UTP offices. Moreover, in the letter36 dated July 30, 2009, Kemplin was ordered to cease and
desist from entering the premises of UTP.
UTP, on its part, argued that the termination letter sent to Kemplin on July 30,
2009 was based on (a) the expiration of the fixed term employment contract they In Unilever Philippines, Inc. v. Maria Ruby M. Rivera,37 the Court laid down in detail
had entered into, and (b) an employer’s prerogative to terminate an employee, who the steps on how to comply with procedural due process in terminating an
commits criminal and illegal acts prejudicial to business. UTP alleged that Kemplin employee, viz:cha
bad–mouthed, treated his co–workers as third class citizens, and called them
“brown monkeys”. Kemplin’s presence in the premises of UTP was merely (1) The first written notice to be served on the employees should contain the
tolerated and he was given allowances due to humanitarian considerations.12 specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. “Reasonable opportunity” under the Omnibus Rules means
ISSUE: every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as
Whether or not the CA erred when it: a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union
(a) ruled that the termination of [Kemplin] was invalid or unjust; official or lawyer, gather data and evidence, and decide on the defenses they will
raise against the complaint. Moreover, in order to enable the employees to
(b) invalidated the termination of [Kemplin] for [UTP and Jersey’s] failure to afford intelligently prepare their explanation and defenses, the notice should contain a
him due process of law; detailed narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will not suffice.
(c) stated that the issue [of] “loss of trust and confidence” cannot be raised for the Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged against been sufficiently established.
the employees.
Kemplin should have been promptly apprised of the issue of loss of trust
(2) After serving the first notice, the employers should schedule and conduct and confidence in him before and not after he was already dismissed.
a hearingor conference wherein the employees will be given the opportunity to:
(1) explain and clarify their defenses to the charge against them; (2) present UTP and Jersey challenge the CA’s disquisition that it need not resolve the issue
evidence in support of their defenses; and (3) rebut the evidence presented of loss of trust and confidence considering that the same was only raised in the
against them by the management. During the hearing or conference, the Position Paper which they filed before LA Jose.
employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this The method of “Fire the employee and let him explain later” is obviously not in
conference or hearing could be used by the parties as an opportunity to come to accord with the mandates of law.
an amicable settlement.
Clearly then, UTP was not exempted from notifying Kemplin of the charges against
(3) After determining that termination of employment is justified, the employers him. The fact that Kemplin was apprised of his supposed offenses, through the
shall serve the employees a written notice of termination indicating that: (1) all Position Paper filed by UTP and Jersey before LA Jose, did not cure the defects
circumstances involving the charge against the employees have been considered; attending his dismissal from employment.
and (2) grounds have been established to justify the severance of their
employment. While we agree with the LA, NLRC and CA’s findings that Kemplin was
ChanRoblesVirtual illegally dismissed, grounds exist compelling us to modify the order of
reinstatement and payment of 13th month benefit.
Prescinding from the above, UTP’s letter sent to Kemplin on July 30, 2009 is a
lame attempt to comply with the twin notice requirement provided for in Section 2, Under the doctrine of strained relations, the payment of separation pay is
Rule XXIII, Book V of the Rules Implementing the Labor Code. 39 considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. On one hand, such payment liberates the employee
The charges against Kemplin were not clearly specified. While the letter stated that from what could be a highly oppressive work environment. On the other hand, it
Kemplin’s employment contract had expired, it likewise made general references releases the employer from the grossly unpalatable obligation of maintaining in its
to alleged criminal suits filed against him.40 One who reads the letter is inevitably employ a worker it could no longer trust. Moreover, the doctrine of strained
bound to ask if Kemplin is being terminated due to the expiration of his contract, or relations has been made applicable to cases where the employee decides not to
by reason of the pendency of suits filed against him. Anent the pendency of be reinstated and demands for separation pay.45(Citations
criminal suits, the statement is substantially bare. Besides, an employee’s guilt or omitted)chanroblesvirtualawlibrary
innocence in a criminal case is not determinative of the existence of a just or Considering that Kemplin’s dismissal occurred in 2009, there is much room to
authorized cause for his dismissal.41 The pendency of a criminal suit against an doubt the viability, desirability and practicability of his reinstatement as UTP’s
employee, does not, by itself, sufficiently establish a ground for an employer to President. Besides, as a consequence of the unsavory accusations hurled by the
terminate the former. contending parties against each other, Kemplin’s reinstatement is not likely to
create an efficient and productive work environment, hence, prejudicial to business
It also bears stressing that the letter failed to categorically indicate which of the and all the persons concerned.
policies of UTP did Kemplin violate to warrant his dismissal from service. Further,
Kemplin was never given the chance to refute the charges against him as no We likewise find the award of 13th month benefit to Kemplin as improper.
hearing and investigation were conducted. Corollarily, in the absence of a hearing
and investigation, the existence of just cause to terminate Kemplin could not have
46
In Torres v. Rural Bank of San Juan, Inc., we stated practice. For an employee to be validly dismissed on the ground of willful
that:chanRoblesvirtualLawlibrary disobedience of lawful orders of employer, the employer’s orders,
Being a managerial employee, the petitioner is not entitled to 13th month pay. regulations, or instructions must be: (1) reasonable and lawful, (2)
Pursuant to Memorandum Order No. 28, as implemented by the Revised sufficiently known to the employee, and (3) in connection with the duties
th
Guidelines on the Implementation of the 13 Month Pay Law dated November 16, which the employee has been engaged to discharge. Lastly, it is well-settled
1987, managerial employees are exempt from receiving such benefit without that conviction in a criminal case is not necessary to find just cause for
prejudice to the granting of other bonuses, in lieu of the 13th month pay, to termination of employment.
47
managerial employees upon the employer’s discretion.
FACTS:
Hence, Kemplin, who had rendered his services as UTP’s President, a managerial
th
position, is clearly not entitled to be paid the 13 month benefit. - Sanchez was a staff nurse in SLMC Pediatric Unit. At the end of her shift
one day, she passed through the SLMC Centralization Entrance/Exit
where she was subjected to the standard inspection procedure and the
30. St. Luke’s Medical Center v. Sanchez security guard found a pouch bag in her bag and was asked to open it
G.R. No. 212054, March 11, 2015 revealing assortment of medical stocks which were subsequently
confiscated.
DOCTRINE: It is well-settled that conviction in a criminal case is not necessary to - Although she offered to return the pouch bag, he was brought to the SLMC
find just cause for termination of employment. Criminal and labor cases involving In-House Security Department (IHSD) where she was directed to write an
an employee arising from the same infraction are separate and distinct Incident Report explaining why she had the questioned items in her
proceedings which should not arrest any judgment from one to the other. possession.
- In her letter, she apologized and admitted that she knew it was wrong but
RECIT-READY DIGEST: Sanchez was a staff nurse in SLMC Pediatric Unit. A it has been a tolerated practice among nurses in the hospital to hoard
security guard found a pouch bag in her bag upon standard inspection and when hospital stocks. She explained that those were excess items from
asked to open it, the pouch bag revealed assortment of medical stocks. Despite medication drawers of patients who had already been discharged, and, as
her written apology and explanation that she did not mean it for her personal use similarly practiced by the other staff members, she started saving these
but only to make sure that she has her own stock for future use during her shifts, items as excess stocks in her pouch, along with other basic items that she
she was placed under preventive suspension while an investigation is on-going. uses during her shift.
She was informed of SLMC’s decision to terminate her for violating SLMC’s Code - An initial investigation was conducted by the Customer Affairs Division and
of Discipline on Acts of Dishonesty (Robbery, Theft, Pilferage, Misappropriation of she repeated her explanation adding that she only forgot to return the
Funds). She filed for illegal dismissal with NLRC. LA = validly dismissed for pouch because she got caught up with work. She was then placed under
misconduct; NLRC & CA = illegally dismissed; not a serious misconduct, no ill-will, preventive suspension during the investigation by SLMC’s Employee and
and hospital stocks “hoarding” already a tolerated practice in SLMC. SC = Labor Relations Department (ELRD) for violating Section 1, Rule I of the
VALIDLY DISMISSED. Employer has management prerogatives, including the SLMC Code of Discipline i.e., Robbery, Theft, Pilferage, and
right to prescribe reasonable rules and regulations necessary or proper for the Misappropriation of Funds.
conduct of its business or concern, to provide certain disciplinary measures to
- She was terminated so she filed an illegal dismissal case in the NLRC.
implement said rules and to assure that the same would be complied with. Sanchez claimed that she had no intention of bringing outside the SLMC’s
Sanchez has knowledge of prohibition on even only an attempt of pilferage of premises the questioned items since she merely inadvertently left the
hospital property but she still knowingly brought out the subject medical items with pouch containing them in her bag as she got caught up in work that day.
her. She failed to comply with company policy to turnover excess medical supplies She also stressed the fact that SLMC did not file any criminal
and just because no one has been sanctioned yet, doesn’t mean it is tolerated charges against her.
- SLMC contended that Sanchez was validly dismissed for just cause as - Sanchez was validly dismissed by SLMC for her willful disregard and
she had committed theft in violation of SLMC Code of Discipline. disobedience of Section 1, Rule I of the SLMC Code of Discipline. Despite
- LA: Validly dismissed. Sanchez was aware of SLMC’s strict policy her knowledge of its express prohibition under the SLMC Code of
regarding the taking of hospital/medical items as evidenced by her Discipline, she still knowingly brought out the subject medical items with
handwritten letter, but nonetheless committed the said misconduct. The her.
non-filing of a criminal case against Sanchez did not preclude a - The fact that no one was caught and/or sanctioned for transgressing the
determination of her serious misconduct, considering that the filing of a prohibition therefor does not mean that the so-called “hoarding” practice
criminal case is entirely separate and distinct from the determination of just was tolerated by SLMC.
cause for termination of employment. - It is well-settled that conviction in a criminal case is not necessary to
- NLRC: Illegally dismissed. Keeping excess hospital stocks or “hoarding” find just cause for termination of employment, as in this case.
was an admitted practice amongst nurses in the Pediatric Unit which had Criminal and labor cases involving an employee arising from the
been tolerated by SLMC management for a long time. SLMC failed to same infraction are separate and distinct proceedings which should
establish that Sanchez was motivated by ill will not arrest any judgment from one to the other.
- CA: Sanchez’s offense did not qualify as serious misconduct. Had SLMC
honestly believed that Sanchez committed theft or pilferage, it should have
filed the appropriate criminal case, but failed to do so. SLMC should only Disease
impose penalties commensurate with the degree of infraction. Considering 31. Crayons Processing v. Pula
that there was no indication that Sanchez’s actions were perpetrated for Doctrine: For a dismissal on the ground of disease to be considered valid, two
self-interest or for an unlawful objective, the penalty of dismissal imposed requisites must concur: (a) the employee must be suffering from a disease which
on her was grossly oppressive and disproportionate to her offense. cannot be cured within six months and his continued employment is prohibited by
law or prejudicial to his health or to the health of his co-employees; and (b) a
ISSUE: Whether or not Sanchez was illegally dismissed – NO. certification to that effect must be issued by a competent public health authority.
The burden falls upon the employer to establish these requisites, and in the
HELD/RATIO: absence of such certification, the dismissal must necessarily be declared illegal.
- SANCHEZ WAS VALIDLY DISMISSED FOR JUST CAUSE.
- The right of an employer to regulate all aspects of employment, aptly Recit Ready Digest:
called “management prerogative,” gives employers the freedom to Felipe Pula suffered a heart attack and was rushed to the hospital. He took a leave
regulate, according to their discretion and best judgment, all aspects of of absence. After his return, he again suffered a relapsed and needs to take a
employment, including work assignment, working methods, processes to month off. Upon return, he was asked to resign from the company. Issue: WoN the
be followed, working regulations, transfer of employees, work supervision, dismissal is valid. Held: NO. For a dismissal on the ground of disease to be
layoff of workers and the discipline, dismissal and recall of workers. considered valid, two requisites must concur: (a) the employee must be suffering
- Among the employer’s management prerogatives is the right to prescribe from a disease which cannot be cured within six months and his continued
reasonable rules and regulations necessary or proper for the conduct of its employment is prohibited by law or prejudicial to his health or to the health of his
business or concern, to provide certain disciplinary measures to implement co-employees; and (b) a certification to that effect must be issued by a competent
said rules and to assure that the same would be complied with. public health authority. There is no certification in this case.
- For an employee to be validly dismissed on the ground of willful
disobedience of lawful orders of employer, the employer’s orders, Facts:
regulations, or instructions must be: (1) reasonable and lawful, (2) Petitioner Crayons Processing, Inc. (Crayons) employed respondent Felipe Pula
sufficiently known to the employee, and (3) in connection with the (Pula) as a Preparation Machine Operator beginning June 1993. On 27 November
duties which the employee has been engaged to discharge.
1999, Pula suffered a heart attack and was rushed to the hospital, where he was employer of the gravity or extent of the employee's illness and thus defeat the
confined for around a week. public policy in the protection of labor.
Upon his discharge from the hospital, Pula was advised by his attending physician
to take a leave of absence from work and rest for three (3) months. Following an 32. Villaruel v. Yeo Han Guan
angiogram procedure, respondent was certified as fit to work by Dr. Recto. On 11 G.R. No. 169191
April 2000, Pula returned to work, but 13 days later, he was taken to the company June 1, 2011
clinic after complaining of dizziness. Diagnosed as having suffered a relapse, he
was advised by his physician to take a leave of absence from work for one (1) DOCTRINE: An employee who voluntarily resigns from employment is not entitled
month. to separation pay, except when it is stipulated in the employment contract or CBA,
or it is sanctioned by established employer practice or policy.
Pula reported back for work on 13 June 2000, armed with a certification from his
physician that he was fit to work. However, Pula claimed that he was not given any RECIT READY:
post or assignment, but instead, on 20 June 2000, he was asked to resign with an Villaruel filed with the NLRC a Complaint or payment of separation pay against
offer from Crayons of P12, 000 as financial assistance. Pula refused the offer and Yuhans Enterprises. Villaruel is a machine operator in Yeo Han Guan’s company.
instead filed a complaint for illegal dismissal. He alleged that on October 5, 1998, he got sick and was confined in a hospital; on
December 12, 1998, he reported for work but was no longer permitted to go back
Issue: because of his illness; he asked that Yeo Han Guan allow him to continue working
WoN the dismissal is valid. NO but be assigned a lighter kind of work but his request was denied; instead, he was
offered a sum of P15,000.00 as his separation pay. Yeo Han Guan claimed that he
Held: never terminated the services of Villaruel and that during their mandatory
For a dismissal on the ground of disease to be considered valid, two requisites conference, he even told the latter that he could go back to work anytime but
must concur: (a) the employee must be suffering from a disease which cannot be Villaruel clearly manifested that he was no longer interested in returning to work
cured within six months and his continued employment is prohibited by law or and instead asked for separation pay. The SC ruled that the following
prejudicial to his health or to the health of his co-employees; and (b) a certification circumstances prove that Yeo Han Guan did not terminate Villaruel's employment:
to that effect must be issued by a competent public health authority. The burden first, the only cause of action in Villaruel's original complaint is that he was offered
falls upon the employer to establish these requisites, and in the absence of such a very low separation pay; second, there was no allegation of illegal dismissal,
certification, the dismissal must necessarily be declared illegal. As succinctly both in Villaruel's original and amended complaints and position paper; and, third,
stressed in Tan v. NLRC, it is only where there is a prior certification from a there was no prayer for reinstatement. The SC ruled that Villaruel was the one who
competent public authority that the disease afflicting the employee sought to be initiated the severance of his employment relations with Yeo Han Guan. It is
dismissed is of such nature or at such stage that it cannot be cured within six (6) evident from the various pleadings filed by Villaruel that he never intended to
months even with proper medical treatment that the latter could be validly return to his employment with Yeo Han Guan on the ground that his health is
terminated from his job. failing. Indeed, Villaruel did not ask for reinstatement. In fact, he rejected Yeo Han
Guan's offer for him to return to work. This is tantamount to resignation.
Without the required certification, the characterization or even diagnosis of the Resignation is defined as the voluntary act of an employee who finds himself in a
disease would primarily be shaped according to the interests of the parties rather situation where he believes that personal reasons cannot be sacrificed in favor of
than the studied analysis of the appropriate medical professionals. The the exigency of the service and he has no other choice but to disassociate himself
requirement of a medical certificate under Article 284 cannot be dispensed with; from his employment. there is no provision in the Labor Code which grants
otherwise, it would sanction the unilateral and arbitrary determination by the separation pay to voluntarily resigning employees. In fact, the rule is that an
employee who voluntarily resigns from employment is not entitled to separation
pay, except when it is stipulated in the employment contract or CBA, or it is cause of action in Villaruel's original complaint is that he was offered a very low
sanctioned by established employer practice or policy. separation pay; second, there was no allegation of illegal dismissal, both in
Villaruel's original and amended complaints and position paper; and, third, there
was no prayer for reinstatement.
FACTS:
On February 15, 1999, Villaruel filed with the NLRC, National Capital Region, In consonance with the above findings, the Court finds that Villaruel was the one
Quezon City a Complaint or payment of separation pay against Yuhans who initiated the severance of his employment relations with Yeo Han Guan. It is
Enterprises. Villaruel alleged that in June 1963, he was employed as a machine evident from the various pleadings filed by Villaruel that he never intended to
operator by Ribonette Manufacturing Company, an enterprise engaged in the return to his employment with Yeo Han Guan on the ground that his health is
business of manufacturing and selling PVC pipes and is owned and managed by failing. Indeed, Villaruel did not ask for reinstatement. In fact, he rejected Yeo Han
Yeo Han Guan. October 5, 1998, he got sick and was confined in a hospital; on Guan's offer for him to return to work. This is tantamount to resignation.
December 12, 1998, he reported for work but was no longer permitted to go back Resignation is defined as the voluntary act of an employee who finds himself in a
because of his illness; he asked that Yeo Han Guan allow him to continue working situation where he believes that personal reasons cannot be sacrificed in favor of
but be assigned a lighter kind of work but his request was denied; instead, he was the exigency of the service and he has no other choice but to disassociate himself
offered a sum of P15,000.00 as his separation pay; however, the said amount from his employment. It may not be amiss to point out at this juncture that aside
corresponds only to the period between 1993 and 1999; Villaruel prayed that he be from Article 284 of the Labor Code, the award of separation pay is also authorized
granted separation pay computed from his first day of employment in June 1963, in the situation dealt with in Article 283 of the same Code and under Section 4 (b),
but Yeo Han Guan refused. Aside from separation pay, Villaruel prayed for the Rule I, Book VI of the Implementing Rules and Regulations of the said Code where
payment of service incentive leave for three years as well as attorney's fees. there is illegal dismissal and reinstatement is no longer feasible. By way of
exception, this Court has allowed grants of separation pay to stand as a measure
Yeo Han Guan averred that Villaruel was hired as machine operator from March 1, of social justice where the employee is validly dismissed for causes other than
1993 until he stopped working sometime in February 1999 on the ground that he serious misconduct or those reflecting on his moral character. However, there is no
was suffering from illness; after his recovery, Villaruel was directed to report for provision in the Labor Code which grants separation pay to voluntarily resigning
work, but he never showed up. Yeo Han Guan was later caught by surprise when employees. In fact, the rule is that an employee who voluntarily resigns from
Villaruel filed the instant case for recovery of separation pay. Yeo Han Guan employment is not entitled to separation pay, except when it is stipulated in the
claimed that he never terminated the services of Villaruel and that during their employment contract or CBA, or it is sanctioned by established employer practice
mandatory conference, he even told the latter that he could go back to work or policy. In the present case, neither the abovementioned provisions of the Labor
anytime but Villaruel clearly manifested that he was no longer interested in Code and its implementing rules and regulations nor the exceptions apply because
returning to work and instead asked for separation pay. Villaruel was not dismissed from his employment and there is no evidence to show
that payment of separation pay is stipulated in his employment contract or
The LA rendered judgment in favor of Villaruel. Yeo Han Guan filed a petition for sanctioned by established practice or policy of herein Yeo Han Guan, his
certiorari with the CA, which the appellate court granted. employer.
ISSUE: Whether Yeo Han Guan, in fact, dismissed Villaruel from his employment. The foregoing notwithstanding, this Court, in a number of cases, has granted
– NO. financial assistance to separated employees as a measure of social and
compassionate justice and as an equitable concession. Taking into consideration
HELD: the factual circumstances obtaining in the present case, the Court finds that
Villaruel is entitled to this kind of assistance.
The Court agrees with the CA in its observation of the following circumstances as
proof that Yeo Han Guan did not terminate Villaruel's employment: first, the only
Jurisprudence authorized the grant of financial assistance in lieu of retirement for all its employees in the even that the bank would close and thus the
benefits, the Court finds no cogent reason not to employ the same guiding concomitant severance of its personnel. Padillo’s insurance plan benefit was
principle of compassionate justice applied by the Court, taking into consideration P100k to mature on July 2009. In 2004, the bank’s president Oropeza bought a
the factual circumstances obtaining in the present case. In this regard, the Court majority of the bank’s shares, took over its management and gradually
finds credence in Villaruel's contention that he is in the employ of Yeo Han Guan rehabilitated the bank.
for more than 35 years. In the absence of a substantial refutation on the part of
Yeo Han Guan, the Court agrees with the findings of the Labor Arbiter and the Padillo suffered a stroke due to hypertension affecting his ability to work. He was
NLRC that Yeo Han Guan company is not distinct from its predecessors but, in diagnosed with hypertension with short term memory loss, considered a total
fact, merely continued the operation of the latter under the same owners and the disability. He then wrote to the bank’s president expressing his intention to avail of
same business venture. The Court further notes that there is no evidence on an early retirement package. The request remained unheeded.
record to show that Villaruel has any derogatory record during his long years of
service with Yeo Han Guan and that his employment was severed not by reason of Padillo was separated from his employment due to failing health. Because he did
any infraction on his part but because of his failing physical condition. Add to this not receive his early retirement package he filed a complaint for recovery of unpaid
the willingness of Yeo Han Guan to give him financial assistance. Hence, based on retirement benefits with the RAB, saying that the bank regularly gave out early
the foregoing, the Court finds that the award of P50,000.00 to Villaruel as financial retirement packages citing his co-employee who retired at 53 and was granted the
assistance is deemed equitable under the circumstances. benefit. The bank claimed that Padillo lacked basis to claim the benefits.
The LA’s decision stated that Padillo was not entitled to retirement benefits as he
33. Padillo v. Rural bank of Nabunturan was just 55 years old and the LC in Art 300 optional retirement age is 60 and
G.R. No. 199338 compulsory at 65.
January 21, 2013
The NLRC reversed and ordered the bank to pay Padillo P164k separation pay on
DOCTRINE top of the Philam Insurance proceeds. NLRC applied LR Art 300 on termination on
Art 297 on termination only applies when it is the employer who severs the the ground of disease, saying that Padillo resigned only because of his failing
employment relationship, and not when the employee himself severs the health.
relationship by resigning.
The CA reversed the NLRC and reinstated the LA’s decision and further stating
RECIT READY that separation pay on the ground of disease under Art 297 could not be availed by
Padillo was a bookkeeper for Rural Bank of Nabunturan. Sometime during his Padillo because he was the one who initiated his separation by resigning. But the
tenure he got sick and was diagnosed with hypertension, classified as a total CA still granted him financial assistance and his Philam Life insurance proceeds.
disability. Later on he resigned due to his failing health. He then claimed
separation pay from the Bank invoking Art 297 of the Labor Code. The Court held The case was raised to the SC by Padillo’s heirs because of his death in the
that Art 297 did not apply to Padillo since he was the one who terminated the middle of the proceedings.
employment relationship by resigning. Art 297 applies only when it is the employer
who dismissed the employee due to the grounds therein. As such, Padillo is not ISSUES
entitled to separation pay under Art 297. 1. Is Padillo entitled to separation under Art 297 of the Labor Code for
termination due to disease?
FACTS 2. Is Padillo entitled to retirement pay?
Padillo was employed by Rural Bank of Nabunturan as a bookkeeper. Because of
liquidity problems the Bank took out retirement/insurance plans with Phil Am Life HELD
1. No. Art 297 terminatioen on the ground of disease is not applicable in this case 34. Deoferio v. Intel Technology, June 18, 2014
since it was not the bank who terminated Padillo but rather Padillo resigned, Doctrine:
severing the employment relationship. A plain reading of the [Article 297 of the - The Labor Code and its IRR are silent on the procedural due process
Labor Code] clearly presupposes that it is the employer who terminates the required in terminations due to disease. Despite the seeming gap in the law,
services of the employee found to be suffering from any disease and whose Section 2, Rule 1, Book VI of the IRR expressly states that the employee should
continued employment is prohibited by law or is prejudicial to his health as well be afforded procedural due process in all cases of dismissals. In previous cases,
as to the health of his co-employees. It does not contemplate a situation where the Court finally pronounced the rule that the employer must furnish the employee
it is the employee who severs his or her employment ties. This is precisely the two written notices in terminations due to disease, namely: (1) the notice to apprise
reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the employee of the ground for which his dismissal is sought; and (2) the notice
the Labor Code, directs that an employer shall not terminate the services of informing the employee of his dismissal, to be issued after the employee has been
the employee unless there is a certification by a competent public health given reasonable opportunity to answer and to be heard on his defense. These
authority that the disease is of such nature or at such a stage that it cannot be rulings reinforce the State policy of protecting the workers from being terminated
cured within a period of six (6) months even with proper medical treatment. without cause and without affording them the opportunity to explain their side of
Thus, given the inapplicability of Article 297 of the Labor Code to the case at the controversy.
bar, it necessarily follows that petitioners claim for separation pay anchored on - In fixing the amount of nominal damages whose determination is
such provision must be denied. addressed to our sound discretion, the Court should take into account several
factors surrounding the case, such as: (1) the employer’s financial, medical, and/or
2. No. In the absence of any applicable contract or any evolved company policy, moral assistance to the sick employee; (2) the flexibility and leeway that the
Padillo should have met the age and tenure requirements set forth under employer allowed the sick employee in performing his duties while attending to his
Article 300 of the Labor Code to be entitled to the retirement benefits provided medical needs; (3) the employer’s grant of other termination benefits in favor of the
therein. Unfortunately, while Padillo was able to comply with the five (5) year employee; and (4) whether there was a bona fide attempt on the part of the
tenure requirement as he served for twenty-nine (29) years he, however, fell employer to comply with the twin-notice requirement as opposed to giving no
short with respect to the sixty (60) year age requirement given that he was notice at all.
only fifty-five (55) years old when he retired. Therefore, without prejudice to the
proceeds due under the Philam Life Plan, petitioners claim for retirement Recit-ready:
benefits must be denied. Deoferio worked for Intel as a product quality and reliability engineer. Intel
then assigned him to the US but he got repatriated after he got confined in a
hospital there. Deoferio underwent a series of medical and psychiatric treatment at
Nevertheless, the Court concurs with the CA that financial assistance should Intel’s expense after his confinement in the United States. Dr. Paul Lee, a
be awarded but at an increased amount. With a veritable understanding that consultant psychiatrist of the PGH, concluded that Deoferio was suffering from
the award of financial assistance is usually the final refuge of the laborer, schizophrenia. Dr. Lee issued a psychiatric report concluding and stating that
considering as well the supervening length of time which had sadly overtaken Deoferio’s psychotic symptoms are not curable within a period of six months and
the point of Padillos death an employee who had devoted twenty-nine (29) "will negatively affect his work and social relation with his co-worker[s]." Pursuant
years of dedicated service to the Bank the Court, in light of the dictates of to these findings, Intel issued Deoferio a notice of termination on March 10, 2006.
social justice, holds that the CAs financial assistance award should be Intel did NOT comply with the twin notice rule contending that the twin-notice
increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 requirement in dismissals does not apply to terminations under Article 284 of the
benefit receivable by the petitioners under the Philam Life Plan which remains Labor Code. They emphasized that the Labor Code’s implementing rules (IRR)
undisputed. only requires a competent public health authority’s certification to effectively
terminate the services of an employee.
Issue/Held: YES THERE WAS AN AUTHORIZED CAUSE TO Philippine General Hospital, concluded that Deoferio was suffering from
TERMINATE HIM BUT THE TWIN NOTICE RULE SHOULDVE BEEN COMPLIED schizophrenia. After several consultations, Dr. Lee issued a psychiatric report
WITH. The Labor Code and its IRR are silent on the procedural due process dated January 17,2006 concluding and stating that Deoferio’s psychotic symptoms
required in terminations due to disease. Despite the seeming gap in the law, are not curable within a period of six months and "will negatively affect his work
Section 2, Rule 1, Book VI of the IRR expressly states that the employee should and social relation with his co-worker[s]." Pursuant to these findings, Intel issued
be afforded procedural due process in all cases of dismissals. In previous cases, Deoferio a notice of termination on March 10, 2006.
the Court finally pronounced the rule that the employer must furnish the employee
two written notices in terminations due to disease, namely: (1) the notice to apprise Deoferio responded to his termination of employment by filing a complaint for
the employee of the ground for which his dismissal is sought; and (2) the notice illegal dismissal with prayer for money claims against respondents Intel and Mike
informing the employee of his dismissal, to be issued after the employee has been Wentling (respondents). He denied that he ever had mental illness and insisted
given reasonable opportunity to answer and to be heard on his defense. These that he satisfactorily performed his duties as a product engineer. He argued that
rulings reinforce the State policy of protecting the workers from being terminated Intel violated his statutory right to procedural due process when it summarily
without cause and without affording them the opportunity to explain their side of issued a notice of termination. He further claimed that he was entitled to a salary
the controversy. differential equivalent to the pre-terminated period of his assignment in the United
ALSO, BECAUSE PROCEDURAL DUE PROCESS WAS NOT States minus the base pay that he had already received. Deoferio also prayed for
FOLLOWED, Deoferio deserves NOMINAL DAMAGES. In fixing the amount of backwages, separation pay, moral and exemplary damages, as well as attorney’s
nominal damages whose determination is addressed to our sound discretion, the fees.
Court should take into account several factors surrounding the case, such as: (1)
the employer’s financial, medical, and/or moral assistance to the sick employee; In defense, the respondents argued that Deoferio’s dismissal was based on Dr.
(2) the flexibility and leeway that the employer allowed the sick employee in Lee’s certification that: (1) his schizophrenia was not curable within a period of six
performing his duties while attending to his medical needs; (3) the employer’s months even with proper medical treatment; and (2) his continued employment
grant of other termination benefits in favor of the employee; and (4) whether there would be prejudicial to his and to the other employees’ health. The respondents
was a bona fide attempt on the part of the employer to comply with the twin-notice also insisted that Deoferio’s presence at Intel’s premises would pose an actual
requirement as opposed to giving no notice at all. harm to his co-employees as shown by his previous acts. On May 8, 2003,
Deoferio emailed an Intel employee with this message: "All soul’s day back to work
Facts: Monday WW45.1." On January 18, 2005, he cut the mouse cables, stepped on the
Intel Technology Philippines, Inc. (Intel) employed Deoferio as a product quality keyboards, and disarranged the desks of his co-employees. The respondents also
and reliability engineer with a monthly salary of ₱9,000.00. Intel assigned him to highlighted that Deoferio incurred numerous absences from work due to his mental
the US as a validation engineer for an agreed period of two years and with a condition, specifically, from January 31, 2002 until February 28, 2002, from August
monthly salary of US$3,000.00. Deoferio was repatriated to the Philippines after 2002 until September 2002, and from May 2003 until July 2003. Deoferio also took
being confined at Providence St. Vincent Medical Center for major depression with an administrative leave with pay from January 2005 until December 2005.
psychosis. In the Philippines, he worked as a product engineer with a monthly
salary of ₱23,000.00. The respondents further asserted that the twin-notice requirement in dismissals
does not apply to terminations under Article 284 of the Labor Code. They
Deoferio underwent a series of medical and psychiatric treatment at Intel’s emphasized that the Labor Code’s implementing rules (IRR) only requires a
expense after his confinement in the United States. In 2002, Dr. Elizabeth Rondain competent public health authority’s certification to effectively terminate the services
of Makati Medical Center diagnosed him to be suffering from mood disorder, major of an employee. They insisted that Deoferio’s separation and retirement payments
depression, and auditory hallucination. He was also referred to Dr. Norieta for ₱247,517.35 were offset by his company car loan which amounted to
Balderrama, Intel’s forensic psychologist, and to a certain Dr. Cynthia Leynes who ₱448,132.43.19 He was likewise not entitled to moral and exemplary damages, as
both confirmed his mental condition. Dr. Paul Lee, a consultant psychiatrist of the
well as attorney’s fees, because the respondents faithfully relied on Dr. Lee’s health. This conclusion is further substantiated by the unusual and bizarre acts that
certification that he was not fit to work as a product engineer. Deoferio committed while at Intel’s employ.
LA/NLRC/CA: VALID DISMISSAL. Schizophrenia proven. (2) YES IT APPLIES. The twin-notice requirement applies to terminations
under Article 284 of the Labor Code
In the present petition before the Court, Deoferio argues that the uniform finding
that he was suffering from schizophrenia is belied by his subsequent employment The Labor Code and its IRR are silent on the procedural due process required in
at Maxim Philippines Operating Corp. and Philips Semiconductors Corp., which terminations due to disease. Despite the seeming gap in the law, Section 2, Rule
both offered him higher compensations. He also asserts that the Labor Code does 1, Book VI of the IRR expressly states that the employee should be afforded
not exempt the employer from complying with the twin-notice requirement in procedural due process in all cases of dismissals.
terminations due to disease.
In Sy v. Court of Appeals and Manly Express, Inc. v. Payong, Jr., promulgated in
Issue: 2003 and 2005, respectively, the Court finally pronounced the rule that the
(1) Whether Intel had an authorized cause to dismiss Deoferio? employer must furnish the employee two written notices in terminations due to
(2) Whether the twin-notice requirement in dismissals applies to terminations due disease, namely: (1) the notice to apprise the employee of the ground for which his
to disease? dismissal is sought; and (2) the notice informing the employee of his dismissal, to
(3) Whether Deoferio is entitled to salary differential, backwages, separation pay, be issued after the employee has been given reasonable opportunity to answer
moral and exemplary damages, as well as attorney’s fees? and to be heard on his defense. These rulings reinforce the State policy of
protecting the workers from being terminated without cause and without affording
Held/Ratio: them the opportunity to explain their side of the controversy.
We find the petition partly meritorious. From these perspectives, the CA erred in not finding that the NLRC gravely
abused its discretion when it ruled that the twin-notice requirement does not apply
(1) YES. Intel had an authorized cause to dismiss Deoferio from employment. to Article 284 of the Labor Code. This conclusion is totally devoid of any legal
basis; its ruling is wholly unsupported by law and jurisprudence. In other words, the
The present case involves termination due to disease – an authorized cause for NLRC’s unprecedented, whimsical and arbitrary ruling, which the CA erroneously
dismissal under Article 284 of the Labor Code. As substantive requirements, the affirmed, amounted to a jurisdictional error.
Labor Code and its IRR33 require the presence of the following elements:
(3) YES. Deoferio is entitled to nominal damages for violation of his right to
(1) An employer has been found to be suffering from any disease. statutory procedural due process.
(2) His continued employment is prohibited by law or prejudicial to his health, as
well as to the health of his co-employees. Intel’s violation of Deoferio’s right to statutory procedural due process warrants the
(3) A competent public health authority certifies that the disease is of such nature payment of indemnity in the form of nominal damages. In Jaka Food Processing
or at such a stage that it cannot be cured within a period of six months even with Corp. v. Pacot, we fixed the nominal damages at ₱50,000.00 if the dismissal is due
proper medical treatment. to an authorized cause under Article 283 of the Labor Code but the employer failed
to comply with the notice requirement. The reason is that dismissals for just cause
In the current case, we agree with the CA that Dr. Lee’s psychiatric report imply that the employee has committed a violation against the employer, while
substantially proves that Deoferio was suffering from schizophrenia, that his terminations under Article 283 of the Labor Code are initiated by the employer in
disease was not curable within a period of six months even with proper medical the exercise of his management prerogative.
treatment, and that his continued employment would be prejudicial to his mental
of its employees to go on leave for 6 months. Jackbilt Employees Workers Union-
Illegal Strike NAFLU-KMU immediately protested the shutdown. It claimed that since its CBA
35. Jackbilt Industries v. Jackbilt Employees Union, March 20, 2009 was about to expire, the company halted productions so that it can avoid the duty
Doctrine: to bargain collectively and was thus motivated by anti-union sentiments. The union
The use of unlawful means in the course of a strike renders such strike went on strike and blocked the ingress and egress to the company’s compound.
illegal. If there was a finding by the NLRC that the strikers committed illegal acts The company filed a petition for injunction with the NLRC to enjoin the
during the strike, there is no necessity to file a petition to declare the strike illegal union members from blocking the company’s production facility. A TRO was
before the employer may legally dismiss the striking employees who committed granted by the NLRC but the union members violated the order as they stopped
such illegal acts. and inspected vehicles that were going in to the compound. The company sent
letters to the union officers and members who joined the strike, asking them why
Recit-ready: they should not be terminated for committing illegal acts in the course of a strike.
Jackbilt industries was forced to temporarily cease operations for its hollow Despite repeated reminders, the union officers and members ignored the letters.
block production plant due to the Asian financial crisis. As a result, it had to compel The company dismissed the concerned union officers and members and barred
most of its employees to go on leave for 6 months. However, the union claims that them from entering its premises.
the cessation was motivated by anti-union sentiments imputing that since its CBA The union filed a complaint for illegal lockout, illegal dismissal, runaway
was about to expire the company did not want to bargain collectively. The union shop, refusal to bargain and unfair labor practice. The labor arbiter dismissed the
then went on strike and blocked the ingress and egress of the company’s complaints for lack of merit, but because the company did not ask for the strike to
compound. The company filed a petition for injunction with the NLRC, and a TRO be declared illegal before dismissing the complainants it was found guilty of illegal
was issued. The company sent letters to the union officers and members who dismissal. NLRC affirmed the finding of illegal dismissal. The company elevated
joined the strike asking them to explain why they should not be terminated but the matter to the CA via petition for certiorari. The CA dismissed the petition but
these were just ignored so the company eventually dismissed them. modified the decision of the NLRC. It ruled that the shutdown was moved by anti-
The respondents then filed a complaint for illegal lockout, illegal dismissal, union sentiments because most of the employees affected were union members
runaway shop, refusal to bargain and ULP. The LA dismissed the complaint for so it was guilty of ULP.
lack of merit but ruled that there was illegal dismissal because the company did not
file a petition to declare the strike illegal. The NLRC affirmed. The CA upon petition Issue:
for certiorari however said that there was ULP. W/N the filing of a petition to declare a strike illegal is a condition sine qua
The issue is whether the filing of a petition to declare a strike illegal is a non for the valid termination of employees who commit an illegal act in the course
condition sine qua non for the valid termination of employees who commit an of such strike
illegal act in the course of such strike. The Court ruled in the negative. Since
respondent was found by the NLRC in its previous decision to have prevented the Held/Ratio:
free entry into and exit of vehicles from petitioner’s compound, respondent’s NO. Article 264(e) of the Labor Code prohibits any person engaged in
officers and employees clearly committed illegal acts during the strike. The use of picketing from obstructing the free ingress to and egress from the employer’s
unlawful means in the course of a strike renders such strike illegal. Pursuant to the premises. Since respondent was found by the NLRC in its previous decision to
principle of conclusiveness of judgment, the strike was ipso facto illegal. The filing have prevented the free entry into and exit of vehicles from petitioner’s compound,
of a petition to declare the strike illegal was thus unnecessary. Petitioner clearly respondent’s officers and employees clearly committed illegal acts during the
had the legal right to terminate respondent’s officers and employees.  strike. The use of unlawful means in the course of a strike renders such strike
illegal. Pursuant to the principle of conclusiveness of judgment, the strike was ipso
Facts: facto illegal. The filing of a petition to declare the strike illegal was thus
When the Asian financial crisis hit in 1997, Jackbilt Industries was forced unnecessary. The dismissal of respondents was therefore legal. Petitioner clearly
to temporarily close down its hollow block production plant and had to compel most had the legal right to terminate respondent’s officers and employees. 
same is not possible does not bar reinstatement. This right can only be waived
when the employee unjustifiably refuses to return to work upon being so ordered or
36. Escario v. NLRC, September 27, 2010 after the employer has offered to reinstate him. However, separation pay can be
September 27, 2010 an alternative relief when: (a) reinstatement can no longer be effected in view of
Doctrine the passage of a long period of time or because of the realities of the situation; (b)
The right to reinstatement is to be deemed waived only when the employee reinstatement is inimical to the employers interest; (c) reinstatement is no longer
unjustifiably or unreasonably refuses to return to work upon being so ordered or feasible; (d) reinstatement does not serve the best interests of the parties involved;
after the employer has offered to reinstate him. However, separation can be an (e) the employer is prejudiced by the workers continued employment; (f) facts that
alternative when: (a) reinstatement can no longer be effected in view of the make execution unjust or inequitable have supervened; or (g) strained relations
passage of a long period of time or because of the realities of the situation; (b) between the employer and employee. In this case, reinstatement was not feasible
reinstatement is inimical to the employers interest; (c) reinstatement is no longer due to, among others, the lapse of 15 years and the abolition of the positions
feasible; (d) reinstatement does not serve the best interests of the parties involved; related to sales and distribution. Even when an employee has been validly
(e) the employer is prejudiced by the workers continued employment; (f) facts that dismissed, separation pay can be granted as a measure of social justice as long
make execution unjust or inequitable have supervened; or (g) strained relations as the dismissal has not been due to serious misconduct or reflective of personal
between the employer and employee. Separation pay can be granted as a integrity or morality.
measure of social justice even when an employee has been validly dismissed, as
long as the dismissal has not been due to serious misconduct or reflective of FACTS:
personal integrity or morality. The petitioners were among the regular employees of respondent Pinakamasarap
Corporation (PINA), a corporation engaged in manufacturing and selling food
Recit-ready Digest seasoning. They were members of petitioner Malayang Samahan ng mga
The petitioners, who were employees of PINA and members of the Malayang Manggagawa sa Balanced Foods.
Samahan ng mga Manggagawa sa Balanced Foods, staged a walkout to show
support for a union officer charged with oral defamation by PINA’s personal At 8:30 in the morning of March 13, 1993, all the officers and some 200 members
manager and secretary. PINA preventively suspended the officers, then terminated of the Union walked out of PINAs premises and proceeded to the barangay office
them, leading the officers to file a complaint for ULP. to show support for Juanito Caete, an officer of the Union charged with oral
defamation by Aurora Manor, PINAs personnel manager, and Yolanda Fabella,
The Labor Arbiter ruled that the illegal walkout was ULP, so the employees were Manors secretary.
deemed to have lost their employment. Thus, the union filed a notice of strike, had
a strike vote, and staged a strike, prompting PINA to file a ULP complaint against The proceedings in the barangay resulted in a settlement, and the officers and
them. The Labor Arbiter ruled that the strike was illegal and that employees had members of the Union all returned to work thereafter. However, as a result of the
abandoned their work. The NLRC affirmed, but said that there was no walkout, PINA preventively suspended all officers of the Union. PINA terminated
abandonment. The CA affirmed the NLRC, but denied the claim for full backwages. the officers of the Union after a month.
Under Article 264(a) of the Labor Code, full backwages are only awarded when an
employee is dismissed due to an illegal lockout. PINA filed a complaint for unfair labor practice (ULP) and damages. The Labor
Arbiter ruled that the incident was an illegal walkout constituting ULP; and that all
The SC sustained the CA, finding that Article 264(a) indeed applies. Moreover, the Unions officers, except Caete, had thereby lost their employment.
based on the concept of a fair days wage for a fair day’s labor, employees who
participate in an illegal strike are not entitled to backwages since they did not On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty
render work. Moreover, it was correct for separation pay to be awarded instead of of union busting through the constructive dismissal of its officers. After a strike
reinstatement. Absence of any alternative relief in the order of reinstatement if the vote, the strike was held. PINA retaliated by charging the petitioners with ULP
and abandonment of work, stating that they had violated provisions on strike of the provided under Article 278 (termination by employer), or Article 283 (closure of
CBA, such as: (a) sabotage by the insertion of foreign matter in the bottling of establishment and reduction of personnel), or Article 284 (disease as ground for
company products; (b) decreased production output by slowdown; (c) serious termination), all of the Labor Code; while procedural due process demands
misconduct, and willful disobedience and insubordination to the orders of the compliance with the twin-notice requirement.
Management and its representatives; (d) disruption of the work place by invading
the premises and perpetrating commotion and disorder, and by causing fear and In contrast, contemplating two causes for the dismissal of an employee, that is: (a)
apprehension; (e) abandonment of work despite notices to return to work unlawful lockout; and (b) participation in an illegal strike, the third paragraph of
individually sent to them; and (f) picketing within the company premises that Article 264(a) authorizes the award of full backwages only when the termination of
effectively barred with the use of threat and intimidation the ingress and egress of employment is a consequence of an unlawful lockout. On the consequences of an
PINAs officials, employees, suppliers, and customers. illegal strike, the provision distinguishes between a union officer and a union
member participating in an illegal strike. A union officer who knowingly participates
The NLRC issued a TRO enjoining the union from barricading the entrances and in an illegal strike is deemed to have lost his employment status, but a union
exits, and fom committing violence. The Labor Arbiter declared the strike illegal member who is merely instigated or induced to participate in the illegal strike is
and found that the employees had abandoned their work. The NLRC affirmed this, more benignly treated. Part of the explanation for the benign consideration for the
but ruled that there was no abandonment. There was no showing that they had union member is the policy of reinstating rank-and-file workers who are misled into
refused to return to work. Thus, they were ordered reinstated but without supporting illegal strikes, absent any finding that such workers committed illegal
backwages. acts during the strike.
The CA affirmed the NLRC. In denying the petitioners claim for full backwages, the The petitioners were terminated for joining a strike that was later declared to be
CA applied the third paragraph of Article 264(a) instead of Article 279 of the Labor illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the
Code, explaining that the only instance under Article 264 when a dismissed payment of their separation pay, because they were mere rank-and-file workers
employee would be reinstated with full backwages was when he was dismissed by whom the Unions officers had misled into joining the illegal strike. They were not
reason of an illegal lockout; that Article 264 was silent on the award of backwages unjustly dismissed from work. It is plain that Article 264(a) is applicable.
to employees participating in a lawful strike; and that a reinstatement with full
backwages would be granted only when the dismissal of the petitioners was not II. Petitioners not entitled to backwages despite their reinstatement
done in accordance with Article 282 (dismissals with just causes) and Article 283 As a general rule, backwages are granted to indemnify a dismissed employee for
(dismissals with authorized causes) of the Labor Code. MR was denied. his loss of earnings during the whole period that he is out of his job. Considering
that an illegally dismissed employee is not deemed to have left his employment, he
ISSUE: is entitled to all the rights and privileges that accrue to him from the
W/N petitioners are entitled to full backwages from the date of dismissal until the employment.That backwages are not granted to employees participating in an
date of actual reinstatement due to their not being found to have abandoned their illegal strike simply accords with the reality that they do not render work for the
jobs. employer during the period of the illegal strike. This follows the principle of a fair
days wage for a fair days labor.
HELD:
I. Third Paragraph of Article 264 (a), Labor Code, is Applicable III. Appropriate Amount for Separation Pay Is One Month per Year of Service
By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is The petitioners were ordered reinstated because they were union members merely
unjustly done, that is, the employer dismisses the employee without observing instigated or induced to participate in the illegal strike. By joining the strike, they
substantive or procedural due process. Substantive due process requires the did not renounce their employment relation with PINA but remained as its
attendance of any of the just or authorized causes for terminating an employee as employees.
CA AFFIRMED, subject to the modification to the effect that in lieu of
The absence from an order of reinstatement of an alternative relief should the reinstatement the petitioners are granted backwages equivalent of one month for
employer or a supervening event not within the control of the employee prevent every year of service.
reinstatement negates the very purpose of the order. The judgment favorable to
the employee is thereby reduced to a mere paper victory, for it is all too easy for
the employer to simply refuse to have the employee back. The right to 37. Abaria v. NLRC, December 7, 2011 (relate to Bascon v. CA, February 5,
reinstatement is to be considered renounced or waived only when the employee 2004)
unjustifiably or unreasonably refuses to return to work upon being so ordered or (Note: all issues tackled in this case are interrelated so all were included in
after the employer has offered to reinstate him. this digest)
However, separation pay is made an alternative relief in lieu of reinstatement in DOCTRINE

certain circumstances, like: (a) when reinstatement can no longer be effected in Art. 264 (a) of the Labor Code, as amended, provides for the consequences of an
view of the passage of a long period of time or because of the realities of the illegal strike to the participating workers. The provision makes a distinction
situation; (b) reinstatement is inimical to the employers interest; (c) reinstatement between workers and union officers who participate in an illegal strike:
is no longer feasible; (d) reinstatement does not serve the best interests of the An ordinary striking worker cannot be terminated for mere participation in
parties involved; (e) the employer is prejudiced by the workers continued an illegal strike. There must be proof that he or she committed illegal acts
employment; (f) facts that make execution unjust or inequitable have supervened; during a strike.
or (g) strained relations between the employer and employee. A union officer may be terminated from work when he knowingly
participates in an illegal strike, and like other workers, when he commits
Here, PINA manifested that the reinstatement of the petitioners would not be an illegal act during a strike.
feasible because: (a) it would inflict disruption and oppression upon the employer;
(b) petitioners [had] stayed away for more than 15 years; (c) its machines had RECIT READY
depreciated and had been replaced with newer, better ones; and (d) it now sold MCCHI operates Metro Cebu Community Hospital (MCCH), while NFL is the
goods through independent distributors, thereby abolishing the positions related to exclusive bargaining rep of the rank-and-file employees of MCCHI. In 1995, a
sales and distribution. certain Nava wrote MCCHI asking for a renewal of CBA. Meanwhile, NFL’s legal
counsel informed MCCHI that the proposed CBA submitted by Nava was never
Under the circumstances, the grant of separation pay in lieu of reinstatement of the referred to NFL and that NFL has not authorized any person for collective
petitioners was proper. The SC has granted separation pay as a measure of social bargaining negotiations. NFL’s counsel likewise wrote a letter to Nava and his
justice even when an employee has been validly dismissed, as long as the group, suspending his union membership for violating NFL’s Constitution. Nava led
dismissal has not been due to serious misconduct or reflective of personal integrity the union called NAMA-MCCH-NFL and launched a series of mass actions such
or morality. as wearing black and red armbands/headbands, marching around the hospital
premises and putting up placards, posters and streamers.
As for the appropriate amount of separation pay, it is noted that this case has
dragged for almost 17 years from the time of the illegal strike. Bearing in mind DOLE issued a certification stating that NAMA-MCCH-NFL was not a registered
PINAs manifestation that the positions that the petitioners used to hold had ceased union. Despite this, NAMA-MCCH-NFL filed a Notice of Strike, conducted a strike
to exist for various reasons, we hold that separation pay equivalent to one month vote, and led a strike in the hospital premises for months on end. The union
per year of service in lieu of reinstatement fully aligns with the aforecited rulings of officers and members were thus dismissed, allegedly for conducting illegal strike.
the Court.
Issue: W/N the union officers and members were validly dismissed: Held: With
respect to the union officers, there is no question that they knowingly participated
in the illegal strike; therefore their dismissal was proper. With respect to the uttered slanderous and scurrilous words against the officers of the
dismissed union members, MCCHI never individually named those striking hospital, threatening other workers and forcing them to join the strike.
employees and never proved the illegal acts committed by each of them. Subsequently, DOLE issued certifications stating that there is no record
Consequently, the dismissal of union members who merely participated in the showing that NAMA-MCCH-NFL (the company union led by Nava) is a
illegal strike was illegal. [SEE DOCTRINE] registered labor organization. NAMA-MCCH-NFL filed a Notice of Strike
but the same was deemed not filed for want of legal personality on the part
FACTS of the filer.
Metro Cebu Community Hospital, Inc. (MCCHI) operates the Metro Cebu Despite being rebuffed, Nava and her group still conducted a strike vote,
Community Hospital (MCCH), a tertiary medical institution in Cebu City. during which an overwhelming majority of union members approved the
MCCH is owned by the United Church of Christ in the Philippines (UCCP) strike.
and Rev. Gregorio P. Iyoy is the Hospital Administrator. MCCHI sent termination letters to union leaders and other members who
The National Federation of Labor (NFL) is the exclusive bargaining participated in the strike. It also issued a cease-and-desist order to the rest
representative of the rank-and-file employees of MCCHI. of the striking employees stressing that the wildcat concerted activities
In December 1995, a certain Nava wrote Rev. Iyoy expressing the desire spearheaded by the Nava group is illegal without a valid Notice of Strike
to renew the CBA, attaching to her letter a statement of proposals and warning them that non-compliance will compel management to
signed/endorsed by 153 union members. Nava subsequently requested impose disciplinary actions against them.
that certain employees be allowed to avail of one-day union leave with pay Because they continued to strike and picket despite the warning, more
on December 19, 1995. However, MCCHI returned the CBA proposal for than 100 striking employees were dismissed.
Nava to secure first the endorsement of the legal counsel of NFL as the Unfazed, the striking union members held more mass actions. The means
official bargaining representative of MCCHI employees. of ingress to and egress from the hospital were blocked so that vehicles
Meanwhile, Atty. Alforque (NFL’s legal counsel) informed MCCHI that the carrying patients and employees were barred from entering the premises.
proposed CBA submitted by Nava was never referred to NFL and that NFL Placards were placed at the hospital’s entrance gate stating: "Please
has not authorized any other legal counsel or any person for collective proceed to another hospital" and "we are on protest." Employees and
bargaining negotiations. patients reported acts of intimidation and harassment perpetrated by union
By January 1996, the collection of union fees (check-off) was temporarily leaders and members. With the intensified atmosphere of violence and
suspended by MCCHI in view of the existing conflict between the animosity within the hospital premises as a result of continued protest
federation and its local affiliate. Thereafter, MCCHI attempted to take over activities by union members, MCCHI suffered heavy losses due to low
the room being used as union office but was prevented to do so by Nava patient admission rates.
and her group who protested these actions and insisted that management With the volatile situation adversely affecting hospital operations and the
directly negotiate with them for a new CBA. condition of confined patients, MCCHI filed a petition for injunction in the
MCCHI referred the matter to Atty. Alforque and advised Nava that their NLRC (Cebu City). MCCHI’s petition was granted and a permanent
group is not recognized by NFL. In his letter to Nava and his group, Atty. injunction was issued, enjoining the Nava group from committing illegal
Alforque stated that NFL was suspending their union membership for acts mentioned in Art. 264 of the Labor Code.
serious violation of the Constitution and By-Laws. Thereafter, several complaints for illegal dismissal and unfair labor
Several union members led by Nava launched a series of mass actions practice were filed by the terminated employees against MCCHI.
such as wearing black and red armbands/headbands, marching around
the hospital premises and putting up placards, posters and streamers. ISSUE #1: W/N MCCHI is guilty of ULP by violating its duty to bargain collectively.
Rev. Iyoy, having been informed that Nava and her group have also been No.
suspended by NFL, directed said officers to appear before his office for
investigation in connection with the illegal strike wherein they reportedly
Records of the NCMB and DOLE confirmed that NAMA-MCCH-NFL had and egress from the hospital, including preventing patients and their
not registered as a labor organization, having submitted only its charter vehicles from entering the hospital and other employees from reporting to
certificate as an affiliate or local chapter of NFL. Not being a legitimate work, the putting up of placards with a statement advising incoming
labor organization, NAMA-MCCH-NFL is not entitled to those rights patients to proceed to another hospital because MCCHI employees are on
granted to a legitimate labor organization under Art. 242, specifically: (a) strike/protest.
To act as the representative of its members for the purpose of collective
bargaining; and (b) To be certified as the exclusive representative of all the ISSUE #3: W/N Nava and the other union members were illegally dismissed. Yes
employees in an appropriate collective bargaining unit for purposes of as to the union officers; no as to the union members.
collective bargaining.
Aside from the registration requirement, it is only the labor organization Art. 264 (a) of the Labor Code, as amended, provides for the
designated or selected by the majority of the employees in an appropriate consequences of an illegal strike to the participating workers. The
collective bargaining unit which is the exclusive representative of the provision makes a distinction between workers and union officers who
employees in such unit for the purpose of collective bargaining, as participate in an illegal strike:
provided in Art. 255. NAMA-MCCH-NFL is not the labor organization o An ordinary striking worker cannot be terminated for mere
certified or designated by the majority of the rank-and-file hospital participation in an illegal strike. There must be proof that he or she
employees to represent them in the CBA negotiations but the NFL. committed illegal acts during a strike.
While it is true that a local union has the right to disaffiliate from the o A union officer may be terminated from work when he knowingly
national federation, NAMA-MCCH-NFL has not done so as there was no participates in an illegal strike, and like other workers, when he
any effort on its part to comply with the legal requisites for a valid commits an illegal act during a strike.
disaffiliation during the "freedom period" or the last 60 days of the last year With respect to the union officers, there is no question that they knowingly
of the CBA, through a majority vote in a secret balloting in accordance with participated in the illegal strike.
Art. 241 (d). Nava and her group simply demanded that MCCHI directly With respect to the dismissed union members, MCCHI never individually
negotiate with the local union which has not even registered as one. named those striking employees and specify the illegal act committed by
In any case, a local union which is not independently registered cannot, each of them. Indeed, it identified mostly union officers as the persons who
upon disaffiliation from the federation, exercise the rights and privileges blocked the hospital entrance, harassed hospital employees and patients
granted by law to legitimate labor organizations; thus, it cannot file a whose vehicles were prevented from entering the premises. Only some of
petition for certification election. these witnesses actually named a few union members who committed
similar acts of harassment and coercion. Consequently, the dismissal of
ISSUE #2: W/N the strike led by Nava was legal. No. union members who merely participated in the illegal strike was illegal.
Since there is no clear proof that union members actually participated in
NAMA-MCCH-NFL was not a duly registered or an independently the commission of illegal acts during the strike, they are not deemed to
registered union at the time it filed the notice of strike on March 13, 1996 have lost their employment status as a consequence of a declaration of
and when it conducted the strike vote on April 2, 1996. It could not then illegality of the strike.
legally represent the union members. Consequently, the mandatory notice
of strike and the conduct of the strike vote report were ineffective for ISSUE #4: W/N the illegally dismissed employees are entitled to backwages and
having been filed and conducted by NAMA-MCCH-NFL which has no legal reinstatement. No.
personality as a legitimate labor organization.
Furthermore, the strike was illegal due to the commission of the following In G & S Transport Corporation v. Infante, the Court explained the
prohibited activities: (1) violence, coercion, intimidation and harassment rationale for its recent rulings deleting back wages awarded to the
against non-participating employees; and (2) blocking of free ingress to dismissed workers if the strike was found to be illegal. Considering that
they did not render work for the employer during the strike, they are Believing that their union was the certified collective bargaining agent, the
entitled only to reinstatement. members and officers of NAMA-MCCH staged a series of mass actions inside
With respect to backwages, the principle of a "fair day’s wage for a fair MCCH’s premises. They marched around the hospital putting up streamers,
day’s labor" remains as the basic factor in determining the award thereof. placards and posters. DOLE issued a certification stating that NAMA-MCCH-NFL
If there is no work performed by the employee there can be no wage or was not a registered union. Despite this, NAMA-MCCH-NFL filed a Notice of
pay unless, of course, the laborer was able, willing and ready to work but Strike, conducted a strike vote, and led a strike in the hospital premises for months
was illegally locked out, suspended or dismissed or otherwise illegally on end. The union officers and members were thus dismissed, allegedly for
prevented from working. While it was found that respondents expressed conducting illegal strike.
their intention to report back to work, the latter exception cannot apply in
this case. In Philippine Marine Officers’ Guild v. Compañia Maritima, the MCCH ordered petitioners to desist from participating in the mass actions
Court stressed that for this exception to apply, it is required that the conducted in the hospital premises with a warning that non-compliance would
strike be legal, a situation that does not obtain in the case at bar. result in the imposition of disciplinary measures. Petitioners claimed they did not
Considering that 15 years had lapsed from the onset of this labor dispute, receive said order. Nevertheless, petitioners were subsequently served notices
and in view of strained relations that ensued, in addition to the reality of terminating their employment for (1) illegal strike and (2) willful disobedience of
replacements already hired by the hospital which had apparently MCCH’s order of desistance.
recovered from its huge losses, and with many of the petitioners either
Issue: W/N petitioners validly dismissed. Held: They were not.
employed elsewhere, already old and sickly, or otherwise incapacitated,
First, as to the alleged ground of illegal strike, while a union officer can be
separation pay without back wages is the appropriate relief.
terminated for mere participation in an illegal strike, an ordinary striking employee,
like petitioners herein, must have participated in the commission of illegal acts
38. Bascon v. CA, February 5, 2004 during the strike. There must be substantial evidence that they committed illegal
Note: FLJ says we have to relate this to the previous case. acts during the strike. In this case, petitioners’ actual participation in the illegal
strike was limited to wearing armbands and putting up placards, which are within
DOCTRINE the mantle of constitutional protection under freedom of speech. They never
Willful disobedience of the employer’s lawful orders, as a just cause for dismissal performed illegal acts during the strike.
of an employee, envisages the concurrence of at least two requisites: Second, as to the alleged ground of willful disobedience, the element of willfulness
(1) The employee's assailed conduct must have been willful, that is, characterized by a perverse mental attitude on the part of petitioners in disobeying
their employers order is lacking. Wearing armbands and putting up placards to
characterized by a wrongful and perverse attitude; and
express one’s views – without violating the rights of third parties – are legal per se
(2) 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 and even constitutionally protected. Thus, MCCH could have done well to respect
discharge. petitioners’ right to freedom of speech instead of threatening them with disciplinary
action and eventually terminating them.
RECIT READY
FACTS
Petitioners were nurses at the Metro Cebu Community Hospital (MCCH) and
members of NAMA-MCCH), a labor union of MCCH employees. Controversy arose The petitioners were employees of respondent Metro Cebu Community
from an intra-union conflict between the NAMA-MCCH and the National Labor Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo
Federation (NFL), the mother federation of NAMA-MCCH. In 1995, NAMA-MCCH sa Metro Cebu Community Hospital (NAMA-MCCH), a labor union of
asked MCCH to renew their CBA. However, NFL opposed this move by its local MCCH employees.
affiliate, stating that it had no right to negotiate the CBA since NFL was the Petitioner Bascon had been employed as a nurse by MCCH. At the time of
exclusive bargaining agent. her termination from employment in 1996, she already held the position of
Head Nurse. The other petitioner Cole had been working as a nursing aide
with MCCH. Both petitioners were dismissed by the respondent hospital
for allegedly participating in an illegal strike. While a union officer can be terminated for mere participation in an illegal
Controversy arose from an intra-union conflict between the NAMA-MCCH strike, an ordinary striking employee, like petitioners herein, must have
and the National Labor Federation (NFL), the mother federation of NAMA- participated in the commission of illegal acts during the strike. There must
MCCH. In 1995, NAMA-MCCH asked MCCH to renew their CBA, which be substantial evidence that they committed illegal acts during the strike.
was set to expire on December 31, 1995. NFL, however, opposed this In this case, petitioners’ actual participation in the illegal strike was limited
move by its local affiliate. to wearing armbands and putting up placards. There was no finding that
Mindful of the apparent intra-union dispute, MCCH decided to defer the the armbands or the placards contained offensive words or symbols.
CBA negotiations until there was a determination as to which of said Thus, neither such wearing of armbands nor said putting up of placards
unions had the right to negotiate a new CBA. can be construed as an illegal act. In fact, per se, they are within the
Believing that their union was the certified collective bargaining agent, the mantle of constitutional protection under freedom of speech.
members and officers of NAMA-MCCH staged a series of mass actions The record shows that various illegal acts were committed by unidentified
inside MCCH’s premises. They marched around the hospital putting up union members in the course of the protracted mass action. And we
streamers, placards and posters. commiserate with MCCH, patients, and third parties for the damage they
DOLE issued certifications stating that NAMA-MCCH was not a registered suffered. But we cannot hold petitioners responsible for acts they did not
labor organization. This finding, however, did not deter NAMA-MCCH from commit. The law, obviously solicitous of the welfare of the common
filing a notice of strike with the NCMB. Said notice, however, was worker, requires, before termination may be considered, that an ordinary
disregarded by the NCMB for lack of legal personality of the union. union member must have knowingly participated in the commission of
Meanwhile, the MCCH management received reports that petitioners illegal acts during a strike.
participated in NAMA-MCCHs mass actions. Consequently, notices were
served on all union members, petitioners included, asking them to explain ISSUE #2: W/N petitioner was illegally terminated for gross insubordination or
in writing why they were wearing red and black ribbons and roaming willful disobedience to the order to stop to stop wearing armbands and putting up
around the hospital with placards. placards. Yes.
As a response, the union members, including petitioners, explained that
wearing armbands and putting up placards was their answer to MCCHs Willful disobedience of the employer’s lawful orders, as a just cause for
illegal refusal to negotiate with NAMA-MCCH. dismissal of an employee, envisages the concurrence of at least two
MCCH ordered petitioners to desist from participating in the mass actions requisites:
conducted in the hospital premises with a warning that non-compliance (1) The employee's assailed conduct must have been willful, that is,
would result in the imposition of disciplinary measures. Petitioners claimed characterized by a wrongful and perverse attitude; and
they did not receive said order. Nevertheless, petitioners were (2) The order violated must have been reasonable, lawful, made
subsequently served notices terminating their employment. known to the employee and must pertain to the duties which he
The dismissal of petitioners did not deter NAMA-MCCH from staging more had been engaged to discharge.
mass actions. The means of ingress to and egress from the hospital were In this case, the element of willfulness characterized by a perverse mental
blocked. Employees and patients, including emergency cases, were attitude on the part of petitioners in disobeying their employers order is
harassed, according to MCCH management, which also complained that lacking.
mass actions held inside the hospital had created an atmosphere of Wearing armbands and putting up placards to express one’s views without
animosity and violence, aggravating the condition of ailing patients. violating the rights of third parties, are legal per se and even
Petitioners filed a case for illegal dismissal. constitutionally protected. Thus, MCCH could have done well to respect
petitioners’ right to freedom of speech instead of threatening them with
ISSUE #1: W/N was illegally dismissed due to striking. Yes. disciplinary action and eventually terminating them.
Neither are we convinced that petitioners’ exercise of the right to freedom report, and staged a strike. PHIMCO filed for a TRO in NLRC, which was granted,
of speech should be taken in conjunction with the illegal acts committed by to enjoin the workers from preventing the ingress to and egress from the company
other union members in the course of the series of mass actions. It bears premises of non-striking employees. PHIMCO sent a letter to 36 union members
stressing that said illegal acts were committed by other union members directing them to explain why they should not be dismissed. They were dismissed
after petitioners were already terminated, not during the time that the latter 3 days later. PHIMCO filed a Petition to Declare the Strike Illegal. The Labor
wore armbands and put up placards. Arbiter ruled that it is illegal and that the employees, members and officers, are
Assuming, however, that there is willful disobedience, the penalty of validly terminated or may be validly terminated. The Supreme Court ruled that the
dismissal is too harsh. Not every case of willful disobedience by an strike is illegal. Thus, the participating union officers and the union members who
employee of a lawful work-connected order of the employer may be committed illegal acts (prevention of ingress and egress) are validly terminated. To
penalized with dismissal. There must be reasonable proportionality comply with due process, an employee must furnish the employee 2 written
between, on the one hand, the willful disobedience by the employee and, notices: a written notice specifying the grounds for termination and giving the
on the other hand, the penalty imposed therefor. employee a reasonable opportunity to explain his side and another written notice
In this case, evidence is wanting on the depravity of conduct and indicating that grounds have been established to justify the decision to dismiss the
willfulness of the disobedience on the part of petitioners. Wearing employee. It was settled in jurisprudence that the Labor Code recognizes the right
armbands to signify union membership and putting up placards to express to due process of all workers even if the cause was their supposed involvement in
their views cannot be of such great dimension as to warrant the extreme strike-related violence prohibited by the Labor Code. In this case, the officers were
penalty of dismissal, especially considering the long years of service not given notice at all. The union members, on the other hand, were given notices
rendered by petitioners and the fact that they have not heretofore been but not ample time to defend themselves – only 3-day difference between the two
subject of any disciplinary action in the course of their employment with notices.
MCCH.
FACTS
PHIMCO is engaged in the production of matches. PHIMCO Labor Association
39. PHIMCO Industries v. PHIMCO Industries Labor Association, August 11, (PILA) is the authorized bargaining representative of PHIMCO’s daily paid workers.
2010 When the collective bargaining was about to expire, PHIMCO and PILA negotiated
G.R. No. 170830 for its renewal, which eventually resulted in a deadlock on economic issues –
August 11, 2010 salary increases and benefits. PILA filed with the NCMB a Notice of Strike on the
ground of bargaining deadlock. The union conducted a strike vote in which majority
DOCTRINES of the union members voted for a strike. They filed the strike vote results with the
The Labor Code recognizes the right to due process of all workers, without NCMB. Later on, they staged a strike.
distinction as to the cause of their termination, even if the cause was their
supposed involvement in strike-related violence prohibited by the Labor Code. PHIMCO filed with the NLRC a petition for preliminary injunction and TRO to enjoin
An employee must furnish the employee 2 written notices: a written notice strikers from preventing, through force, intimidation ad coercion, the ingress and
specifying the grounds for termination and giving the employee a reasonable egress of non-striking employees into and from the company premises. NLRC
opportunity to explain his side and another written notice indicating that, upon issued an ex-parte TRO. PHIMCO then sent a letter to 36 union members directing
consideration of all circumstances, grounds have been established to justify the them to explain within 24 hours why they should not be dismissed for illegal acts
decision to dismiss the employee. committed during the strike. 3 days later, 36 union members were informed of their
dismissal.
EMERGENCY RECIT
PILA negotiated for the renewal of its CBA with PHIMCO. It resulted into a The Labor Secretary, assuming jurisdiction, ordered the striking employees, except
deadlock. They filed a notice of strike, conducted a strike vote, filed the strike vote those handed termination papers, to return to work within 24 hours. He also
ordered PHIMCO to accept the striking employees under the same terms and In this case, it does not appear from the evidence that the union officers were
conditions. PILA ended its strike. specifically informed of the charges against them and given the chance to explain
and present their side. Without the specifications they had to respond to, they were
PHIMCO filed a Petition to Declare the Strike Illegal with a prayer for the dismissal arbitrarily separated from work in total disregard of their right to due process.
of PILA officers and members who participated. The dismissed employees
countered that they complied with all legal requirements and that the strike was As with the union members, only 36 of the 37 were notified of the charges against
peaceful. The Labor Arbiter ruled that the strike is illegal and that the striking them and all of them were not given ample opportunity to be head and defend
employees, PILA officers and members, have lost their employment status. themselves. The notice of termination came only 3 days from the first notice – a
perfunctory and superficial attempt to comply with the notice requirement.
ISSUE
Whether or not the strike is legal. (omitted discussion) Thus, despite the just cause for dismissal, PHIMCO must pay the dismissed
Whether or not the officers and members were properly dismissed. workers nominal damages as indemnity for the violation of the workers’ right to
statutory due process.
HELD
The services of an ordinary striking worker cannot be terminated for mere
participation in an illegal strike. Proof must be adduced showing that he or she 40. VCMC v. Yballe, January 15, 2014
committed illegal acts during the strike. The services of a participating union G.R. No. 196156
officer, on the other hand, may be terminated, not only when he actually commits January 15, 2014
an illegal act during a strike, but also if he knowingly participates in an illegal strike.
In all cases, the striker must be identified with substantial evidence. In this case, DOCTRINES
the strike is illegal. Thus, all the participating union officers are validly dismissed. Backwages are granted to indemnify a dismissed employee for his loss of earnings
On the other hand, only the members who were identified to have participated in during the whole period that he is out of his job. However, the principle of a “fair
illegally blocking ingress to and egress from company premises are validly day’s wage for a fair day’s labor” remains as the basic factor in determining the
dismissed. award thereof. If there is no work performed by the employee there can be no
wage or pay unless, of course, the laborer was able, willing and ready to work but
However, due process was not complied with. Article 277(b) provides that the was illegally locked out, suspended or dismissed or otherwise prevented from
employer must send the employee, who is about to be terminated, a written notice working. For this exception to apply, it is required that the strike be legal. For union
stating the causes for termination and must give the employee the opportunity to members who were dismissed for having participated in an illegal strike, the relief
be head and to defend himself. It was settled in jurisprudence that the Labor Code is the payment of separation pay in lieu of reinstatement.
recognizes the right to due process of all workers, without distinction as to the
cause of their termination, even if the cause was their supposed involvement in EMERGENCY RECIT
strike-related violence prohibited by the Labor Code. President of NAMA-MCCH-NFL, Nava, sent proposals to MCCH. MCCH returned
the proposal to Nava asking the latter to secure the endorsement of NFL, the
An employee must furnish the employee 2 written notices: a written notice bargaining representative of the rank-and-file employees. MCCH attempted to take
specifying the grounds for termination and giving the employee a reasonable over the union office but was prevented by the group of Nava. NFL suspended
opportunity to explain his side and another written notice indicating that, upon Nava’s and her group’s membership. Later on, several union members led by
consideration of all circumstances, grounds have been established to justify the Nava launched mass actions by wearing armbands/headbands. DOLE issued a
decision to dismiss the employee. certificate stating that NAMA-MCCH-NFL is not a registered labor organization.
NAMA-MCCH-NFL, nevertheless, filed a Notice of Strike though deemed as not
filed. Mass actions by the union members continued. Thus, more than 100
members were terminated and filed complaints for illegal dismissal. The Supreme was temporary stoppage of work, explaining that the employees only wore
Court earlier ruled that the strike is illegal but the union members were invalidly armbands as a sign of protest.
terminated. A Motion for Reconsideration was filed on the issue of whether or not
they are entitled to separation pay and backwages. In this case, the SC ruled that DOLE issued certifications stating that NAMA-MCCH-NFL is not a registered labor
they are not entitled to backwages but are entitled to separation pay. Backwages organization and that said union only submitted a Charter Certificate. MCCH then
are granted to indemnify a dismissed employee for his loss of earnings during the sent to all union members asking them to submit within 72 hours a written
whole period that he is out of his job. However, the principle of a “fair day’s wage explanation why they not be terminated.
for a fair day’s labor” remains as the basic factor in determining the award thereof.
If there is no work performed by the employee there can be no wage or pay. To be NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed not filed for
entitled to backwages, it is required that the strike be legal. For union members want of legal personality. Nava and her group still conducted a strike vote –
who were dismissed for having participated in an illegal strike, their only relief is overwhelming majority approved the strike.
the payment of separation pay in lieu of reinstatement.
The striking union members did not attend the investigations. MCCH again sent
FACTS notices informing them that their refusal to submit to investigation is deemed a
National Federation of Labor (NFL) is the bargaining representative of the rank- waiver of their right to explain their side. Later on, MCCH sent termination letters to
and-file employees of Metro Cebu Community Hospital (MCCH), now Visayas the union leaders and the members who participated in the strike. They were given
Community Medical Center (VCMC). Perla Nava, President of Nagkahiusang a cease-and-desist order but they still continued the concerted activities. More
Mamumuno sa MCCH (NAMA-MCCH-NFL), the local affiliate, sent a letter to Rev. than 100 employees were dismissed.
Iyoy, MCCH Administrator, expressing the union’s desire to renew their CBA and
attaching a statement of proposals signed and endorsed by 153 union members. The striking union members held more mass actions – means of ingress to and
Nava also requested that certain employees be allowed to avail of one-day union egress from the hospital were blocked, placards were placed (saying “please
leave with pay. MCCH returned the CBA proposal to Nava for the latter to secure proceed to another hospital, we are on strike”). MCCH suffered heavy losses due
first the endorsement of the legal counsel of NFL, Atty. Alforque. to the intensified atmosphere of violence and animosity.
Atty. Alforque informed MCCH that the proposed CBA submitted by Nava was MCCH filed a petition for injunction and a TWO was issued. MCCH presented
never referred to NFL and that NFL has not authorized any other person for witnesses, including a security guard stabbed by a striker. Petition was granted
collective bargaining negotiations. Thus, the collection of union fees was and permanent injunction issued. The City of Cebu ordered the demolition of
temporarily suspended by MCCH in view of the existing conflict between the obstructions put up by the picketing employees.
federation and its local affiliate. MCCH then attempted to take over the room being
used as a union office but was prevented to do so by Nava and her group The employees filed several complaints for illegal dismissal. The Labor Arbiter held
protesting that management directly negotiate with them for a new CBA. Atty. that the strike was illegal and the officers and members were properly dismissed,
Alforque suspended the union membership of Nava and others for serious violation but awarding separation pay and attorney’s fees. Ong and Angel, staff nurses, and
of the Constitution and By-Laws of the union. Yballe and Cortez, midwives, appealed the decision.
MCCH granted their one-day leave with pay. Despite this, several union members ISSUE
led by Nava launched a series of mass actions by wearing black and red Whether or not the dismissed employees are entitled to backwages and separation
armbands/headbands. MCCH directed the union officers led by Nava to submit pay.
within 48 hours a written explanation why they should not be terminated for having
engaged in illegal concerted activities amounting to strike. Nava denied that there HELD
The law makes a distinction between union members and union officers. A worker 7. Strained relations between the employer and employee
merely participating in an illegal strike may not be terminated from employment
unless he commits illegal acts during the strike. In contrast, a union officer may be Thus, in this case, the award of separation pay is affirmed but the award of back
terminated for knowingly participating in an illegal strike regardless of whether or wages is deleted.
not he commits illegal acts.
In a previous decision, the Supreme Court already held as invalid the dismissal of
MCCH employees who participated in the illegal strike since there was no showing Authorized Causes
that the complainants committed illegal acts during the strike. They may not be 41. Andrada v. NLRC
deemed to have lost their employment status by their mere participation in the G.R. No. 17321, December 28, 2007, Joben Odulio
illegal strike. But since reinstatement is no longer feasible, MCCH was ordered to Authorized Causes
pay separation pay while the claim for backwages was denied. On the other hand,
it was held that the union leaders were validly terminated by their mere Doctrine:
participation in the strike knowing that the union is not duly registered. Requirements to justify retrenchment to prevent abuse by employers:
(1) it is undertaken to prevent losses, which are not merely de minimis, but
The issue subject to this Motion for Reconsideration is whether or not the substantial, serious, actual, and real, or if only expected, are reasonably
dismissed union members are entitled to backwages and separation pay. imminent as perceived objectively and in good faith by the employer;
(2) the employer serves written notice both to the employees and the DOLE
Backwages are granted to indemnify a dismissed employee for his loss of earnings at least 1 month prior to the intended date of retrenchment; and
during the whole period that he is out of his job. Considering that an illegally (3) the employer pays the retrenched employees separation pay equivalent
dismissed employee is not deemed to have left his employment, he is entitled to all to 1 month pay or at least 1/2 month pay for every year of service,
the rights and privileges that accrue to him from the employment. whichever is higher.
(4) The Court later added the requirements that the employer must use fair
However, the principle of a “fair day’s wage for a fair day’s labor” remains as the and reasonable criteria in ascertaining who would be dismissed and
basic factor in determining the award thereof. If there is no work performed by the retained among the employees and that the retrenchment must be
employee there can be no wage or pay unless, of course, the laborer was able, undertaken in good faith.
willing and ready to work but was illegally locked out, suspended or dismissed or Except for the written notice to the affected employees and the DOLE, non-
otherwise prevented from working. For this exception to apply, it is required that compliance with any of these requirements render[s] the retrenchment illegal.
the strike be legal. Retrenchment and redundancy are two different concepts:
Redundancy exists where the services of an employee are in excess of what is
For union members who were dismissed for having participated in an illegal strike, reasonably demanded by the actual requirements of the enterprise. A position
the relief is the payment of separation pay in lieu of reinstatement under any of the is redundant where it is superfluous, and superfluity of a position or positions
following circumstance: may be the outcome of a number of factors, such as over hiring of workers,
1. Reinstatement can no longer be effected in view of the passage of a long decreased volume of business, or dropping of a particular product line or
period of time or because of realities of situation service activity previously manufactured or undertaken by the enterprise.
2. Reinstatement is inimical to the employer’s interest Retrenchment, on the other hand, is used interchangeably with the term "lay-
3. Reinstatement is no longer feasible
off." It is the termination of employment initiated by the employer through no
4. Reinstatement does not serve the best interests of the parties involved
fault of the employee's and without prejudice to the latter, resorted to by
5. The employer is prejudiced by the worker’s continued employment
management during periods of business recession, etc. Simply put, it is an act
6. Facts that make execution unjust or inequitable have supervened
of the employer of dismissing employees because of losses in the operation of
a business, lack of work, and considerable reduction on the volume of his Development Division, such as shelving of a condotel project, completion of a
business, a right consistently recognized and affirmed by this Court. casino, subcontracting a work to a third party, the completion of a hotel and a
It is however not enough for a company to merely declare that positions have casino, abolition of a department.
become redundant. It must produce adequate proof of such redundancy to
justify the dismissal of the affected employees. The following day, Legend informed the 34 employees of the retrenchment through
a notice with the aforesaid reasons.
ER: Andrada, et. al. were dismissed by their employer, Legend, citing
retrenchment. They said that they were being retrench in a last-in-first-out basis on Curiously, on the same day, the Labor and Employment Center of the Subic Bay
account of shelving of a condotel project, completion of a casino, subcontracting a Metropolitan Authority advertised that Legend International Resorts, Inc. was in
work to a third party, the completion of a hotel and a casino, abolition of a need of employees for positions similar to those vacated by petitioners
department. The LA said there was an illegal dismissal as Legend failed to justify
the retrenchment of its personnel; the documents failed to show that Legend was Afterwards, on February 6, 1998, Legend informed the retrenched employees of
suffering from actual losses or that there was redundancy. The CA held that the their permanent retrenchment and/or their options. Legend paid the retrenched
retrenched employees were validly dismissed from employment due to redundancy employees their salaries up to February 6, 1998, separation pay, pro-rated 13th-
and not retrenchment. The CA ratiocinated that Legend had validly terminated the month pay, ex-gratia, meal allowance, unused vacation leave credits, and tax
employment of its employees since it had proven that complainants' positions were refund. Petitioners, in turn, signed quitclaims but reserved their right to sue
superfluous and that there was an oversupply of employees; more than what its Legend.
projects needed. It agreed with NLRC that it was a different person who was
recruiting for new personnel. [SEE REQUISITES FOR RETRENCHMENT] In this A month later, 14 of the 34 retrenched employees filed before the Regional
case, Legend failed to show its financial condition prior to and at the time it Arbitration Branch of the NLRC in Pampanga, a complaint for illegal dismissal.
enforced its retrenchment program nor did it submit audited financial statements
regarding its alleged financial losses. Though Legend complied with the notice Before the Labor Arbiter, complainants alleged that they were illegally dismissed
requirements and the payment of separation benefits to the retrenched employees, because Legend, after giving retrenchment as the reason for their termination,
its failure to establish the basis made the retrenchment illegal. The SC also created new positions similar to those they had just vacated. Legend, on the other
disagreed the CA’s pronouncement that petitioners were validly dismissed, not for hand, invoked management prerogative when it terminated the retrenched
retrenchment, but for redundancy. [SEE DIFFERENTIATION BET. REDUNDANCY employees; and said that complainants voluntarily signed quitclaims so that they
& RETRENCHMENT.] The basis for retrenchment was not established by were already barred from suing Legend. The LA declared there was illegal
substantial evidence, we also rule that Legend failed to establish by the same dismissal and ordered the reinstatement of the complainants.
quantum of proof the fact of redundancy; hence, petitioners' termination from
employment was illegal. The LA stated that Legend failed to justify the retrenchment of its personnel; the
documents failed to show that Legend was suffering from actual losses or that
Facts: Andrada, et. al. were hired on various dates from 1995 up to 1997 and there was redundancy. The LA said there was bad faith when Legend advertised
worked as architects, draftsmen, operators, engineers, and surveyors in the Subic openings for positions similar to those occupied by the retrenched employees at
Legend Resorts and Casino, Inc. (Legend) Project Development Division on the same time the retrenchment program was being implemented. As such, it
various projects. awarded damages.
On January 6, 1998, Legend sent a notice to the DOLE of its intention to retrench Legend filed an appeal with the NLRC, who then reversed the LA. It said that
and terminate the employment of 34 employees, which included the petitioners in Legend was able to prove that it was suffering from actual losses, and that there
the Project Development Division. The retrenchment would be conducted in a last- was redundancy in the work of the retrenched employees. The NLRC also gave
in-first-out (LIFO) basis, on the strength of the updated status report of the Project credence to Legend's claim that it was Yap Yuen Khong, and not Legend, who
asked for Subic Bay Metropolitan Authority's help in recruiting personnel for to 1 month pay or at least 1/2 month pay for every year of service,
Gaehin International Inc. (Gaehin) as the sub-contractor for the construction of the whichever is higher.
Grand Legenda Hotel and Casino. The NLRC observed that Gaehin was an entity (4) The Court later added the requirements that the employer must use fair
distinct and separate from Legend. Legend fully and properly complied with the 30- and reasonable criteria in ascertaining who would be dismissed and
day notice requirements to the DOLE and to the retrenched employees. MR was retained among the employees and that the retrenchment must be
denied. undertaken in good faith.
Except for the written notice to the affected employees and the DOLE, non-
Before the CA, it was held that the retrenched employees were validly dismissed compliance with any of these requirements render[s] the retrenchment illegal.
from employment due to redundancy and not retrenchment. The CA ratiocinated In this case, Legend failed to show its financial condition prior to and at the time it
that Legend had validly terminated the employment of its employees since it had enforced its retrenchment program nor did it submit audited financial statements
proven that complainants' positions were superfluous and that there was an regarding its alleged financial losses. Though Legend complied with the notice
oversupply of employees; more than what its projects needed. It agreed with requirements and the payment of separation benefits to the retrenched employees,
NLRC that it was a different person who was recruiting for new personnel. its failure to establish the basis made the retrenchment illegal.
Issue: Whether or not the complainants were illegally dismissed? Corollarily, was NO VALID REDUNDANCY
there a valid retrenchment or did Legend prove the existence of redundancy in its The SC also disagreed the CA’s pronouncement that petitioners were validly
Project Development Division? dismissed, not for retrenchment, but for redundancy.
Retrenchment and redundancy are two different concepts; they are not
Held: This was an illegal dismissal. synonymous and therefore should not be used interchangeably. This Court
explained in detail the difference between the two concepts in Sebuguero v.
NO VALID RETRENCHMENT NLRC:
A company's exercise of its management prerogatives is not absolute. Under the Redundancy exists where the services of an employee are in excess of what is
Labor Code, retrenchment and redundancy are authorized causes for separation reasonably demanded by the actual requirements of the enterprise. A position
from service. How ever, to protect labor, dismissals due to retrenchment or is redundant where it is superfluous, and superfluity of a position or positions
redundancy are subject to strict requirements under Article 283. may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or
Retrenchment is an exercise of management's prerogative to terminate the service activity previously manufactured or undertaken by the enterprise.
employment of its employees en masse, to either minimize or prevent losses, or Retrenchment, on the other hand, is used interchangeably with the term "lay-
when the company is about to close or cease operations for causes not due to off." It is the termination of employment initiated by the employer through no
business losses. fault of the employee's and without prejudice to the latter, resorted to by
management during periods of business recession, etc. Simply put, it is an act
In Ariola v. Philex Mining Corporation, summarized the requirements to justify of the employer of dismissing employees because of losses in the operation of
retrenchment to prevent abuse by employers: a business, lack of work, and considerable reduction on the volume of his
business, a right consistently recognized and affirmed by this Court.
(1) it is undertaken to prevent losses, which are not merely de minimis, but It is however not enough for a company to merely declare that positions have
substantial, serious, actual, and real, or if only expected, are reasonably become redundant. It must produce adequate proof of such redundancy to justify
imminent as perceived objectively and in good faith by the employer; the dismissal of the affected employees.
(2) the employer serves written notice both to the employees and the DOLE
at least 1 month prior to the intended date of retrenchment; and The basis for retrenchment was not established by substantial evidence, we also
(3) the employer pays the retrenched employees separation pay equivalent rule that Legend failed to establish by the same quantum of proof the fact of
redundancy; hence, petitioners' termination from employment was illegal. Being guided accordingly, we find that respondent was fully justified in
implementing a retrenchment program since it was undergoing business reverses,
not only for a single fiscal year, but for several years prior to and even after the
42. Manatad v. PT&T
March 7, 2008 program. In a span of six years, respondent realized profits only in one year, in
1997.
DOCTRINE:
That the financial statements are audited by independent auditors
1. Audited financial statements as proof of retrenchment is to be accorded great
safeguards the same from the manipulation of the figures therein to suit the
weight.
company’s needs. The auditing of financial reports by independent external
2. Closure or cessation of business operations is allowed even if the business is
auditors are strictly governed by national and international standards and
not undergoing economic losses. The owner, for any bona fide reason, can lawfully
regulations for the accounting profession. It bears to stress that the financial
close shop anyone.
statements submitted by respondent were audited by reputable auditing
firms. Hence, petitioners assertion that respondent merely manipulated its financial
RECIT READY: Petitioner was initially temporarily laid off then permanently laid off
statements to make it appear that it was suffering from business losses that would
eventually. This was due to a retrenchment program from alleged financial losses.
justify the retrenchment is incredible and baseless.
Petitioner challenges this on the ground that the company actually is NOT
experiencing business losses. As evidence, the company offered their financial In fact, even granting arguendo that respondent was not experiencing
statements. These financial statements were audited by big independent
losses, it is still authorized by Article 283 of the Labor Code to cease its business
accounting firms. The employee, on his end, also submitted his own computations.
operations. Explicit in the said provision is that closure or cessation of business
operations is allowed even if the business is not undergoing economic losses. The
Issue: W/N the retrenchment program implemented by respondent was valid. YES.
owner, for any bona fide reason, can lawfully close shop anyone. Just as no law
forces anyone to go into business, no law can compel anybody to continue in it. It
For a valid retrenchment, the following requisites must be complied with: (a) the
would indeed be stretching the intent and spirit of the law if we were to unjustly
retrenchment is necessary to prevent losses and such losses are proven; (b)
interfere with the managements prerogative to close or cease its business
written notice to the employees and to the DOLE at least one month prior to the
operations, just because said business operations are not suffering any loss or
intended date of retrenchment; and (c) payment of separation pay equivalent to
simply to provide the workers continued employment.
one-month pay or at least one-half month pay for every year of service, whichever
is higher.
Petitioner was employed by respondent Corporation (PT&T) as junior clerk
with a monthly salary of P3,839.74. She was later promoted as Account Executive,
The financial statements reflect that respondent suffered substantial loss
the position she held until she was temporarily laid off from employment.
in the amount of P558 Million by 30 June 1998. The Report of SGV &
Co. substantiates the alleged precarious financial condition of the respondent. No
Petitioners temporary separation from employment was pursuant to the
evidence can best attest to a company’s economic status other than its financial
Temporary Staff Reduction Program adopted by respondent due to serious
statement.
business reverses. Petitioner received a letter from respondent inviting her to avail
herself of its Staff Reduction Program Package equivalent to one-month salary for
th
every year of service, one and one-half month salary, pro-rated 13 month pay, Respondent claimed that it was suffering from serious financial reverses from 1995
conversion to cash of unused vacation and sick leave credits, and Health up to 1999. To support its claim, respondent submitted its financial statements for
Maintenance Organization and group life insurance coverage until full payment of the fiscal period of 30 June 1996 to 30 June 1998 audited by independent auditors.
the separation package. Petitioner, however, did not opt to avail herself of the said Independent public accountants, Sycip Gorres Velayo (SGV) & Co., reported that
package. On 26 February 1999, petitioner received a Notice of Retrenchment from respondent incurred a substantial loss of about P558 Million which resulted in a
respondent permanently dismissing her from employment effective 16 February deficit of about P574 Million as of 30 June 1998. Respondent has been negotiating
1999. with its creditors for the suspension of payments until the completion of an
acceptable restructuring plan.
Consequently, petitioner filed a Complaint for illegal dismissal against
respondent, its Regional Director for Visayas Reynaldo Macrohon, and its Issue: W/N the retrenchment program implemented by respondent was valid.
President and Chief Executive Officer Marilyn Eleonor Santiago before the Labor
Arbiter claiming the award of separation pay, damages and attorneys fees. In her The pertinent provision of the Labor Code reads:
Position Paper, petitioner mainly alleged that the retrenchment program adopted
by respondent was illegal for it was gaining profits for the period of July 1997 to Art. 283. Closure of establishment and reduction of
June 1998. In support of her allegation that respondent was obtaining profits, personnel. - The employer may also terminate the employment of
petitioner presented the central Visayas Operating Margin Reports showing the any employee due to the installation of labor saving devices,
respondents gross revenue and net profits in the region for the period in question. redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless
Petitioner further belied respondents contention that it was suffering from the closing is for the purpose of circumventing the provisions of
serious financial reverses by presenting respondents Special Order granting an this Title, by serving a written notice on the worker and the
increase in the salaries of its employees under Job Grade 8 and 9 in the amount [Department] of Labor and Employment at least one (1) month
of P2,300.00 a month effective January 1998. Petitioners evidence supposedly before the intended date thereof. In case of termination due to the
showed that it was still economically viable for respondent to continue its business installation of labor saving devices or redundancy, the worker
operations without downsizing its workforce. Petitioner thus prayed for the award affected thereby shall be entitled to a separation pay equivalent to
of separation pay in the amount of P107,000.00, unpaid salary, prorated at least his one (1) month pay or to at least one (1) month pay for
13th month pay, unpaid vacation leave benefits and attorneys fees. every year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
On the other hand, respondent asserted that petitioner was separated operations of establishment or undertaking not due to serious
from service pursuant to a valid retrenchment implemented by the business losses or financial reverses, the separation pay shall be
company. Retrenchment is an authorized cause for the employer to terminate the equivalent to one (1) month pay or at least one-half (1/2) month
services of an employee. Due to huge business losses suffered by respondent in pay for every year of service, whichever is higher. A fraction of at
the sum of P684,096,285.00 from 1995-1998, it was constrained to arrest least six (6) months shall be considered as one (1) whole year.
escalating operating costs by downsizing its workforce.
Retrenchment is the termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter, resorted to by
management during periods of business recession; industrial depression; or costs than labor costs. An employer who, for instance, lays off
seasonal fluctuations, during lulls occasioned by lack of orders, shortage of substantial numbers of workers while continuing to dispense fat
materials, conversion of the plant for a new production program, or the introduction executive bonuses and perquisites or so-called golden
of new methods or more efficient machinery or automation. Retrenchment is a parachutes, can scarcely claim to be retrenching in good faith to
valid management prerogative. It is, however, subject to faithful compliance with avoid losses. To impart operational meaning to the constitutional
the substantive and procedural requirements laid down by law and policy of providing full protection to labor, the employers
[17]
jurisprudence. In the discharge of these requirements, it is the employer who prerogative to bring down labor costs by retrenching must be
[18]
bears the onus, being in the nature of affirmative defense. exercised essentially as a measure of last resort, after less drastic
means - e.g., reduction of both management and rank-and-file
For a valid retrenchment, the following requisites must be complied with: bonuses and salaries, going on reduced time, improving
(a) the retrenchment is necessary to prevent losses and such losses are proven; manufacturing efficiencies, trimming of marketing and advertising
(b) written notice to the employees and to the DOLE at least one month prior to the costs, etc.have been tried and found wanting.
intended date of retrenchment; and (c) payment of separation pay equivalent to
one-month pay or at least one-half month pay for every year of service, whichever Lastly, but certainly not the least important, alleged losses
[19]
is higher. if already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence.
Jurisprudential standards for the losses which may justify retrenchment The reason for requiring this quantum of proof is readily apparent:
have been reiterated by this Court in a long line of cases to forestall management any less exacting standard of proof would render too easy the
abuse of this prerogative, viz: abuse of this ground for termination of services of employees.[20]
Firstly, the losses expected should be substantial and not In the case at bar, respondent instituted a retrenchment program to arrest
merely de minimis in extent. If the loss purportedly sought to be its alleged escalating financial losses by downsizing its workforce. Respondent
forestalled by retrenchment is clearly shown to be insubstantial claimed that a significant portion of its operational expenses went to manpower
and inconsequential in character, the bonafide nature of the resources constraining it to implement measures to reduce the number of
retrenchment would appear to be seriously in question. Secondly, employees so as to revive its fiscal condition.
the substantial loss apprehended must be reasonably imminent,
as such imminence can be perceived objectively and in good faith Upon examination of the evidence adduced by both parties, we are
by the employer. There should, in other words, be a certain convinced that, indeed, respondent experienced serious financial crises as shown
degree of urgency for the retrenchment, which is after all a drastic in the financial statements audited by independent auditors, SGV & Co. and Alba
recourse with serious consequences for the livelihood of the Ledesma & Co. It is unlikely therefore that respondent was just feigning business
employees retired or otherwise laid-off. Because of the losses in order to ease out employees.
consequential nature of retrenchment, it must, thirdly, be
reasonably necessary and likely to effectively prevent the The financial statements reflect that respondent suffered substantial loss
expected losses. The employer should have taken other measures in the amount of P558 Million by 30 June 1998. The Report of SGV &
prior or parallel to retrenchment to forestall losses, i.e., cut other Co. substantiates the alleged precarious financial condition of the respondent. No
evidence can best attest to a company’s economic status other than its financial towards workers and employees, "the right of enterprises to reasonable returns of
statement. investment and to expansion and growth." To hold otherwise would not only be
oppressive and inhuman, but also counter-productive and ultimately subversive of
Being guided accordingly, we find that respondent was fully justified in the nation's thrust towards a resurgence in our economy which would ultimately
implementing a retrenchment program since it was undergoing business reverses, benefit the majority of our people. Where appropriate and where conditions are in
not only for a single fiscal year, but for several years prior to and even after the accord with law and jurisprudence, the Court has authorized valid reductions in the
program. In a span of six years, respondent realized profits only in one year, in work force to forestall business losses, the hemorrhaging of capital, or even to
1997. recognize an obvious reduction in the volume of business which has rendered
certain employees redundant.
That the financial statements are audited by independent auditors
safeguards the same from the manipulation of the figures therein to suit the We also find that the respondent complied with the requisite notices to the
company’s needs. The auditing of financial reports by independent external employee and the DOLE to effect a valid retrenchment. Petitioner failed to refute
auditors are strictly governed by national and international standards and that she received the written notice of retrenchment from respondent on 16
regulations for the accounting profession. It bears to stress that the financial November 1998. Although respondent failed to furnish DOLE with a formal letter
statements submitted by respondent were audited by reputable auditing notifying it of the retrenchment, it still substantially complied with the
firms. Hence, petitioners assertion that respondent merely manipulated its financial requirement. Since the National Conciliation and Mediation Board, the
statements to make it appear that it was suffering from business losses that would reconciliatory arm of DOLE, supervised the negotiation for separation package, we
justify the retrenchment is incredible and baseless. agree with the Court of Appeals that it would be superfluous to still require
respondent to serve notice of the retrenchment to DOLE.
In fact, even granting arguendo that respondent was not experiencing
losses, it is still authorized by Article 283 of the Labor Code to cease its business WHEREFORE, premises considered, the instant Petition is DENIED. The
operations. Explicit in the said provision is that closure or cessation of business Court of Appeals Decision dated 12 July 2005 and its Resolution dated 22 March
operations is allowed even if the business is not undergoing economic losses. The 2006 in CA-G.R. SP No. 79440 are hereby AFFIRMED. Costs against the
owner, for any bona fide reason, can lawfully close shop anyone. Just as no law petitioner.
forces anyone to go into business, no law can compel anybody to continue in it. It
would indeed be stretching the intent and spirit of the law if we were to unjustly
interfere with the managements prerogative to close or cease its business 43. Linton Commercial v. Hellera, October 10, 2007
Doctrine: For a valid reduction of workdays, the company has to prove substantial
operations, just because said business operations are not suffering any loss or
financial losses. Management prerogative must be exercised in good faith and with
simply to provide the workers continued employment. due regard to rights of labor.
The law recognizes the right of every business entity to reduce its work Recit Ready: Respondents are employees of Linton Company who filed a
force if the same is made necessary by compelling economic factors which would COMPLAINT FOR ILLEGAL REDUCTION OF WORKDAYS. Linton implemented a
endanger its existence or stability. In spite of overwhelming support granted by the compressed workweek without giving notice to DOLE one month prior as required
social justice provisions of our Constitution in favor of labor, the fundamental law in retrenchment cases (from 6 days in one week to 3 days rotational scheme
affecting the jobs of the employees). LA said illegal reduction. NLRC reversed
itself guarantees, even during the process of tilting the scales of social justice
saying it was management prerogative. CA reversed saying it amounted to
constructive dismissal and should have notified DOLE one month prior. W/N there Petitioner questions this now before the SC.
was an illegal reduction of workdays? YES. SC said a valid justification for Issue: W/N there was an illegal reduction of work when Linton implemented a
reduction of workdays is that the company is suffering financial losses. But here, compressed workweek by reducing from six to three the number of working days
Linton was found out to have enough earnings to sustain operations. Permitting with the employees working on a rotation basis?
reduction of work and pay at the slightest indication of losses would be contrary to
the States policy to afford protection to labor and provide full employment. Held/Ratio: the compressed workweek arrangement was unjustified and illegal.
Thus, petitioners committed illegal reduction of work hours.
Facts:
Linton Company issued a memorandum to its employees informing them A common consideration in justifying reduction of work is financial losses
of the decision to suspend its operations from Dec. 18, 1997 to Jan. 5, of the company. Basis:
1998 due to the Asian Financial Crisis. Linton Company submitted a o Philippine Graphic Arts v. NLRC: valid reduction of work hours
termination report to the DOLE regarding temporary closure and indicated since the arrangement was temporary, it was more humane than
it was to resume in Jan. 6, 1998. But on Jan. 7, it issued another retrenchment, company was suffering from losses, notice and
memorandum saying it would implement a new compressed workweek on consultations were conducted.
3 day rotation basis instead of working for 6 days a week. Linton o Bureau of Working Conditions’ bulletin: a reduction of regular
implemented this without approval of DOLE. working days is valid where the arrangement is resorted to by the
Respondents are 68 workers of Linton who filed a COMPLAINT FOR employer to prevent serious losses due to causes beyond his
ILLEGAL REDUCTION OF WORKDAYS with the NLRC. They allege that control, such as substantial slump in demand of goods or services,
it was done without the required submission of notice to the DOLE one or lack of raw materials.
month prior to the implementation pursuant to Art. 283 of the Labor Code. o Note: as of this case, no definite guidelines have been set to
Linton’s defense: financial troubles so they need to reduce work days; Art. determine whether alleged losses are sufficient to justify reduction
283 is not applicable to the case. of work hours. Even if we apply the following, Linton fails.
Pending decision of the LA, 21 of the workers signed individual release Art. 286 applies when there is bona fide suspension of
and quitclaim stating they voluntarily tendered their resignation. (so they employers operation for a period not exceeding 6 months.
were dropped as complainants) – Linton continued its business operations.
LA: guilty of illegal reduction of work hours and ordered Linton to pay 3 Art. 283 applies to retrenchment which requires (1) the
days/week worth of compensation for the period when program was losses incurred are substantial and not de minimis; (2) the
implemented. losses are actual or reasonably imminent; (3) the
Linton appealed to NLRC. NLRC reversed saying it was valid under retrenchment is reasonably necessary and is likely to be
management prerogative and Art. 283 applies when there is closure or effective in preventing the expected losses; and (4) the
reduction of employees. Here, Linton did not close and did not reduce alleged losses, if already incurred, or the expected
employees (only work hours). imminent losses sought to be forestalled, are proven by
Respondents filed R65 (Certiorari) with CA. CA reversed ruling there was sufficient and convincing evidence. – Linton fails.
constructive dismissal since the interval between submission of Was the claim of financial losses proved here? No.
termination report and implementation of compressed workweek showed o SC said upon looking at financial reports, Linton had enough
intention to eventually retrench employees. Linton did not observe due earnings to sustain its operations (it only suffered losses of
process in retrenchment since it failed to provide adequate evidence that it P3.6M). A year of financial losses would not warrant such
was suffering business losses. Linton also did not justify the necessity of reduction of work week. Permitting reduction of work and pay at
the compressed workweek absent efforts to adopt more sensible means of the slightest indication of losses would be contrary to the States
cutting costs. policy to afford protection to labor and provide full employment.
Management prerogative must be exercised in good faith and with due least 1 month prior to the intended date of retrenchment; and (c) payment of
regard to rights of labor. separation pay equivalent to 1 month pay or at least 1/2 month pay for every year
As to those who already signed the quitclaims: no longer entitled to back of service, whichever is higher. The loss here must be: (1) substantial and not de
payments. minimis; (2) actual or reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing the expected losses; and (4)
the alleged losses, if already incurred, or the expected imminent losses sought to
44. AMA Computer College v. Garcia, April 14, 2008 be forestalled, are proven by sufficient and convincing evidence. ACC only made
G.R. No. 166703 bare allegations to prove retrenchment.
April 14, 2008
Digest by: Kristine Uy Facts:
Garcia and Balla were regular employees of ACC. Garcia was initially
Doctrine: Redundancy exists when the service capability of the workforce is in hired by ACC as a janitress and was subsequently changed to the position
excess of what is reasonably needed to meet the demands of the business of Library Aide. Balla was initially a Social Worker and later became a
enterprise. Retrenchment, on the other hand, is the termination of employment Guidance Assistant in the Guidance Department of ACC.
effected by management during periods of business recession, industrial On 21 March 2000, the ACC Human Resource Director, informed Garcia
depression, seasonal fluctuations, lack of work or considerable reduction in the and Balla and 52 other employees of the termination of their employment:
volume of the employer’s business.
“This is to formally inform you that due to the prevailing economic
Recit-ready: Garcia (Library Aide) and Balla (Guidance Assistant), regular condition of our economy and as part of the austerity program of the
employees of ACC, were dismissed by ACC since their positions have been found company, the top management has decided to come up with a manpower
no longer necessary as it can be handled by the other existing staff. Garcia and review of the AMA Group of Companies in order to streamline its operation
Balla filed a complaint for illegal dismissal. ACC could not decide whether the and the growth of the Organization.
basis of its dismissal was redundancy or retrenchment.
In view of this, your positions have been found no longer necessary for the
RULING: There was illegal dismissal. Redundancy exists when the service reason that your function can be handled by the other existing staff.
capability of the workforce is in excess of what is reasonably needed to meet the
demands of the business enterprise. Its requisites: (1) the good faith of the Thus, we regret to inform you effective April 21, 2000, your employment
employer in abolishing the redundant position; and (2) fair and reasonable criteria with ACC is hereby terminated. x x x.”
in ascertaining what positions are to be declared redundant and accordingly Garcia and Balla filed a complaint with the Labor Arbiter for illegal
abolished. While the determination that the employees services are no longer dismissal and prayed for the payment of separation pay, 13th month pay,
necessary is an exercise of the employer’s business judgment, it must produce and attorney’s fees, alleging that ACCs streamlining program was tainted
adequate proof of such redundancy to justify the dismissal of the affected with bad faith as there was no fair and reasonable criteria used therein,
employees. ACC did not sufficiently prove redundancy, and neither did it make the such as the less preferred status, efficiency rating and authority.
necessary notification to the DOLE of the dismissal based on redundancy. ACC claims that the dismissal was due to the legitimate streamlining by
the company.
Retrenchment, on the other hand, is the termination of employment effected by
management during periods of business recession, industrial depression, seasonal Issue: (1) Were the employees legally dismissed? – No.
fluctuations, lack of work or considerable reduction in the volume of the employer’s
business. Its requisites: (a) the retrenchment is necessary to prevent losses and Held/Ratio:
such losses are proven; (b) written notice to the employees and to the DOLE at
4. In termination cases, the burden of proving just and valid cause for
dismissing an employee from his employment rests upon the employer, It also failed to implement the same using fair and reasonable criteria
and the latter’s failure to discharge that burden would result in a finding for choosing which employees to dismiss. Among the accepted
that the dismissal is unjustified. It must be stressed at the outset that ACC criteria in implementing a redundancy are: (a) less preferred status,
raised different grounds to justify its dismissal of Garcia and Balla: before e.g., temporary employee; (b) efficiency; and (c) seniority. There is no
the Labor Arbiter, it cited retrenchment; before the NLRC, it claimed showing that ACC applied any of these criteria in determining that,
redundancy; and before the Court of Appeals, it averred both retrenchment among its employees, Garcia and Balla should be dismissed, thus,
and redundancy. making their dismissal arbitrary and illegal.
a. Redundancy exists when the service capability of the workforce is in b. Retrenchment, on the other hand, is the termination of employment
excess of what is reasonably needed to meet the demands of the effected by management during periods of business recession,
business enterprise. A reasonably redundant position is one rendered industrial depression, seasonal fluctuations, lack of work or
superfluous by any number of factors, such as overhiring of workers, considerable reduction in the volume of the employer’s business. It is
decreased volume of business, dropping of a particular product line resorted to by an employer to avoid or minimize business losses. A
previously manufactured by the company or phasing out of service valid retrenchment requires the following: (a) the retrenchment is
activity priorly undertaken by the business. Among the requisites of a necessary to prevent losses and such losses are proven; (b) written
valid redundancy program are: (1) the good faith of the employer in notice to the employees and to the DOLE at least 1 month prior to the
abolishing the redundant position; and (2) fair and reasonable criteria intended date of retrenchment; and (c) payment of separation pay
in ascertaining what positions are to be declared redundant and equivalent to 1 month pay or at least 1/2 month pay for every year of
accordingly abolished. While the determination that the employees service, whichever is higher.
services are no longer necessary is an exercise of the employer’s
In a number of cases, the Court has identified the necessary
business judgment, it must produce adequate proof of such
conditions for the company losses to justify retrenchment: (1) the
redundancy to justify the dismissal of the affected employees.
losses incurred are substantial and not de minimis; (2) the losses are
actual or reasonably imminent; (3) the retrenchment is reasonably
Here, ACC presented its new table of organization and a certification
necessary and is likely to be effective in preventing the expected
by its Human Resources Supervisor that the functions and duties of
losses; and (4) the alleged losses, if already incurred, or the expected
many rank and file employees are now being performed by
imminent losses sought to be forestalled, are proven by sufficient and
supervisory employees. These, however, are insufficient. They are
convincing evidence. ACC miserably failed to prove any of the
grossly inadequate and mainly self-serving. More compelling evidence
foregoing. It only made bare allegations.
would have been a comparison of the old and new staffing patterns, a
description of the abolished and newly created positions, and proof of
the set business targets and failure to attain the same which
45. GSWU-NAFLU-KMU v. NLRC, October 17, 2006
necessitated the reorganization or streamlining.
G.R. Nos. 165757
Date: October 17, 2006
Moreover, the claim that Garcia and Balla were remiss in their duties
Digest by: Isa Avanceña
for being tardy and absent, are irrelevant to prove redundancy of the
relevant positions.
Recit-Ready (Doctrine in bold)
- Galaxie Steel had to terminate its employees due to serious business
ACC also failed to notify the DOLE at least one month before the
losses. The company notified DOLE and also posted a notice on the
intended dismissal.
company bulletin board for the employees. Issues were whether or not
Galaxie Steel really was facing business losses and were not simply doing W/N Galaxie Steel’s closure of business operations was really motivated by
it because they were anti-union; whether or not the posting of the notice on serious business losses, and not by their anti-union stance? YES, it really
the bulletin board is sufficient; and, given that the posting of the notice on was because of serious business losses.
the bulletin board is not sufficient, whether or not the dismissal is still valid. - The NLRC’s finding on the legality of the closure should be upheld for it is
The NLRC’s finding on the legality of the closure should be upheld for it is supported by substantial evidence consisting of the audited financial
supported by substantial evidence consisting of the audited financial statements. True, the union was seeking the holding of a certification
statements. True, the union was seeking the holding of a certification election at the time that Galaxie Steel closed its business operation, but
election at the time that Galaxie Steel closed its business operation, that, without more, was not sufficient to attribute anti-unionism against
but that, without more, was not sufficient to attribute anti-unionism Galaxie Steel.
against Galaxie Steel. Article 283 of the Labor Code does not obligate
an employer to pay separation benefits when the closure is due to W/N the employees should be paid separation pay? NO.
serious losses. Service of the written notice must be made - Quoting from a previous case: It is only in instances of "retrenchment to
individually upon each and every employee of the company. prevent losses and in cases of closures or cessation of operations of
Nevertheless, the validity of termination of services can exist establishment or undertaking not due to serious business losses or
independently of the procedural infirmity in the dismissal. However, financial reverses" that employees whose employment has been
the employer should indemnify the employee, in the form of nominal terminated as a result are entitled to separation pay. In other words, Article
damages, for the violation of his right to statutory due process. 283 of the Labor Code does not obligate an employer to pay separation
benefits when the closure is due to serious losses. To require an employer
Facts: to be generous when it is no longer in a position to do so, in our view,
- On account of serious business losses totaling P127,000,000, Galaxie would be unduly oppressive, unjust, and unfair to the employer. Ours is a
Steel decided toc close down its business operations. system of laws, and the law in protecting the rights of the working man,
- Galaxie Steel filed a written notice with the DOLE informing the latter of its authorizes neither the oppression nor the self-destruction of the employer.
intended closure and the consequent termination of its employees
effective August 31, 1999. W/N the posting of the notice of closure on the company bulletin board
- It also posted the notice of closure on the corporate bulletin board sufficiently complied with the requirement under Article 283 of “serving a
- The Union filed a complaint for illegal dismissal, unfair labor practice, and written notice on the workers… at least one (1) month before the intended
money claims against Galaxie. date [of termination]”? NO.
- LA: Declared valid Galaxie’s closure of business but nevertheless ordered - The purpose of the written notice is to inform the employees of the specific
it to pay employees separation pay, pro-rata 13th month pay, and date of termination or closure of business operations, and must be served
vacation and sick leave credits upon them at least one month before the date of effectivity to give them
- NLRC: Upheld the Labor Arbiter’s decision but reversed the award of pro- sufficient time to make the necessary arrangements. In order to meet the
rata 13th month pay and vacation and sick leave credits, the same not foregoing purpose, service of the written notice must be made
being among employees’ causes of action as in fact they were not even individually upon each and every employee of the company.
mentioned in their pleadings; reversed too the award for separation pay, - Nevertheless, the validity of termination of services can exist
because the closure of Galaxie Steel’s business was due to serious independently of the procedural infirmity in the dismissal. However, the
business losses; Nevertheless, the NLRC directed Galaxie to grant the employer should indemnify the employee, in the form of nominal damages,
employees, by way of financial assistance, the same amount given to the for the violation of his right to statutory due process.
employees who had executed quitclaims.
- CA: Upheld NLRC
46. Dickinson Philippines v. NLRC
Issues/Held/Rationale: G.R. No. 159969 | November 5, 2005
the quitclaim (see doctrine no.2). Though he was an intelligent man occupying a
Doctrines: top position, the Court understands that such a risk of not receiving anything
whatsoever, coupled with the probability of not immediately getting any gainful
1. Redundancy exists where the services of an employee are in excess of employment or means of livelihood in the meantime, constitutes enough pressure
what is reasonably demanded by the actual requirements of the upon anyone who is asked to sign a release and quitclaim in exchange of some
enterprise. A position is redundant where it is superfluous, and superfluity amount of money which may be way below what he may be entitled to based on
of a position or positions may be the outcome of a number of factors, such company practice and policy or by law. What respondent received when he signed
as overhiring of workers, decrease in volume of business, or dropping of a the Release and Quitclaim was less than half of what he is entitled to under the
particular product line or service activity previously manufactured or circumstances.
undertaken by the enterprise.
2. If the a quitclaim was voluntarily entered into and represents a reasonable Facts:
settlement of the claims of the employee, it is binding on the parties.
However, when the voluntariness of the execution of the quitclaim or In 1989, Private respondent Reinerio Z. Esmaquel started his stint
release is put into issue, then the claim of employee may still be given due with Becton, Phils. as Director of Sales and Marketing of the Diagnostics
course. This rule on the validity and binding effect of releases and Division. For his commendable performance as Sales and Marketing
quitclaims apply not only to rank-and-file workers, but even to top officers Director, respondent received numerous citations and awards. He was
when it concerns the pressure which the employer may exert upon the free then appointed to Business Director. As Business Director, he exceeded
will of the employee. the sales target and was given numerous incentives. Afterwards, he was
appointed as Director of Sales and consistent with his work performance,
Recit Ready Digest: respondent achieved the sales target assigned to him. He was also made
Private respondent Esmaquel was the Director of Sales of Becton Dickson, a a part of the leadership team, which was responsible for the formulation of
distributor of pharma and medical supplies. He was an outstanding employee who policies and rules of the company. (In short, he was an outstanding
always went beyond his sales targets. In 2000, the company retrenched nine employee).
employees. Two months after a new country manager was appointed, respondent In November, 2000, pursuant to its established policies and guidelines for
was also terminated due to redundancy. However, the company standards and terminating employees, Becton retrenched nine (9) employees.
guidelines for declaring redundant positions and terminating employees were not After the country manager left the company, respondent was considered
taken into account. The separation package given to him was also considerably for said position. However, a certain Wilfredo Joaquin was appointed.
lower than that offered to the earlier retrenched employees. Respondent was also Two (2) months from Joaquin’s assumption of his position as Country
asked to sign a release and quitclaim, otherwise his separation and retirement pay Manager, Becton, Phils. served upon respondent a notice of termination of
will be withheld. The issues are (1) W/N respondent was validly dismissed due to employment on the ground that his position has been declared redundant.
redundancy; and (2) W/N his claim is barred by the quitclaim. On the first issue, Respondent asked Joaquin if he had taken into consideration in declaring
respondent was NOT validly terminated because the company does have redundant his position, the guidelines/rules for termination of employment
standards or criteria in choosing who to dismiss, but it violated them. It treated as directed by Becton, Asia’s President, namely: (a) to retain the best
respondent in a way different from its treatment of the earlier retrenched employee; (b) consider the performance of the employee for the last three
employees not only in the matter of termination but also in the matter of separation years; and (c) refrain from taking decision based on individual salary.
pay and retirement benefits. Company was also not able to prove redundancy Joaquin failed to answer.
because there is no clear proof that respondent’s services are in excess of the Respondent further protested when he was informed that the separation
Company’s reasonable demands and requirements; and that there is no other benefits to be paid to him was way below those received by the nine (9)
alternative available to the Company except to dismiss him. The superfluity of his employees previously terminated. He demanded an equal treatment from
position has not been established. On the second issue, his claim is not barred by the company.
He was then terminated and required to sign a Release and enterprise. A position is redundant where it is superfluous, and
Quitclaim, otherwise, his separation pay and retirement benefits will be superfluity of a position or positions may be the outcome of a
withheld. Respondent found no other alternative but to give in, and number of factors, such as overhiring of workers, decrease in
reluctantly signed the document. volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the
Issues: enterprise.
o There is no clear proof that respondent’s services are in excess of
the Company’s reasonable demands and requirements; and that
1. W/N respondent was validly terminated on the ground of redundancy;
there is no other alternative available to the Company except to
2. W/N the respondent’s claim is barred by the release and quitclaim;
dismiss him. The superfluity of his position has not been
and
established. There has been no previous overhiring of employees.
3. W/N the NLRC erred on dismissing petitioner’s appeal due to lack of
There is no proof of decreased volume of business. Respondent
CNFS
even went beyond the sales target – he achieved 104% sales
performance. Neither is there proof that the Company had
Held: dropped a product line or service.
6. Petitioners utterly failed to establish by substantial evidence that indeed,
On termination due to redundancy – NOPE, INVALID respondent’s position in the company became redundant due to concrete
and real factors recognized by law and relevant jurisprudence.
3. Petitioners disregarded totally the Company’s guidelines in declaring 7. The characterization of an employee’s services as no longer necessary or
respondent’s position redundant. The principal reason why his position sustainable, and therefore, properly terminable, is an exercise of business
was declared redundant is the fact that he was the highest paid employee judgment on the part of the employer however, the exercise of managerial
with a monthly salary of ₱197,525.00. The Company’s main purpose in prerogative must be exercised without grave abuse of discretion, bearing
terminating him was to cut down expenses, camouflaging its malice by in mind the basic elements of justice and fair play.
using the ground of redundancy. There were violations of the Company 8. When the company laid down guidelines for terminating employees and
rules to retain the best employee; to consider the performance of the applied these in previously laying off nine of its employees, it committed
employee for the last three years; protect the best people; and remove grave abuse of discretion in not applying the same criteria in respondent’s
those who least contribute. case. There is no valid and acceptable explanation for the unequal
4. The Company does have standards or criteria in choosing who to dismiss, treatment by petitioner.
but it violated them. On the other hand, it adhered closely to these
standards when it terminated nine other employees. The records also On W/N respondent’s claim is barred by the quitclaim – NOPE, claim can
show that the Company treated respondent in a way different from its prosper
treatment of aforesaid nine employees not only in the matter of termination
but also in the matter of separation pay and retirement benefits. Not all waivers and quitclaims are invalid as against public policy. If the
o Other nine employees had a bigger separation package – theirs agreement was voluntarily entered into and represents a reasonable
was no.of years of service x monthly salary x 3 while respondent’s settlement of the claims of the employee, it is binding on the parties and
was just no.of years of service x month salary x 1.38 may not later be disowned simply because of a change of mind. However,
o For the retirement package, the former were offered x 1.5 while when as in this case, the voluntariness of the execution of the quitclaim or
respondent was just given x .75. release is put into issue, then the claim of employee may still be given due
5. Redundancy exists where the services of an employee are in excess of course
what is reasonably demanded by the actual requirements of the
The Court cannot subscribe to petitioners’ reasoning that the foregoing both to the employee concerned and the DOLE at least one month prior to the
ruling on the validity and binding effect of releases and quitclaims apply intended date of retrenchment. Compliance with the one-month notice rule is
only to rank-and-file workers, and find no application to respondent in this mandatory regardless of whether the retrenchment is temporary or permanent.
case, who happens to be a highly intelligent man who once held the top The employer’s failure to comply with the one-month notice requirement prior to
sales position at petitioner company. There is no nexus between retrenchment does not render the termination illegal—it merely renders the same
intelligence, or even the position which the employee held in the company defective, entitling the dismissed employee to payment of indemnity in the form of
when it concerns the pressure which the employer may exert upon the free nominal damages.
will of the employee who is asked to sign a release and quitclaim. The
Court understands that such a risk of not receiving anything whatsoever, Recit-Ready: PT&T incurred business losses. To prevent bankruptcy, it
coupled with the probability of not immediately getting any gainful implemented a Voluntary Staff Reduction Program (VSRP) to reduce employees
employment or means of livelihood in the meantime, constitutes enough from 2500 to 900 but only 478 availed of the program. Since it needed to lay-off
pressure upon anyone who is asked to sign a release and quitclaim in more workers it 1) extended the VSRP. But they still need to layoff more so they
exchange of some amount of money which may be way below what he subsequently implemented the Temporary Staff Reduction Program (Bayao and
may be entitled to based on company practice and policy or by law. Castillo were affected. The reported for work thereafter but they were informed that
It may likewise be noted that what respondent received when he signed their position, AE is no longer available; in its stead, the positions of Service
the Release and Quitclaim was less than half of what he is entitled to Account Representatives and Service Account Specialists were created. Bayao
under the circumstances. This is another reason why the Court cannot rely and Castill filed a complaint for illegal dismissal. In the interim, Bayao and Castillo
upon such Release and Quitclaim to validly bar respondent from thereafter received a letter informing them of the business losses and that they are being
claiming additional benefits from petitioner. offered a separation package as per the agreement of the company with the
collective bargaining agent. LA, NLRC and CA ruled in favor of Bayao and Castillo.
On W/N NLRC erred in dismissing the case due to lack of CNFS (skippable) - W/N the retrenchment program implemented by petitioner PT&T is valid. SC held
NOPE that: YES, termination was legal, but employee is entitled to payment of indemnity
in the form of nominal damages. Petitioner sufficiently proved that it has a valid
ground for implementing a retrenchment program, BUT it is not excused from
The certificate of non-forum shopping is mandatory and should complying with the required written notice served both to the employee concerned
accompany pleadings filed before the NLRC. and the DOLE at least one month prior to the intended date of retrenchment.
The failure of the petitioners to comply is fatal to their cause for their non- Compliance with the one-month notice rule is mandatory regardless of whether the
compliance with the requirement relative to the filing of certificate of non- retrenchment is temporary or permanent. The employer’s failure to comply with the
forum shopping did not toll the running of the period for perfecting their one-month notice requirement prior to retrenchment does not render the
appeal. termination illegal—it merely renders the same defective, entitling the dismissed
employee to payment of indemnity in the form of nominal damages.
47. PT & T v. NLRC, April 15, 2005 Facts:

Doctrine: In order that retrenchment due to serious business losses may be Bayao and Castillo were hired by PT&T as account executives (AE) in
validly exercised, the following requisites must concur: (a) necessity of the Baguio. They received a memo inviting them to consider a 3-month
retrenchment to prevent losses, and proof of such losses; (b) written notice to the assignment in Rizal and Laguna in view of PT&T’s expansion. But they
employees and to the DOLE at least one (1) month prior to the intended date of refused. In any event, the expansion failed to materialize due to lack of
retrenchment; and (c) payment of separation pay equivalent to one (1) month pay capital.
or at least one-half (1/2) month pay for every year of service, whichever is higher. PT&T incurred business losses and resorted to reducing employees
While an employer may have a valid ground for implementing a retrenchment through a Voluntary Staff Reduction Program to prevent bankruptcy. Goal
program, it is not excused from complying with the required written notice served
is to reduce employees from 2500 to 900 but only 478 availed of the intended date of retrenchment; and (c) payment of separation pay
program. They extended this program but still not enough. Consequently, equivalent to one (1) month pay or at least one-half (1/2) month pay for
they implemented a Temporary Staff Reduction Program (TSRP) every year of service, whichever is higher.
Bayao and Castillo received a letter informing them that the cumulative net Under the first requisite, it is imperative on the part of the employer to
losses of PT&T for the last four years had reached P293.4 million and that sufficiently and convincingly establish business reverses of the kind or in
they were among the employees affected by the TSRP. The reported for the amount that would justify retrenchment.
work thereafter but they were informed that their position, AEis no longer To justify retrenchment, the employer must prove serious business losses,
available; in its stead, the positions of Service Account Representatives as not all business losses suffered by an employer would justify
(SAR) and Service Account Specialists (SAS) were created. retrenchment under the aforesaid Article 283. The loss referred to in the
Bayao and Castillo filed complaints for illegal dismissal. said provision cannot be of just any kind or amount, otherwise, a company
In the interim, Petitioner sent a letter stating that although they are not part could easily feign excuses to suit its whims and prejudices or to rid itself of
of the bargaining unit, they are offering them separation package as per unwanted employees.
the agreement with the collective bargaining agent. This separation pay is As consistently held by this Court, to guard against abuse, any claim of
only payable upon acknowledgement of receipt of the said letter. Lastly, it actual or potential business losses must satisfy the following established
stated that: “Your separation from the company is effective on 31 August standards, to wit: (a) the losses incurred are substantial and not de
1998. (Please see attached guidelines for details.) It really pains us to minimis; (b) the losses are actual or reasonably imminent; (c) the
separate you from the company but it is a necessary measure we have to retrenchment is reasonably necessary and is likely to be effective in
take to ensure the survival of the company.” (note: the content of the preventing the expected losses; and (d) the alleged losses, if already
letter is important later on, especially the wording of the quoted lines”) incurred, or the expected imminent losses sought to be forestalled are
LA: ruled in favor of Bayao and Castillo. NLRC: affirmed LA. proven by sufficient and convincing evidence 
CA: declared that there was no valid ground for retrenchment, considering In this case, Petitioner sufficiently complied with its burden to prove that it
that when Bayao and Castillo returned, their positions were already filled incurred substantial losses as to warrant the exercise of the extreme
up (thru the creation of SAR and SAS); at the same time, PT&T did not measure of retrenchment to prevent the company from totally going under
inform its employees and the DOLE of the scheduled retrenchment at least by presenting the external audit report.
one month before its implementation. While an employer may have a valid ground for implementing a
retrenchment program, it is not excused from complying with the required
Issue: W/N the retrenchment program implemented by petitioner PT&T is valid. written notice served both to the employee concerned and the DOLE at
YES, termination was legal, but employee is entitled to payment of indemnity least one month prior to the intended date of retrenchment.
in the form of nominal damages. Petitioner alleged that based on the case of Sebuguero, Article 283
speaks of a permanent retrenchment as opposed to a temporary lay-off as
Held/Ratio: There was a valid ground for retrenchment BUT it is defective for is the case here. “There is no specific provision of law which treats of a
failure to comply with the 1-month notice requirement; consequently, it entitled the temporary retrenchment or lay-off and provides for the requisites in
dismissed employees to payment of indemnity in the form of nominal damages effecting it or a period or duration therefor.” Hence, no need to comply with
Retrenchment is a management prerogative resorted to by an employer to the 1-month notice requirement.
avoid or minimize business losses which is consistently recognized by the SC in this case said that nowhere can it be found in Sebuguero that the
Supreme Court. one-month notice may be dispensed with. On the contrary, the Court
In order that retrenchment due to serious business losses may be validly emphasized the mandatory nature of the said notice.
exercised, the following requisites must concur: (a) necessity of the In this case, Bayao and Castillo merely had 2 weeks, and Petitioner’s
retrenchment to prevent losses, and proof of such losses; (b) written notice contentions are misplaced. For one, lay off was not temporary given the
to the employees and to the DOLE at least one (1) month prior to the wordings of the letter sent to Bayao and Castillo (“separation package;”
“separation is effective on xxx;” “It really pains us to separate you from the corporation did not agree to. Aggrieved, the respondents filed a case
company but it is a necessary measure we have to take to ensure the against the company for illegal dismissal with the LA. The LA ruled that the
survival of the company.”) Assuming arguendo that it is temporary, it is retrenchment was invalid for having no sufficient basis. The NLRC, on
immaterial in this case since compliance with the one-month notice appeal by the corporation, held that the corporation’s serious financial
rule is mandatory regardless of whether the retrenchment is difficulties necessitated the retrenchment. It used the audited financial
temporary or permanent. statements as well as proof that it sold assets in order to meet some of its
The employer’s failure to comply with the one month notice requirement prior to financial obligations.
retrenchment does not render the termination illegal; it merely renders the same ● On a Rule 65 with the CA, it reversed the NLRC decision and held that the
defective, entitling the dismissed employee to payment of indemnity in the form of corporation failed to prove financial losses. It held that the corporation
nominal damages. Based on prevailing jurisprudence, the amount of indemnity is actually had an increase in its operations revenue. Further, it held that the
pegged at P30,000.00. petitioner failed to prove that it resorted to less drastic and less permanent
cost-cutting measures before the decision to retrench the employees.
Furthermore, it held that the petitioner failed to adduce evidence as to the
48. Oriental Petroleum v. Fuentes, October 14, 2005 criteria used for retrenchment.
G.R. 112591 | Oct. 14, 2005
Chris Co Issues:
Procedural: Can the CA make an independent evaluation of facts under a Rule 65
Doctrine: It is necessary that the employer, in the act of retrenchment, show its petition? Yes.
criteria transparently and in good faith in selecting which employee should Substantive: Was the retrenchment properly undertaken? No.
retrenched.
Held:
Recit-Ready: Oriental retrenched respondents due to financial losses as shown in Procedural
its financial statements as well as the selling of certain assets. It provided for ● The Court held that yes, the CA can make an independent evaluation of
separation benefits to which the respondents did not agree to. Respondents thus facts under Rule 65 according to the case of St. Martin Funeral Homes vs
filed a complaint for illegal retrenchment with the LA. The LA ruled in favor of the NLRC.
respondents. The NLRC ruled in favor of Oriental. The CA ruled in favor of the Substantive
respondents since the financial statements weren’t enough to prove business ● The Court has laid down the following standards which a corporation must
losses as well as Oriental’s failure to show the criteria it used for retrenchment. meet to justify retrenchment and to foil abuse
The SC ruled that there was an actual showing of financial losses through the sale
of other assets. However, it still rendered the retrenchment illegal because Oriental Firstly, the losses expected should be substantial and not merely de
failed to be transparent with regard to the criteria it used for terminating the minimis in extent. If the loss purportedly sought to be forestalled by
respondents. retrenchment is clearly shown to be insubstantial and inconsequential in
character, the bonafide nature of the retrenchment would appear to be
Facts: seriously in question.
● Oriental through one of its VPs informed the respondents that they were
terminated based on a retrenchment program. Thus, they were allowed to Secondly, the substantial loss apprehended must be reasonably imminent,
receive separation pay equivalent to ½ month salary for every year of as such imminence can be perceived objectively and in good faith by the
service or an amount higher if they qualify under the company’s retirement employer. There should, in other words, be a certain degree of urgency for
plant. The termination was reported to the DOLE. Finding the benefits the retrenchment, which is after all a drastic recourse with serious
unacceptable, the respondents made a counter-proposal to which the
consequences for the livelihood of the employees retired or otherwise laid- vs National Labor Union, where it held that failure to take seniority into
off. account during retrenchment already rendered such act invalid. Here, the
Court ruled that the petitioner failed to show that it had any standard at all
Because of the consequential nature of retrenchment, it must, thirdly, be in selecting the employees to be retrenched.
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 other than labor costs. 49. FASAP v. PAL
An employer who, for instance, lays off substantial numbers of workers GR NO 178083
while continuing to dispense fat executive bonuses and perquisites or so- July 22, 2008 & October 2, 2009
called "golden parachutes," can scarcely claim to be retrenching in good
faith to avoid losses. To impart operational meaning to the constitutional THESE ARE LONG CASES WITH SO MUCH HANASH so you might need longer
policy of providing "full protection" to labor, the employer's prerogative to patience (but I highlighted the stuff that you need to remember!)
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 Doctrine: While the company is allowed to exercise its management prerogative in
management and rank-and-file bonuses and salaries, going on reduced terminating employees, there must be faithful compliance with the law in exercising
time, improving manufacturing efficiencies, trimming of marketing and such power. Specifically, retrenchment is only a measure of last resort, when other
advertising costs, etc. — have been tried and found wanting. less drastic means have been tried and found to be inadequate. The burden
clearly falls upon the employer to prove economic or business losses with
Lastly, but certainly not the least important, alleged losses if already sufficient supporting evidence. Its failure to prove these reverses or losses
realized, and the expected imminent losses sought to be forestalled, must necessarily means that the employees dismissal was not justified. In order for
be proved by sufficient and convincing evidence. The reason for requiring retrenchment to be valid, the elements of retrenchment must all concur (see Held).
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 Recit-ready: FASAP is the collective bargaining agent of PAL cabin crew
services of employees. personnel. PAL decided to retrench 1,400 cabin crew personnel due to the
downsizing of its fleet (initially it thought of downsizing from 54 to 14 but resorted
● In order to justify the retrenchment, the corporation presented its financial to downsizing from 54 to 22). In retrenching cabin crew personnel, two of the
statements to show that the retrenchment was needed to stop its actual considerations are the efficiency rating and seniority of the employee. However,
losses and prevent further loss. These financial statement, however, do the basis for the employees’ performance is for the year 1997 alone. FASAP filed a
not suffice to meet the stringent requirement that the losses must be case for illegal retrenchment. SC ruled that the employees were illegally dismissed
substantial, continuing and without any immediate prospect of abating. because three out of five elements for a valid retrenchment were not satisfied,
● However, the Court disagrees with the CA that there is a need to prove namely, 1) proof of substantial business loss, 2) good faith, and 3) use of fair and
that retrenchment can only be resorted to after less dramatic means have reasonable criteria. For the first element, PAL failed to prove substantial business
been tried and found wanting. It held that the LA and CA failed to loss. SC ruled that just because there was an Asian financial crisis and that PAL
appreciate the sale of the other assets done prior or parallel to the was under rehabilitation, it does not mean that PAL was having substantial
retrenchment. business loss. Records also show that PAL rehired some of the retrenched
● As regards to the use of reasonable criteria used in effecting retrenchment employees and made them permanent and regular. This negates the fact that it
(i.e., less preferred status or temporary employee, efficiency and needed to cut down costs by retrenchment. PAL also failed to submit its financial
seniority), the Court held that the petitioner failed to show transparency statements to the LA to justify its need for retrenchment. For the second element,
and good faith in the implementation of its decision to retrench there was no good faith by the fact that it arbitrarily changed its plan to cut down to
respondents. The Court in this case cited Philippine Tuberculosis Society 14 fleets and decided to retain 22 fleets instead, all the while retrenching the same
number of people. The plan to cut down to 14 fleets was made known to since this action also translated into a reduction of flights
employees, but the arbitrary change to retain 22 fleets instead was not consulted (REMEMBER THIS).
with FASAP. Given that it retained MORE fleets than what it originally planned, SC Prior to the full implementation of the assailed retrenchment program,
ruled that PAL could have retrenched less people. As for the last element, there FASAP and PAL conducted a series of consultations and meetings and
was no fair and reasonable criteria. Upon investigation, a lot of employees were explored all possibilities of cushioning the impact of the impending
retrenched due to “seniority and OTHER REASONS.” The “other reasons” was reduction in cabin crew personnel. Because of failure to agree on how the
vague and not on the basis of fact and law. Moreover, in assessing the overall retrenchment should be implemented, PAL unilaterally resolved to utilize
performance of each cabin crew personnel, PAL only considered the year 1997. the criteria set forth in Section 112 of the PAL-FASAP CBA in retrenching
By discarding the cabin crew personnel’s previous years of service and taking into cabin crew personnel: that is, that retrenchment shall be based on the
consideration only one year’s worth of job performance for evaluation, PAL virtually individual employees’ efficiency rating and seniority (REMEMBER
did away with the concept of seniority, loyalty and past efficiency, and treated all THIS). Also, it decided to adopt Plan 22 instead of Plan 14
cabin attendants as if they were on equal footing, with no one more senior than the PAL determined the cabin crew personnel efficiency ratings through
other. an evaluation of the individual cabin crew members overall performance
On the Motion for Reconsideration, ALMOST SAME HANASH BY PAL, except for for the year 1997 alone (REMEMBER THIS). Their respective
this: PAL raised the issue on the pilots that staged strike which is also a reason performance during previous years, i.e., the whole duration of service with
why they needed to retrench. But SC ruled that THAT’S JUST A TEMPORARY PAL of each cabin crew personnel, was not considered.
STRIKE so don’t be OA. Retrenchment is a measure of last resort. What PAL did In June 1998, PAL was placed under corporate rehabilitation approved by
was use retrenchment as one of its first remedies. Before retrenchment is resorted the SEC.
to, PAL must first prove that it applied OTHER COST-CUTTING measures. On June 22, 1998, FASAP filed a Complaint against PAL (“FASAP Case”)
for ULP, illegal retrenchment with money claims and damages with a
Facts: prayer to enjoin the retrenchment program then being implemented. PAL
FASAP is the duly certified collective bargaining representative of PAL filed a motion to dismiss. FASAP filed its Comment to respondent’s motion
flight attendants and stewards, or collectively known as PAL cabin crew to dismiss and a request to consolidate the FASAP case with the other
personnel. cases filed against PAL in relation to the retrenchment.
On June 15, 1998, PAL retrenched 5,000 of its employees, including o LA set aside the motion to dismiss and granted the injunction
more than 1,400 of its cabin crew personnel. PAL adopted the against PAL’s retrenchment program and directed respondents to
retrenchment scheme allegedly to cut costs and mitigate huge financial restore the said retrenched cabin crew to their positions (note that
losses as a result of a downturn in the airline industry brought about by the in the FASAP case alone, LA did not rule on the legality of the
Asian financial crisis. retrenchment)
o In implementing the retrenchment scheme, PAL adopted its so- o NLRC reversed LA’s decision and lifted the grant of injunction.
called Plan 14. Plan 14 was called Plan 14 because PAL would NOTE THAT in November 1998, or five months after mass dismissal of its
cut down its fleet size to only 14. Plan 14 was made known to PAL cabin crew personnel, PAL began recalling to service those it had
employees. previously retrenched (REMEMBER THIS).
o HOWEVER, 3 days after, PAL decided to implement Plan 22 Thereafter, the FASAP case was consolidated with the other cases and
instead. Instead of cutting down the fleet size to 14, it was again heard by the LA.
retained 22 fleets instead. But the retrenched cabin crew o In the consolidated cases, LA FINALLY ruled on the legality of
employees still remained at 1,400 (REMEMBER THIS). retrenchment. It ruled that the retrenchment of 1,400 cabin crew
o PAL admits that the retrenchment is wholly premised upon employees was done in a despotic and whimsical manner. It
such reduction in fleet and to the strike staged by PAL pilots ordered for the reinstatement of the employees and payment of
backwages and damages.
But NLRC reversed LA’s decision and said that the retrenchment was o FIFTH: That the employer used fair and reasonable criteria in
valid. ascertaining who would be dismissed and who would be retained
among the employees, such as status, efficiency, seniority,
Issue: W/N the retrenchment was valid physical fitness, age, and financial hardship for certain workers.
The case hinges on the determination of the existence of the first, fourth
Held: and the fifth elements. In this case, PAL failed to satisfy these elements.
On the 22 July 2008 SC Decision: FIRST ELEMENT: NOT SATISFIED
SC ruled that the retrenchment was not valid hence, the cabin crew o PAL failed to substantiate its claim of actual and imminent
personnel were illegally dismissed. substantial losses which would justify the retrenchment of more
The law recognizes the right of every business entity to reduce its work than 1,400 of its cabin crew personnel. Although the Philippine
force if the same is made necessary by compelling economic factors which economy was gravely affected by the Asian financial crisis,
would endanger its existence or stability. The Court has authorized valid however, it cannot be assumed that it has likewise brought PAL to
reductions in the work force to forestall business losses, the hemorrhaging the brink of bankruptcy. Likewise, the fact that PAL underwent
of capital, or even to recognize an obvious reduction in the volume of corporate rehabilitation does not automatically justify the
business which has rendered certain employees redundant. retrenchment of its cabin crew personnel. Records show that PAL
Nevertheless, there must be faithful compliance with substantive and was not even aware of its actual financial position when it
procedural requirements of the law and jurisprudence. Retrenchment is implemented its retrenchment program. It embarked on the mass
only a measure of last resort, when other less drastic means have been dismissal without first undertaking a well-considered study on the
tried and found to be inadequate. proposed retrenchment scheme. This view is underscored by the
The burden clearly falls upon the employer to prove economic or business fact that previously, PAL terminated the services of 140
losses with sufficient supporting evidence. Its failure to prove these probationary cabin attendants, but rehired them almost
reverses or losses necessarily means that the employees dismissal was immediately and even converted their employment into
not justified. In order for retrenchment to be valid, the following elements permanent and regular, even as a massive retrenchment was
must concur: already looming in the horizon. To prove that PAL was financially
o FIRST: That retrenchment is reasonably necessary and likely to distressed, it could have submitted its audited financial statements
prevent business losses which, if already incurred, are not but it failed to present the same with the Labor Arbiter. Instead, it
merely de minimis, but substantial, serious, actual and real, or if narrated a litany of woes without offering any evidence to show
only expected, are reasonably imminent as perceived objectively that they translated into specific and substantial losses that would
and in good faith by the employer; necessitate retrenchment.
o SECOND: That the employer served written notice both to the FOURTH ELEMENT: NOT SATISFIED
employees and to the Department of Labor and Employment at o On the requirement that the prerogative to retrench must be
least one month prior to the intended date of retrenchment; exercised in good faith, the hiring of new employees and
o THIRD: That the employer pays the retrenched employees subsequent rehiring of retrenched employees constitute bad faith.
separation pay equivalent to one (1) month pay or at least o PAL implemented Plan 22 instead of Plan 14, which was what it
one-half () month pay for every year of service, whichever is had originally made known to its employees. This act is not in
higher; good faith. The irregularity of PALs implementation of Plan 14
o FOURTH: That the employer exercises its prerogative to retrench becomes more apparent when it rehired 140 probationary cabin
employees in good faith for the advancement of its interest and attendants whose services it had previously terminated, and yet
not to defeat or circumvent the employees right to security of proceeded to terminate the services of its permanent cabin crew
tenure; and, personnel. In sum, we find that PAL had implemented its
retrenchment program in an arbitrary manner and with evident bad being held in connection with the proposed retrenchment, and that twice-
faith, which prejudiced the tenurial rights of the cabin crew weekly meetings between the union and the airline were being held since
personnel. February 12, 1998. It claims that it took PAL four months before the
FIFTH ELEMENT: NOT SATISFIED. retrenchment scheme was finally implemented.
o In selecting employees to be dismissed, fair and reasonable PAL claims that the criteria used in the implementation of the retrenchment
criteria must be used, such as but not limited to: (a) less preferred scheme in question was based on the ratified PAL-FASAP 1996-2000
status (e.g., temporary employee), (b) efficiency and (c) seniority. CBA, which should be considered as the law between the parties. The use
o In the implementation of its retrenchment scheme, PAL evaluated of “other reasons” simply lumped together various reasons for
the cabin crew personnel’s performance during the year preceding retrenchment, such as excess sick leaves, previous admonitions,
the retrenchment (1997), based on the following set of criteria or suspensions, passenger complaints, poor performance, tardiness, etc. It
rating variables found in the Performance Evaluation Form of the claims that it used seniority in conjunction with a combination of these
cabin crew personnel’s Grooming and Appearance Handbook. grounds in arriving at a conclusion of whether to retain or retrench.
o Most of the crew were retrenched due to reasons which are not PAL defends as well its use of a single year (1997) as basis for assessing
specifically stated and shown to be for a valid cause (specifically, the cabin attendant’s fitness for retention or retrenchment, stressing that
454 employees were retrenched due to “seniority and other its CBA with FASAP requires as basis for reduction in personnel only one
reasons”). This is not allowed because it has no basis in fact and efficiency rating, which should be construed as that obtained by each
in law. cabin attendant for a single year.
o Moreover, in assessing the overall performance of each cabin PAL begs the Court to recognize that the retrenchment was due to the
crew personnel, PAL only considered the year 1997. By discarding confluence of simultaneous unfortunate events that occurred during
the cabin crew personnel’s previous years of service and taking the time, like successive strikes, peso depreciation and the Asian
into consideration only one year’s worth of job performance for currency crisis
evaluation, PAL virtually did away with the concept of seniority, SC RULED THAT:
loyalty and past efficiency, and treated all cabin attendants as if o PAL has all this time tried to convince the Court that its decision to
they were on equal footing, with no one more senior than the downsize its flight fleet was the principal reason why it undertook a
other. corresponding downsizing of cabin crew personnel. This time,
In sum, PALs retrenchment program is illegal because it was based on however, it significantly changed stance and blamed pilot’s
wrongful premise (Plan 14, which in reality turned out to be Plan 22, strike as the real culprit which drove it to undertake the
resulting in retrenchment of more cabin attendants than was necessary) massive retrenchment under scrutiny. BUT the strike was a
and in a set of criteria or rating variables that is unfair and unreasonable temporary occurrence that did not necessitate the immediate and
when implemented. It failed to take into account each cabin attendants sweeping retrenchment of 1,400 cabin or flight attendants. By
respective service record, thereby disregarding seniority and loyalty in the PAL’s own account, some of the striking pilots went back to work
evaluation of overall employee performance. in July 1998, or less than one month after the strike began. There
was no reason to drastically implement a permanent retrenchment
On the 2 April 2009 Resolution (PAL filed a MR): scheme in response to a temporary strike, which could have
SC still ruled that the retrenchment was invalid and there was illegal ended at any time, or remedied promptly, if management acted
dismissal with alacrity.
PAL maintains that it was suffering from financial distress which justified o Using the pilots as scapegoats to validate a comprehensive
the retrenchment of more than 1,400 of its flight attendants. retrenchment scheme of cabin personnel without observing the
PAL claims that it did not act with undue haste in effecting the mass requirements set by law is both unfair and underhanded. PAL
retrenchment of cabin attendants. According to PAL, consultations were must still prove that it implemented cost-cutting measures to
obviate retrenchment, which under the law should be the last employer must abolish the redundant positions in good faith; and (d) the
resort. By PAL’s own admission, however, the cabin personnel employer must set fair and reasonable criteria in ascertaining which positions
retrenchment scheme was one of the first remedies it are redundant and may be abolished.
resorted to, even before it could complete the proposed In Smart Communications, Inc. v. Astorga, the Court held that the
downsizing of its aircraft fleet. Again, it must be emphasized characterization of an employee's services as superfluous or no longer
that in order for a retrenchment scheme to be valid, all of the necessary and, therefore, properly terminable, is an exercise of business
following elements under Article 283 of the Labor Code must judgment on the part of the employer. The soundness of such characterization
concur or be present (see above elements). or decision is not subject to discretionary review provided that there is no bad
o In the absence of one element, the retrenchment scheme faith or violation of a law. A company cannot simply declare redundancy
becomes an irregular exercise of management prerogative. The without basis. To exhibit its good faith and that there was a fair and reasonable
employer’s obligation to exhaust all other means to avoid further criteria in ascertaining redundant positions, a company claiming to be over
losses without retrenching its employees is a component of the manned must produce adequate proof of such redundancy to justify dismissal
first element as enumerated above. The employer’s prerogative to of employees, such as but not limited to the new staffing pattern, feasibility
bring down labor costs by retrenching must be exercised studies/proposal, on the viability of the newly created positions, job description
essentially as a measure of last resort, after less drastic means and the approval by the management of the restructuring.
have been tried and found wanting.
o At the time retrenchment was implemented, the retrenchment RECIT-READY DIGEST: In a Letter-Memorandum, General Milling Corporation
scheme under scrutiny was not triggered directly by any financial (GMC), informed Violeta Viajar that her services are no longer needed because
difficulty PAL was experiencing at the time, nor borne of an actual her position as Purchasing Staff was deemed redundant. When Viajar reported for
implementation of its proposed downsizing of aircraft. It was work, a month prior the effectivity from her severance from GMC, the guard on
brought about by and resorted to as an immediate reaction to duty prevented her from entering the company’s premises. She was also asked to
a pilots’ strike which, in strict point of law and as herein sign an Application for Retirement and Benefits. Viajar refused to sign. Thus, she
earlier discussed, may not be considered as a valid reason to filed a complaint for illegal dismissal. LA ruled in favor of GMC and held that the
retrench, nor may it be used to excuse PAL for its non- latter acted in good faith in terminating Viajar. NLRC affirmed LA. The CA ruled in
observance of the requirements of the law on retrenchment favor of Viajar. GMC filed this instant petition before the SC. ISSUE: (1) W/N
under the Labor Code. Viajar was validly terminated from GMC. (2) W/N Viajar voluntarily retired. HELD:
MR DENIED. (1) NO, Viajar was NOT validly terminated from GMC. Redundancy is one of the
authorized causes for dismissal under the Labor Code, provided that the employer
complies with the requirements (see doctrine). But the Court found that GMC failed
50. General Milling Corp. v. Viajar to present substantial proof to support its general allegations of redundancy. The
G.R. No. 181738 notification letter to Viajar; the "Establishment Termination Report" it submitted to
January 30, 2013 the DOLE; the (2) checks and the list of terminated employees are not enough
proof of valid termination of Viajar. Meanwhile, Viajar presented proof that GMC
DOCTRINES: had been hiring new employees while it was firing the old ones, thus negating
For there to have a valid termination of employees based on redundancy, it is GMC’s claim of redundancy. GMC’s acts of prohibiting Viajar from entering the
imperative that the employer must comply with these requirements (a) the company premises even before the effectivity date of termination, and compelling
employer must serve a written notice to the affected employees and the DOLE her to sign an “Application for Retirement and Benefits,” exhibit its bad faith in
at least (1) month before the intended date of retrenchment; (b) the employer terminating Viajar’s employment. (2) NO, Viajar did not voluntarily retire. He was
must pay the employees a separation pay equivalent to at least one month pay terminated due to redundancy under Article 283 of the Labor Code.
or at least one month pay for every year of service, whichever is higher; (c) the
FACTS: NLRC: affirmed the LA’s decision and ruled that the characterization of
GMC is a domestic corporation with principal office in Makati City and a positions as redundant is an exercise of the employer's business judgment and
manufacturing plant in Lapu-Lapu City. In October 2003, GMC terminated the prerogative. GMC was not in bad faith in exercising its business prerogative.
services of (13) employees for redundancy, including respondent, Violeta CA: reversing the LA and NLRC, ruled that Viajar was illegally dismissed.
Viajar. GMC alleged that it has been gradually downsizing its Vismin (Visayas- GMC filed this petition before SC.
Mindanao) Operations in Cebu, where a sizeable number of positions became
redundant over a period of time. ISSUE:
Viajar filed a Complaint for Illegal Dismissal with damages against GMC, 1. W/N Viajar was validly terminated from GMC. – NO
its Human Resource Department Manager, Almocera and Purchasing 2. W/N there was voluntary retirement by Viajar. – NO
Manager, Paulino before the Regional Arbitration Branch, NLRC, Cebu City.
Viajar alleged that she was employed by GMC on August 6, 1979 as Invoicing HELD: NO Viajar was NOT validly terminated.
Clerk. She held various positions in the company until she became Purchasing GMC claims that Viajar was validly dismissed on the ground of redundancy,
Staff. In October 2003, Viajar received a Letter-Memorandum from GMC, which is one of the authorized causes for termination of employment. GMC
informing her that her services were no longer needed, effective November 30, asserts that it has observed the procedure provided by law, and that the same
2003 because her position was deemed redundant. When Viajar reported for was done in good faith. It presented: (i) the notification Letter-Memorandum
work on October 31, 2003, almost a month before the effectivity of her addressed to Viajar; (ii) the “Establishment Termination Report” as prescribed
severance from the company, the guard on duty barred her from entering by the DOLE; (iii) the (2) checks issued in the Viajar’s name for as separation
GMC's premises. She was also denied access to her office computer and was pay; and (iv) the list of dismissed employees to show that GMC was in a
restricted from punching her daily time record in the bundy clock. “reduction mode.”
In November 2003, Viajar was invited to the HRD Cebu Office where she was Article 283 of the Labor Code provides that redundancy is one of the
asked to sign certain documents, which turned out to be an "Application for authorized causes for dismissal: “The employer may also terminate the
Retirement and Benefits.” She refused to sign and sought clarification because employment of any employee due to xxx redundancy xxx to prevent losses or
she did not apply for retirement and instead asserted that her services were the closing or cessation of operation of the establishment or undertaking
terminated for alleged redundancy. Almocera told her that her signature on the unless the closing is for the purpose of circumventing the provisions of this
Application for Retirement and Benefits was needed to process her separation Title.
pay. She also claimed that between the period of July 4, 2003 and October 13, The employer must comply with the requirements for a valid implementation of
2003, GMC hired (15) new employees, which aroused her suspicion that her the company's redundancy program, to wit: (a) the employer must serve a
dismissal was not necessary. written notice to the affected employees and the DOLE at least one (1) month
GMC insisted that Viajar's dismissal was due to the redundancy of her before the intended date of retrenchment; (b) the employer must pay the
position. The company was suffering economic setbacks and there was employees a separation pay equivalent to at least one month pay or at least
continuing rise of its operating and interest expenditures. Redundancy was one (1) month pay for every year of service, whichever is higher; (c) the
part of its cost reduction measures. GMC also presented the required employer must abolish the redundant positions in good faith; and (d) the
“Establishment Termination Report” which it filed before the Department of employer must set fair and reasonable criteria in ascertaining which positions
Labor and Employment (DOLE) on October 28, 2003, involving (13) of its are redundant and may be abolished.
employees, including Viajar. GMC issued to the Viajar (2) checks for her In Smart Communications, Inc. v. Astorga, the Court held that the
separation pay. characterization of an employee's services as superfluous or no longer
LA: ruled in favor of GMC, and held that the latter acted in good faith in necessary and, therefore, properly terminable, is an exercise of business
terminating Viajar and that it complied with the requirements in dismissing judgment on the part of the employer. The soundness of such characterization
Viajar based on redundancy. or decision is not subject to discretionary review provided that there is no bad
faith or violation of a law. A company cannot simply declare redundancy
without basis. To exhibit its good faith and that there was a fair and reasonable demand of GMC for the respondent to sign an “Application for Retirement and
criteria in ascertaining redundant positions, a company claiming to be over Benefits" is really suspect.
manned must produce adequate proof of such redundancy to justify dismissal The award of moral and exemplary damages to Viajar is proper. The Court
of employees, such as but not limited to the new staffing pattern, feasibility has awarded moral damages in termination cases when bad faith, malice or
studies/proposal, on the viability of the newly created positions, job description fraud attend the employee's dismissal or where the act oppresses labor, or
and the approval by the management of the restructuring. where it was done in a manner contrary to morals, good customs or public
But the Court found that GMC failed to present substantial proof to policy. The petition is DENIED.
support its general allegations of redundancy. The notification letter to
Viajar; the "Establishment Termination Report" it submitted to the DOLE; the
(2) checks issued in Viajar’s name; and the list of terminated employees are 51. Am-Phil Food v. Padilla
not enough proof of valid termination of Viajar on the ground of redundancy. October 1, 2014
GMC did not evaluate the existing positions to the company. It did not present
proof that it was experiencing business slow down or over hiring. The list of Doctrine: The requisites for a valid retrenchment are as follows –
terminated employees presented by GMC was a list taken as of June 6, 2006 (1) That the retrenchment is reasonably necessary and likely to prevent
or almost three years after Viajar was illegally dismissed. GMC has not business losses which, if already incurred, are not merely de minimis, but
presented any evidence which could show that GMC’s declaration of substantial, serious, actual and real, or if only expected, are reasonably
redundant positions was justified. Meanwhile, Viajar presented proof that GMC imminent as perceived objectively and in good faith by the employer;
had been hiring new employees while it was firing the old ones, negating the
claim of redundancy. (2) That the employer served written notice both to the employees and to
In termination cases, the burden of proving that the dismissal of the employees DOLE at least 1 month prior to the intended date of retrenchment;
was for a valid and authorized cause rests on the employer. It was incumbent
upon the petitioner to show by substantial evidence that the termination of the (3) That the employer pays the retrenched employees separation pay
employment of the respondent was validly made and failure to discharge that equivalent to one month pay or at least ½ month pay for every year of
duty would mean that the dismissal is not justified and therefore illegal. service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good
2. NO, Viajar did NOT voluntarily retired. faith for the advancement of its interest and not to defeat or circumvent
the employees’ right to security of tenure; and
That Viajar was prohibited from entering the company premises even before
the effectivity date of termination, and that she was compelled to sign an (5) That the employer used fair and reasonable criteria in ascertaining who
“Application for Retirement and Benefits prove that GMC was in bad faith.
would be dismissed and who would be retained among the employees,
Viajar was still entitled to report for work until November 30, 2003. The
such as status (i.e., whether they are temporary, casual, regular or
demand for her to sign the “Application for Retirement and Benefits” also
managerial employees), efficiency, seniority, physical fitness, age, and
contravenes the fact that she was terminated due to redundancy.
financial hardship for certain workers.
In Quevedo v. Benguet Electric Cooperative, Incorporated, the Court
differentiated between retirement and termination due to redundancy.
“Retirement is contractual xxx while termination of employment is statutory.” Recit-Ready Digest: Padilla was retrenched by Am-Phil, allegedly because of
The benefits resulting from termination vary, depending on the cause. business losses incurred from 2001-2004. He filed an illegal dismissal case before
This case is not about retirement, since the term has its peculiar meaning and the LA. Am-Phil’s proof of its business losses was only its audited financial
is governed by Article 287 of the Labor Code. Rather, this is a case of statements for the same period, but these were only annexed to the supplemental
termination due to redundancy under Article 283 of the Labor Code. Thus, the rejoinder that the company attempted to have the LA admit via motion. Because it
was submitted 6 months after the rejoinder, however, LA denied the motion. Am-
Phil also failed to send notice to the DOLE of the retrenchment. SC held that the Held: NO. Retrenchment or "lay-off" is the employer’s act of dismissing employees
retrenchment was not valid for failure to comply with the first requisite (given that because of losses in the operation of a business, lack of work, and considerable
the company did not submit proof of real, actual, and substantial business losses) reduction on the volume of his business. Retrenchment is an exercise of
and the second requisite (given that it never sent notice to DOLE). management’s prerogative to terminate the employment of its employees en
masse.
Facts:
Padilla was hired on April 1, 2002 as a Marketing Associate and regular BUT the exercise of this management prerogative is not absolute when it comes to
employee by Am-Phil. retrenchment. SC outlined the requirements for a valid retrenchment, each of
Sometime in March 2004, Padilla was informed that Am-Phil would be which must be shown by clear and convincing evidence, as follows:
implementing a retrenchment program that would affect 3 employees, (1) That the retrenchment is reasonably necessary and likely to
Padilla included. The retrenchment program was allegedly on account of prevent business losses which, if already incurred, are not
serious and adverse business conditions, i.e., lack of demand in the market, merely de minimis, but substantial, serious, actual and real, or
stiffer competition, devaluation of the Philippine peso, and escalating if only expected, are reasonably imminent as perceived
operation costs. objectively and in good faith by the employer;
o Padilla questioned Am-Phil’s choice to retrench him. He noted that (2) That the employer served written notice both to the
Am-Phil had 6 contractual employees, while he was a regular employees and to the DOLE at least 1 month prior to the
employee who had a good evaluation record. He noted that Am-Phil's intended date of retrenchment;
sales have not been lower relative to the previous year. (3) That the employer pays the retrenched employees separation
o Eventually, Am-Phil retrenched Padilla. pay equivalent to one month pay or at least ½ month pay for
On July 28, 2004, Padilla filed the complaint for illegal dismissal against every year of service, whichever is higher;
both Am-Phil and the 3 officers. (4) That the employer exercises its prerogative to retrench
o For its defense, Am-Phil claimed that Padilla was not illegally employees in good faith for the advancement of its interest
terminated and that it validly exercised a management prerogative. It and not to defeat or circumvent the employees’ right to
added that in 2003, it did suffer serious and adverse business losses security of tenure; and
and that, in the first quarter of 2004, it was compelled to retrench (5) That the employer used fair and reasonable criteria in
employees so as to avoid further losses. With respect to its impleaded ascertaining who would be dismissed and who would be
officers, Am-Phil claimed that the complaint should be dismissed as retained among the employees, such as status (i.e., whether
they have a personality distinct and separate from Am-Phil. they are temporary, casual, regular or managerial
o Am-Phil. only attached its 2001-2004 audited financial statements, for employees), efficiency, seniority, physical fitness, age, and
purposes of proving that it was suffering substantial business losses financial hardship for certain workers.
when it retrenched Padilla, on a motion for leave to admit a
supplemental rejoinder which it filed 6 months after it filed its original As regards the losses in the first requisite, the losses or reverses must be serious,
rejoinder. The LA completely denied the motion to admit the actual, and real.
supplemental rejoinder, and hence, also disregarded the attached That these losses are serious relates to their gravity and that they are actual
financial statements. and real relates to their veracity and verifiability.
All bodies below held that Padilla’s retrenchment was illegal. That a retrenchment is anchored on serious, actual, and real losses or
reverses is to say that the retrenchment is done in good faith and not merely
Issue: WON Padilla was dismissed pursuant to a valid retrenchment program. as a veneer to disguise the illicit termination of employees.
Equally significant is an employer’s basis for determining who among its 2. In cases of redundancy, the management should adduce evidence and prove
employees shall be retrenched. Apart from these substantive requirements are the that a position which was created in place of a previous one should pertain to
procedural requirements imposed by Article 283 of the Labor Code. functions which are dissimilar and incongruous to the abolished office.
In this case, Am-Phil failed to establish compliance with the requisites for a
valid retrenchment. Recit-Ready Digest:
Mapua was Corporate Development’s Research/Business Intelligence Unit Head
Am-Phil’s 2001 to 2004 audited financial statements, the sole proof upon which and Manager of SPI. Her laptop died one time and she lost all her files, and this
Am-Phil relies on to establish its claim that it suffered business losses, are began a deterioration of her relationship with her work colleagues. Eventually,
unworthy of consideration. They were mere annexes to the motion for leave to Mapua saw the new table of organization of the Corporate Development Division
admit supplemental rejoinder which the LA validly disregarded. No credible which would be renamed as the Marketing Division. Following this restructuring,
explanation was offered as to why these statements were not presented when the
Rana was told that her position was considered redundant and that she was
evidence-in-chief was being considered by the LA. It follows that there is no clear
and convincing evidence to sustain the substantive ground on which the supposed considered terminated effective immediately. Later, however, Mapua saw an ad on
validity of Padilla’s retrenchment rests. the newspaper and on Jobstreet.com, both of which pointed towards the fact that
SPI was actually filling up her former position (hence, there was no redundancy in
Moreover, Am-Phil admits it did not serve a written notice to the DOLE at least 1 her position). Mapua then filed a case of illegal dismissal against SPI. SPI’s only
month before the intended date of Padilla’s retrenchment. proof that Mapua was validly fired was an affidavit from their HR department head
saying that the position had become redundant, and explaining the vacancy
While it is true that Am-Phil gave Padilla separation pay, compliance with none but
because of their organizational restructuring. Was her termination due to
1 of the many requisites for a valid retrenchment does not absolve Am-Phil of
liability. redundancy valid?
No. The presentation of the new table of the organization and the certification of
*Side Note: Am-Phil also argued that Padilla executed a quitclaim in its favor. SC the HR Supervisor that the positions occupied by the retrenched employees are
held that quitclaims executed by retrenched employees in favor of employers, redundant are inadequate as evidence to support the college’s redundancy
where the retrenchment undertaken is not valid, is considered not voluntarily program. More compelling evidence would have been a comparison of the old and
entered into by the said retrenched employees.
new staffing patterns, a description of the abolished and newly created positions,
and proof of the set business targets and failure to attain the same which
52. SPI Technologies v. Mapua necessitated the reorganization or streamlining.
Doctrine: Furthermore, in cases of redundancy, the management should adduce evidence
1. As to redundancy: for a valid implementation of a redundancy program, the and prove that a position which was created in place of a previous one should
employer must comply with the ff. requisites: (1) written notice served on both the pertain to functions which are dissimilar and incongruous to the abolished office.
employee and the DOLE at least one month prior to the intended date of SPI failed to prove here that the position they advertised on the ads were different
termination; (2) payment of separation pay equivalent to at least one month pay or from the ones Mapua performed.
at least one month pay for every year of service, whichever is higher; (3) good faith
in abolishing the redundant position; and (4) fair and reasonable criteria in Facts:
ascertaining what positions are to be declared redundant.
Mapua was hired in 2003 by SPI Technologies, Inc. (SPI) and was the streamlining its operations. This was embodied in an Inter-Office
Corporate Development’s Research/Business Intelligence Unit Head and Memorandum issued by the company’s CEO. It was then discovered after
Manager of the company. Nolan was Mapua’s supervisor. assessment and evaluation that the duties of a Corporate Development
October 2006: The hard disk on Mapua’s laptop crashed, causing her to lose Manager could be were actually being performed by other managers of the
files and data. Mapua informed Nolan and her colleagues that she was company. As proof that the duties of Mapua are being performed by other
working on recovering the lost data and asked for their patience for any SPI officers, Villanueva (the HR Department Head of SPI) executed an
possible delay on her part in meeting deadlines. affidavit attesting that Mapua’s functions are being performed by other SPI
On November 13, 2006, Mapua retrieved the lost data. Yet, Nolan informed managers and employees.
Mapua that she was realigning Mapua’s position to become a subordinate of LA ruled in favor of Mapua and found she was illegally dismissed, but NLRC
co-manager Raina due to her missing a work deadline. Nolan also disclosed reversed. NLRC stated that the determination of whether Mapua’s position
that Mapua’s colleagues were “demotivated” because she was taking things as Corporate Development Manager is redundant is not for her to decide. It
easy while they were working very hard. Her colleagues at work became essentially and necessarily lies within the sound business management. It
more and more hostile towards her. also observed that as early as August 28, 2006, SPI’s CEO, announced the
On February 28, 2007, Mapua allegedly saw the new table of organization of corporate changes in the company. A month earlier, the officers held their
the Corporate Development Division which would be renamed as the Senior Management Strategic Planning Session with the theme,
Marketing Division. The new structure showed that Mapua’s level will be “Transformation” of SPI purposely to create an organizational structure that
again downgraded because a new manager will be hired and positioned is streamlined, clear, and efficient.
between her rank and Raina’s. CA reversed the NLRC and reinstated the LA’s decision.
On March 21, 2007, Raina informed Mapua over the phone that her position
was considered redundant and that she is terminated from employment Issue: WON Mapua was illegally dismissed.
effective immediately. Villanueva notified Mapua that she should cease
reporting for work the next day. Her laptop computer and company mobile Held: YES. As to redundancy: for a valid implementation of a redundancy
phone were taken right away. program, the employer must comply with the ff. requisites: (1) written notice served
On March 27, 2007, Mapua filed with the LA a complaint for illegal dismissal,
on both the employee and the DOLE at least 1 month prior to the intended date of
claiming reinstatement or if deemed impossible, for separation pay.
During the pendency of the complaint before the LA, Mapua found an ad on termination; (2) payment of separation pay equivalent to at least one month pay or
the website Jobstreet for the employment of a Corporate Development at least 1 month pay for every year of service, whichever is higher; (3) good faith in
Manager, akin to her own previous position, in the same location as her abolishing the redundant position; and (4) fair and reasonable criteria in
company. The recruitment was being done by a company called Prime ascertaining what positions are to be declared redundant.
Manpower. Mapua pretended to be “Jeanne Tesoro” and applied for a job; As to written notice: In this case, SPI actually gave two termination letters to
during the interview with a recruiter from Prime Manpower, she discovered Mapua – one which stated date of termination was March 21, 2007, while
that it was indeed SPI that was looking for someone to fill up her previous the other stated the date of termination was April 21, 2007. One termination
position. This led her to further believe that there was actually no letter stated that its date of effectivity is on the same day, March 21, 2007.
redundancy in SPI. The other termination letter sent through mail to Mapua’s residence stated
There was also an ad in the Philippine Daily Inquirer which was looking for that the effective date of her termination is on April 21, 2007. Explaining the
Marketing Communications Manager. discrepancy, SPI alleged that the company served a notice to Mapua on
For SPI’s defense, the company stated that it regularly makes an evaluation March 21, 2007, which stated that the effective date of termination is on April
of its organizational structure due to the unexpected growth of its business 21, 2007. However she refused to acknowledge or accept the letter. Later
along with its partnership with ePLDT and the acquisition of CyMed. As a on, Mapua requested for a copy of the said letter but due to inadvertence
result, SPI underwent a reorganization of its structure with the objective of and oversight, a draft of the termination letter bearing a wrong effectivity
date was given to her. To correct the oversight, a copy of the original letter Mapua’s self-serving affidavit as regards the Prime Manpower
was sent to her through mail. advertisement because the allegations therein were based on
o The Court found it weird that two letters had to be made, rather than Mapua’s unfounded suspicions. Also, the failure of Mapua to present a
the first just being reprinted and given to Mapua. It observed there was sworn statement of Dimatulac renders the former’s statements
neither allegation nor proof that the original letter was misplaced or hearsay. BUT even if Mapua’s affidavit is disregarded, SPI admitted
lost which would necessitate the drafting of a new one. SPI did not that it caused the Inquirer advertisement for a Marketing
even explain in the second letter that the same was being sent in lieu Communications Manager position. Mapua alleged that this
of the one given to her. Hence, SPI must shoulder the consequence of advertisement belied the claim of SPI that her position is redundant
causing the confusion brought by the variations of termination letters because the Corporate Development division was only renamed to
given to Mapua. Marketing division. Instead of explaining how the functions of a
o Mapua was also very precise about how she was dismissed and the Marketing Communications Manager differ from a Corporate
exact date of her dismissal, as she narrated. But to counter these Development Manager, SPI hardly disputed Mapua when it stated
statements, SPI merely stated that before the effective date of that, the positions were “entirely different.” SPI, being the employer,
Mapua’s termination on April 21, 2007, she no longer reported for has possession of valuable information concerning the functions of the
work. To this Court, this is insufficient rebuttal to the precise narrative offices within its organization. Nevertheless, it did not even bother to
of Mapua. differentiate the two positions.
As to separation pay: While SPI did offer separation pay to Mapua, the offer o The Court does not agree with the rationalization of the NLRC that "[i]f
must be accompanied with good faith in the abolishment of the redundant it were true that her position was not redundant and indispensable,
position and fair and reasonable criteria in ascertaining the redundant then the company must have already hired a new one to replace her in
position. order not to jeopardize its business operations. The fact that there is
As to the validity of the redundancy program itself: To prove that Villanueva’s none only proves that her position was not necessary and therefore
functions are redundant, SPI submitted an Inter-Office Memorandum and superfluous."
affidavit executed by its HR Director, Villanueva. The memorandum made no o What the above reasoning of the NLRC failed to perceive is that "[o]f
mention that the position of the Corporate Development Manager or any primordial consideration is not the nomenclature or title given to the
other position would be abolished or deemed redundant. In this regard, may employee, but the nature of his functions." "It is not the job title but the
the affidavit of Villanueva which enumerated the various functions of a actual work that the employee performs." Also, change in the job title
Corporate Development Manager being performed by other SPI employees is not synonymous to a change in the functions. A position cannot be
be considered as sufficient proof to uphold SPI’s redundancy program? NO. abolished by a mere change of job title. In cases of redundancy, the
o The presentation of the new table of the organization and the management should adduce evidence and prove that a position
certification of the HR Supervisor that the positions occupied by the which was created in place of a previous one should pertain to
retrenched employees are redundant are inadequate as evidence to functions which are dissimilar and incongruous to the abolished
support the college’s redundancy program. More compelling office.
evidence would have been a comparison of the old and new Mapua tried to make the corporate officers liable for firing her. BUT SC held
staffing patterns, a description of the abolished and newly that individual liability of officers only attaches when: (a) they assent to a
created positions, and proof of the set business targets and patently unlawful act of the corporation, or when they are guilty of bad faith
failure to attain the same which necessitated the reorganization or gross negligence in directing its affairs, or when there is a conflict of
or streamlining. interest resulting in damages to the corporation, its stockholders or other
o Also connected with the evidence negating redundancy was SPI’s persons; (b) they consent to the issuance of watered down stocks or when,
publication of job vacancies after Mapua was terminated from having knowledge of such issuance, do not forthwith file with the corporate
employment. SPI maintained that the CA erred when it considered secretary their written objection; (c) they agree to hold themselves
personally and solidarily liable with the corporation; or (d) they are made by the Skyway, and that the services of the employees would be
specific provision of law personally answerable for their corporate action. consequently terminated effective January 31, 2008. On the same date, the PSC
o Without much explanation, SC said the individual officers cannot be Employees Union (PSCEU) filed a Notice of Strike on the ground of unfair labor
made liable. practice resulting in union busting and dismissal of workers. On December 31,
In the end, SC awarded the ff. damages to Mapua: 2007, the DOLE Secretary intervened and assumed jurisdiction over the labor
o Moral & exemplary - Award of moral and exemplary damages for an incident. SOLE ruled that PSC failed to comply with the 30-day notice requirement
illegally dismissed employee is proper where the employee had been under Article 298 (formerly, Article 283). CA affirmed. But, the SC held that the
harassed and arbitrarily terminated by the employer, because this is PSC complied with the mandated thirty (30)-day notice requirement. Although PSC
an unjust dismissal tainted in bad faith informed its employees that it would be turning over its operations to SOMCO not
o Attorney’s fees earlier than December 31, 2007, they were duly notified that the effective date of
their termination was set on January 31, 2008. In light of valid business
reasons, i.e., the transfer of operations to SOMCO pursuant to the ASTOA, PSC
53. PNCC SKYWAY CORPORATION, petitioner, vs. THE SECRETARY OF asked its employees not to report for work beginning December 31, 2007 but were
LABOR AND EMPLOYMENT and PNCC SKYWAY CORPORATION still retained on payroll until January 31, 2008. Evidently, their employment with
EMPLOYEES UNION, respondents. PSC did not cease by the sole reason that they were told not to render any
G.R. No. 213299. April 19, 2016 service.
By: M. Kalaw
FULL DIGEST:
DOCTRINE: FACTS:
Jurisprudence provides that [t]he determination to cease operations is a Assailed in this petition for review on certiorari are the Decision dated
prerogative of management which the State does not usually interfere with, as September 30, 2013 and the Resolution dated June 11, 2014 of the Court of
no business or undertaking must be required to continue operating simply Appeals (CA) in C.A.-G.R. S.P. No. 111201, which affirmed the
because it has to maintain its workers in employment, and such act would be Decision dated August 29, 2008 and the Resolution dated August 26, 2009 of
tantamount to a taking of property without due process of law. the Secretary of the Department of Labor and Employment (DOLE) holding
Procedurally, Article 298 (formerly, Article 283) of the Labor Code, as petitioner PNCC Skyway Corporation (PSC) liable for P30,000.00 as indemnity
amended provides for three (3) requirements to properly effectuate to each of its terminated employees, for failure to comply with the thirty (30)-
termination on the ground of closure or cessation of business day notice requirement under Article 298 (formerly Article 283) of the Labor
operations. These are: (a) service of a written notice to the employees and to Code, as amended.
the DOLE at least one (1) month before the intended date of termination; (b) October 1977, the Republic of the Philippines, through the Toll Regulatory
the cessation of business must be bona fide in character; and (c) payment to Board (TRB), and the Philippine National Construction Corporation7 (PNCC)
the employees of termination pay amounting to one (1)-month pay or at least entered into a Toll Operation Agreement (TOA)8 for PNCC to operate and
one-half-month pay for every year of service, whichever is higher. maintain the South Metro Manila Skyway (Skyway). On November 27, 1995, a
Supplemental TOA (STOA) was executed by the TRB, PNCC, and Citra Metro
RECIT READY: The operation and management of the Skyway was transferred Manila Tollways Corporation. CITRA, as incoming investor agreed, under a
from PSC to a new Replacement Operator, the Skyway O & M Corporation build-and-transfer scheme, to finance, design, and construct the
(SOMCO). A transition period of 5 1/2 months was provided commencing on the Skyway. However, PNCC retained the right to operate and maintain the toll
date of signing of the ASTOA until December 31, 2007, during which period, PSC facilities, and thus incorporated the PSC- a subsidiary company that would
continued to operate the Skyway. On December 28, 2007, PSC issued assume its rights and obligations under the STOA on December 15, 1998.
termination letters to its employees and filed a notice of closure with the DOLE- The PSC was tasked to maintain the toll facilities, ensure traffic safety, and
National Capital Region, advising them that it shall cease to operate and maintain collect toll fees at the Skyway.
On July 18, 2007, the TRB, PNCC, and CITRA entered into an Amended informed as early as September 2007 of the impending takeover of the
STOA (ASTOA), where the operation and management of the Skyway would operation of the Skyway by a new operator, the CA cited Smart
be transferred from PSC to a new Replacement Operator, the Skyway O & M Communications, Inc. v. Astorga (Smart Communications, Inc.) and thereby,
Corporation (SOMCO). ruled that “actual knowledge of the reorganization cannot replace the formal
A transition period of 5 1/2 months was provided commencing on the date of and written notice required by law.”
signing of the ASTOA until December 31, 2007, during which period, PSC
continued to operate the Skyway. ISSUE:
In line with the transfer, PSC, on December 28, 2007, issued termination (1) Whether or not the CA erred in affirming the DOLE Secretary’s ruling that
letters to its employees and filed a notice of closure with the DOLE-National PSC failed to comply with the 30-day notice requirement under Article 298
Capital Region, advising them that it shall cease to operate and maintain the (formerly, Article 283) of the Labor Code, as amended. (YES)
Skyway, and that the services of the employees would be
consequently terminated effective January 31, 2008. In this regard, PSC HELD:
offered its employees a separation package consisting of 250% of their basic There is no basis to award any indemnity in favor of PSC’s terminated
monthly salary for every year of service, gratuity pay of P40,000.00 each, employees. Closure of business is an authorized cause for termination of
together with all other remaining benefits such as 13th month pay, rice employment, Article 298 (formerly, Article 283) of the Labor Code
subsidy, cash conversion of leave credits, and medical reimbursement.
On the same date, the PSC Employees Union (PSCEU) filed a Notice of Strike Case law has settled that an employer who terminates an employee for a valid
on the ground of unfair labor practice resulting in union busting and dismissal cause but does so through invalid procedure is liable to pay the latter nominal
of workers. On December 31, 2007, the DOLE Secretary intervened and damages. In Agabon, the Court pronounced that, where the dismissal is for a
assumed jurisdiction over the labor incident. just cause, the lack of statutory due process should not nullify the dismissal, or
SOLE. In a decision dated August 29, 2008, the DOLE Secretary dismissed render it illegal, or ineffectual. However, the employer should indemnify the
the charges of unfair labor practice and union busting, as well as the counter- employee for the violation of his statutory rights. Proceeding from the
charges of illegal strike, but ordered PSC to pay its terminated employees same ratio, the Court modified Agabon in the case of Jaka Food Processing
P30,000.00 each as indemnity after finding that the notices of their dismissal Corporation v. Pacot (Jaka) where it created a distinction between
were invalid as PSC “failed to comply with the thirty (30)-day procedural notice procedurally defective dismissals due to a just cause, on the one hand,
requirement in terminating its employees, as provided under Article 283 (now, and those due to an authorized cause, on the other. In Jaka, it was
Article 298) of the Labor Code. SOLE said while PSC stated in the notices of explained that if the dismissal is based on a just cause under Article 282 (now,
termination to the employees (as well as in the notice to the DOLE) that the Article 297) of the Labor Code but the employer failed to comply with the
dismissal of the employees would take effect on January 31, 2008, it admitted notice requirement, the sanction to be imposed upon him should be tempered
that it actually ceased to operate and maintain the Skyway upon its turnover to because the dismissal process was, in effect, initiated by an act imputable to
SOMCO on December 31, 2007. As such, PSC fixed the termination date at the employee; if the dismissal is based on an authorized cause under Article
January 31, 2008 only to make it appear that it was complying with the one- 283 (now, Article 298) of the Labor Code but the employer failed to comply
month notice requirement, Thus, citing the case of Agabon v. National Labor with the notice requirement, the sanction should be stiffer because the
Relations Commission (Agabon), the payment of P30,000.00 as indemnity. dismissal process was initiated by the employer’s exercise of his management
Both Company and Union’s MRs denied. Hence elevated to CA. prerogative.
CA. Affirmed SOLE findings. Per the establishment termination report and the As admitted by both parties, the PSC employees and the DOLE were notified
position paper, both submitted to DOLE, the apparent inconsistency as to the on December 28, 2007 that PSC intended to cease operations on January 31,
date of effectivity of the dismissal of the PSC employees must be resolved in 2008. The PSC employees and the DOLE were, therefore, notified 34 days
favor of the employees who must then be deemed to have been terminated on ahead of the impending closure of PSC. That the PSC turned over the
December 31, 2007. As to PSC’s argument that the PSCEU had been operation and management of the Skyway to SOMCO and ceased business
operations on December 31, 2007, should not be taken to mean that the
FSC employees were ipso facto terminated on the same date. The DOCTRINE
employees were notified that despite the cessation of its operations on Preventive suspension is justified where the employees continued
December 31, 2007 — which, as a consequence thereof, would result in the employment poses a serious and imminent threat to the life or property of
needlessness of their services — the effective date of their termination the employer or of the employees co-workers. Without this kind of threat,
from employment would be on January 31, 2008 preventive suspension is not proper.
SC also mentioned that the PSC undisputedly paid its dismissed employees Preventive suspension which lasts beyond the maximum period (30 days)
separation pay in amounts more than that required by law, at 250% of the allowed by the Implementing Rules amounts to constructive dismissal
basic monthly pay per year of service, a gratuity pay of P40,000.00, rice
subsidy, cash conversion of vacation and sick leaves and medical RECIT-READY: Decorion failed to attend a meeting as he was then supervising
reimbursement. the employees under him. Maricalum placed him under preventive suspension for
Case law teaches that an employer may opt not to require the dismissed insubordination for failure to attend the meeting. was served a Notice of Infraction
employees to report for work during the 30-day notice period. In Associated and Proposed Dismissal to enable him to present his side. 3 days after, he
55
Labor Unions-VIMCONTU v. National Labor Relations Commission, the submitted to the Personnel Department his written reply to the notice. Decorion
Court held that there was “more than substantial compliance” with the notice filed a complaint for illegal dismissal. In the meantime, a memorandum
requirement where a written notice to the employees on August 5, 1983 had recommending that Decorions indefinite suspension be made definite with a
informed them that their services would cease at the end of that month but that warning that a repetition of the same conduct would be punished with dismissal.
they would nevertheless be paid their salaries and benefits for five days, from Then it issued a memorandum placing Decorion under definite disciplinary
September 1 to 5, 1983, even if they rendered no service for the period. suspension of 6 months which would include the period of his preventive
The SC clarified the case of Smart Communications, Inc. cited by the CA- that suspension which was made to take effect retroactively. The Court ruled that
the holding that the actual knowledge by the PSCEU of the impending Decorion was erroneously placed under preventive suspension because no
takeover cannot replace the formal written notice required by law is evidence to indicate that his failure to attend the meeting prejudiced his employer
inapplicable. In Smart, the employee received the notice of her dismissal only or that his presence in the companys premises posed a serious threat to his
two (2) weeks before its effectivity date although it was issued by the employer employer and co-workers. It also ruled that he was constructively dismissed
at least thirty (30) days prior to the intended date of her dismissal. Given that because forced to quit because continued employment was rendered impossible,
the employee was evidently shortchanged of the mandated period of notice, unreasonable or unlikely by Maricalum Minings act of preventing him from
the Court ruled that actual knowledge could not replace the formal written reporting for work.
notice required by law. Here, the PSC complied with the mandated thirty (30)-
day notice requirement. Although PSC informed its employees that it would be FACTS
turning over its operations to SOMCO not earlier than December 31, 2007, Decorion was a regular employee of Maricalum Mining who started out as
they were duly notified that the effective date of their termination was set on a Mill Mechanic assigned to the Concentrator Maintenance Department
January 31, 2008. In light of valid business reasons, i.e., the transfer of and was later promoted to Foreman I.
operations to SOMCO pursuant to the ASTOA, PSC asked its employees not Concentrator Maintenance Supervisor called a meeting which Decorion
to report for work beginning December 31, 2007 but were still retained on failed to attend as he was then supervising the workers under him.
payroll until January 31, 2008. Evidently, their employment with PSC did not Because of his alleged insubordination for failure to attend the meeting, he
cease by the sole reason that they were told not to render any service. was placed under preventive suspension on the same day. He was also
not allowed to report for work the following day.
Constructive Dismissal/Preventive Suspension A month after, Decorion was served a Notice of Infraction and Proposed
54. Maricalum v. Decorion Dismissal to enable him to present his side. 3 days after, he submitted to
April 12 2006 the Personnel Department his written reply to the notice.
A grievance meeting was held wherein Decorion manifested that he failed dismissal occurs only after the lapse of more than 6 months from the time
to attend the meeting because he was then still assigning work to his men. an employee is placed on a floating status as a result of temporary
He maintained that he has not committed any offense and that his service preventive suspension from employment. Thus, it goes on to argue, since
record would show his efficiency. Decorion was suspended for less than 6 months, his suspension was
Decorion filed before NLRC Arbit branch a complaint for illegal dismissal legal.
and payment of moral and exemplary damages and attorneys fees.
In the meantime, the matter of Decorions suspension and proposed ISSUE: W/N respondent was preventively suspended, not dismissed – NO.
dismissal was referred to the Chief and Head of Legal and Industrial Respondent illegally dismissed.
Relations, who issued a memorandum recommending that Decorions
indefinite suspension be made definite with a warning that a repetition of HELD:
the same conduct would be punished with dismissal. On preventive suspension
Maricalum Minings Resident Manager issued a memorandum placing The Rules are explicit that preventive suspension is justified where the
Decorion under definite disciplinary suspension of 6 months which would employees continued employment poses a serious and imminent threat to
include the period of his preventive suspension which was made to take the life or property of the employer or of the employees co-workers.
effect retroactively. Without this kind of threat, preventive suspension is not proper.
Decorion was served a memorandum informing him of his temporary lay- In this case, Decorion was suspended only because he failed to attend a
off due to Maricalum Minings temporary suspension of operations and shut meeting called by his supervisor. There is no evidence to indicate that his
down of its mining operations for six (6) months, with the assurance that in failure to attend the meeting prejudiced his employer or that his presence
the event of resumption of operations, he would be reinstated to his former in the companys premises posed a serious threat to his employer and co-
position without loss of seniority rights. workers. The preventive suspension was clearly unjustified.
Decorion requested that he be reinstated to his former position. The Decorions suspension persisted beyond the 30-day period allowed by the
request was denied with the explanation that priority for retention and Implementing Rules, thus amounts to constructive dismissal.
inclusion in the skeleton force was given to employees who are efficient
and whose services are necessary during the shutdown. On illegal dismissal
Conciliation proceedings having failed to amicably settle the case, the LA Maricalum Minings contention that there was as yet no illegal dismissal at
found Decorions dismissal illegal and ordering his reinstatement with the time of the filing of the complaint is evidently unmeritorious. Decorions
payment of backwages and attorneys fees. According to the labor arbiter, preventive suspension had already ripened into constructive dismissal at
Decorions failure to attend the meeting called by his supervisor did not that time. While actual dismissal and constructive dismissal do take place
justify his preventive suspension. Further, no preventive suspension in different fashion, the legal consequences they generate are identical.
should last longer than 30 days. Decorions employment may not have been actually terminated in the
NLRC: REVERSED. finding that the case was litigated solely on sense that he was not served walking papers but there is no doubt that he
Decorions allegation that he was dismissed on April 11, 1996. However, was constructively dismissed because forced to quit because continued
during the grievance, Decorion left it up to management to decide his fate, employment was rendered impossible, unreasonable or unlikely by
indicating that as of that time, there was no decision to terminate his Maricalum Minings act of preventing him from reporting for work.
services yet. According to the NLRC, to consider the events that transpired Moreover, Valdez ruling does not apply since the instant case involves the
after April 11, 1996 and make the same the basis for the finding of illegal preventive suspension of an employee not by reason of the suspension of
dismissal would violate Maricalum Minings right to due process. the business operations of the employer but because of the employees
CA: reinstated LA failure to attend a meeting. The allowable period of suspension in such a
Petitioner insists that Decorion was not dismissed but merely preventively case is only 30 days as provided by the Implementing Rules.
suspended and contends, based on Valdez case, that constructive
and failure to submit inventory reports.
55. Uniwide Sales v. NLRC, February 29, 2008 On an earlier setting on the investigation of her case, Kawada filed a sick
leave, thus causing the hearing/investigation to be rescheduled. Again,
Doctrine: With respect to rank-and-file personnel, loss of trust and confidence as upon rescheduling, Kawada, despite notice and warning that failure to
ground for valid dismissal requires proof of involvement in the alleged events in appear would mean abandonment of her work, did not appear, this time
question, and that mere uncorroborated assertions and accusations by the coming up with the excuse that she had been already “constructively
employer will not be sufficient. But, as regards a managerial employee, mere dismissed”. Uniwide terminated her work.
existence of a basis for believing that such employee has breached the trust of his Kawada claims that from the months of February to June 1998, she had
employer would suffice for his dismissal. In the case of managerial employees, been subjected to constant harassment, ridicule and inhumane treatment
proof beyond reasonable doubt is not required, it being sufficient that there is some by Apduhan, with the hope that the latter can get her to resign. The
basis for such loss of confidence, such as when the employer has reasonable harassment allegedly came in the form of successive memoranda which
ground to believe that the employee concerned is responsible for the purported she would receive almost every week, enumerating a litany of offenses
misconduct, and the nature of his participation therein renders him unworthy of and maligning her reputation and spreading rumors among the employees
trust and confidence demanded by his position. that private respondent shall be dismissed soon. The last straw of the
imputed harassment was the July 31, 1998 incident wherein private
Recit- Ready: Store Manager issued a Memorandum addressed to Kawada respondent’s life was put in danger when she lost consciousness due to
summarizing the various reported incidents signifying unsatisfactory performance hypertension as a result of Apduhan’s alleged hostility and shouting. She
on the latter’s part which include the commingling of good and damaged items, filed a case for illegal dismissal.
sale of a voluminous quantity of damaged toys and ready-to-wear items at LA dismissed the case but NLRC ruled in favor of Kawada. Upon appeal
unreasonable prices, and failure to submit inventory reports. For the investigation by Uniwide, CA affirmed NLRC’s decision.
of her case and after reschudling, Kawada, despite notice and warning that failure
to appear would mean abandonment of her work, did not appear, this time coming ISSUE: WON as a managerial employee, one may be dismissed by reason of
up with the excuse that she had been already “constructively dismissed”. Uniwide mere existence of a basis for believing that such employee has breached the trust
terminated her work. She says that she was subjected to inhumane treatment and of his employer.
constant harassment maligning her reputation. LA dismissed the case but NLRC
ruled in favor of Kawada. Upon appeal by Uniwide, CA affirmed NLRC’s decision. HELD: Yes.
SC: With respect to rank-and-file personnel, loss of trust and confidence as ground With respect to rank-and-file personnel, loss of trust and confidence as
for valid dismissal requires proof of involvement in the alleged events in question, ground for valid dismissal requires proof of involvement in the alleged
and that mere uncorroborated assertions and accusations by the employer will not events in question, and that mere uncorroborated assertions and
be sufficient. But, as regards a managerial employee, mere existence of a basis for accusations by the employer will not be sufficient. But, as regards a
believing that such employee has breached the trust of his employer would suffice managerial employee, mere existence of a basis for believing that such
for his dismissal. employee has breached the trust of his employer would suffice for his
dismissal.
FACTS: Hence, in the case of managerial employees, proof beyond reasonable
Private respondent, Kawada, was a Full Assistant Store Manager at doubt is not required, it being sufficient that there is some basis for such
Uniwide. Later, Uniwide, through Store Manager Apduhan, issued a loss of confidence, such as when the employer has reasonable ground to
Memorandum addressed to Kawada summarizing the various reported believe that the employee concerned is responsible for the purported
incidents signifying unsatisfactory performance on the latter’s part which misconduct, and the nature of his participation therein renders him
include the commingling of good and damaged items, sale of a voluminous unworthy of trust and confidence demanded by his position.
quantity of damaged toys and ready-to-wear items at unreasonable prices, The evasive attitude of Kawada more than enough supports the
impression that she could be guilty or is guilty of the charges against her was then charged by petitioners’ Inquiry Assistance Panel with negligence of basic
and believes that she might not be able to defend herself. This is even duties and responsibilities resulting in loss of trust and confidence and laxity in
bolstered by the information that complainant called on several of the directing and supervising his own subordinates.
witnesses against her, simply to influence them and their testimonies. She
could not have been “constructively dismissed.” Norkis issued a memorandum placing respondent under 15-day suspension
Case law defines constructive dismissal as a cessation of work because without pay, travel and transportation allowance, effective upon receipt thereof. He
continued employment is rendered impossible, unreasonable or unlikely; was then assigned to the Marketing Division directly reporting to petitioner Albos.
when there is a demotion in rank or diminution in pay or both; or when a In a letter dated July 27, 2000, respondent requested petitioner Albos that he be
clear discrimination, insensibility, or disdain by an employer becomes assigned as Sales Engineer or to any position commensurate with his
unbearable to the employee. qualifications. However, respondent was formally appointed as Marketing Assistant
The test of constructive dismissal is whether a reasonable person in the to Albos.
employee’s position would have felt compelled to give up his position Respondent filed with the LA a complaint for illegal suspension, constructive
under the circumstances.It is an act amounting to dismissal but made to dismissal, non-payment of allowance, vacation/sick leave, damages and attorney’s
appear as if it were not. In fact, the employee who is constructively fees against petitioners.
dismissed may be allowed to keep on coming to work. Constructive
dismissal is therefore a dismissal in disguise. The law recognizes and LA ruled that there was no constructive dismissal as the petitioners exercised their
resolves this situation in favor of employees in order to protect their rights inherent prerogative as an employer when they appointed respondent as a
and interests from the coercive acts of the employer. Marketing Assistant.
The NLRC reversed the LA’s decision. It held that the transfer of respondent from
the position of Credit and Collection Manager to Marketing Assistant resulted in his
56. Norkis Trading Co., Inc. and/or Manuel Gaspar E. Albos, Jr. v. Melvin demotion in rank from Manager to a mere rank and file employee, which was
Gnilo tantamount to constructive dismissal and therefore illegal. The CA affirmed.
G.R. No. 159730
Feb. 11, 2008 The SC ruled that respondent was constructively dismissed.
Constructive dismissal is defined as a quitting because continued employment is
Doctrine: There is constructive dismissal when an employee's functions, which rendered impossible, unreasonable or unlikely; when there is a demotion in rank or
were originally supervisory in nature, were reduced; and such reduction is not a diminution of pay. Likewise, constructive dismissal exists when an act of clear
grounded on valid grounds such as genuine business necessity. discrimination, insensibility or disdain by an employer becomes unbearable to the
employee, leaving him with no option but to forego his continued employment.
Recit-ready: Respondent was initially hired by Norkis as Norkis Installment In this case, while the transfer of respondent from Credit and Collection Manager
Collector (NIC) in April 1988. Albos is the Senior VP of petitioner Norkis. to Marketing Assistant did not result in the reduction of his salary, there was a
Respondent held various positions in the company until he was appointed as reduction in his duties and responsibilities which amounted to a demotion
Credit and Collection Manager of Magna Financial Services Group, Inc.-Legaspi tantamount to a constructive dismissal.
Branch, Norkis’s sister company, in charge of the areas of Albay and Catanduanes Facts:
with travel and transportation allowances and a service car. A special audit team Respondent Melvin R. Gnilo was initially hired by Petitioner Norkis Trading
was conducted in respondent’s office and it was found out that respondent Co., Inc. (Norkis) as Norkis Installment Collector (NIC).
forwarded the monthly collection reports of the NICs under his supervision without Petitoner Manuel Gaspar E. Albos, Jr. (Albos) is the Senior Vice-
checking its veracity. The monthly collection highlights for the months of April to President of Norkis.
September 1999 submitted by respondent to the top management were all Respondent held various positions in the company until he was appointed
overstated particularly the account handled by NIC Dennis Cadag. Respondent as Credit and Collection Manager of Magna Financial Services
Group, Inc.-Legaspi Branch, Norkis’s sister company, in charge of the attorney's fees
areas of Albay and Catanduanes with travel and transportation allowances o It found that the 15-day suspension cannot be considered harsh
and a service car. and unconscionable as petitioners exercised their management
A special audit team was conducted in respondent's office when it was prerogative to impose discipline on an erring employee for
found out that respondent forwarded the monthly collection reports of the negligence.
NICs under his supervision without checking the veracity of the same. o However, it held that the transfer of respondent from the position
The monthly collection highlights for the months of April to September of Credit and Collection Manager to Marketing Assistant
1999 submitted by respondent to the top management were all overstated resulted in his demotion in rank from Manager to a mere rank and
particularly the account handled by NIC Dennis Cadag, who made it file employee, which was tantamount to constructive dismissal and
appear that the collection efficiency was higher than it actually therefore illegal.
was; and that the top management was misled into o It ruled that respondent was constructively dismissed and
believing that respondents area of responsibility obtained a favorable therefore he was entitled to reinstatement and payment of full
collection efficiency. backwages from the time he quit working due to his demotion up
Respondent was then charged by petitioners' Inquiry Assistance Panel to the time of his actual reinstatement.
with negligence of basic duties and responsibilities resulting in loss of trust The CA affirmed the NLRC.
and confidence and laxity in directing and supervising his own
subordinates. Issue: W/N respondent was constructively dismissed (i.e. W/N respondent's
Norkis issued a memorandum placing respondent under 15- transfer from the position of Credit and Collection Manager to that of a Marketing
day suspension without pay, travel and transportation Assistant amounts to a constructive dismissal)
allowance, effective upon receipt thereof.
He was then assigned to the Marketing Division directly reporting to Held: YES.
petitioner Albos. Well-settled is the rule that it is the prerogative of the employer to transfer
In a letter dated July 27, 2000, respondent requested petitioner Albos that and reassign employees for valid reasons and according to the
he be assigned as Sales Engineer or to any position commensurate with requirement of its business.
his qualifications. The employer bears the burden of showing that the transfer is not
However, respondent was formally appointed as Marketing Assistant to unreasonable, inconvenient or prejudicial to the
petitioner Albos, which position respondent subsequently assumed employee; and does not involve a demotion in rank or a diminution of his
Respondent filed with the LA a complaint for illegal suspension, salaries, privileges and other benefits. Should the employer fail to
constructive dismissal, non-payment of allowance, vacation/sick overcome this burden of proof, the employees transfer shall be tantamount
leave, damages and attorney's fees against petitioners. to constructive dismissal.
The LA dismissed the complaint for lack of merit. Constructive dismissal is defined as a quitting because continued
o It found that the position of Credit and Collection Manager held by employment is rendered impossible, unreasonable or unlikely; when there
respondent involved a high degree of responsibility requiring trust is a demotion in rank or a diminution of pay. Likewise, constructive
and confidence, and that petitioners exercised their inherent dismissal exists when an act of clear discrimination, insensibility or disdain
prerogative as an employer when they appointed respondent as a by an employer becomes unbearable to the employee, leaving him with no
Marketing Assistant. option but to forego his continued employment.
The NLRC reversed the LA, and held that Norkis constructively dismissed A transfer is defined as a movement from one position to another which is
respondent. of equivalent rank, level or salary, without break in service. Promotion is
o It ordered Norkis to pay Gnilo the amount of P411,796.00 as the advancement from one position to another with an increase in duties
backwages and separation pay, plus ten percent (10%) thereof as and responsibilities as authorized by law, and usually accompanied by an
increase in salary. Conversely, demotion involves a situation in which an in his benefit.
employee is relegated to a subordinate or less important position There is also constructive dismissal when an act of clear discrimination,
constituting a reduction to a lower grade or rank, with a corresponding insensibility, or disdain by an employer becomes so unbearable on the
decrease in duties and responsibilities, and usually accompanied by a part of the employee as to foreclose any choice on his part except to
decrease in salary. resign from such employment.
In this case, while the transfer of respondent from Credit and Collection The barbaric treatment suffered by the respondent in the hands of his
Manager to Marketing Assistant did not result in the reduction of his salary, bosses is unjustifiable. Not only was respondent made to look like an idiot
there was a reduction in his duties and responsibilities which when he was not given work in his new assignment, but he was humiliated
amounted to a demotion tantamount to a constructive dismissal as and debased when Albos, in a very uncouth manner, hurled expletives at
correctly held by the NLRC and the CA. the private respondent, calling him bobo, gago and screaming putang
A comparison in the nature of work of these two positions shows a great ina mo in front of him, at the same time crumpling his report and throwing
difference. it into his face. Such undignified and boorish deeds perpetrated against
o As Credit and Collection Manager, respondent was clothed with all respondent directly caused him to leave the employ of petitioner
the duties and responsibilities of a managerial employee. He corporation, which he served loyally for 12years.
could devise and implement action plans to meet his Respondent’s demotion in the nature of his functions coupled with
objectives and exercise independent judgment in resolving petitioner Albos’s act of insensibility no doubt amounts to his
problem accounts. He had power and control over NICs, Branch constructive dismissal.
Control Officers and Cashiers under his Respondent could not be faulted for accepting the position of a Marketing
supervision, and he provided them training in the performance of Assistant, since he did so and stayed put in order to compare and evaluate
their respective works. Further, he had the authority to ensure his position.
reserves in the NICs, BCOs and Cashiers in case of expansion, Furthermore, the alleged overstated collection reports of three NICs under
reassignment and/or termination. There is no doubt respondent's supervision submitted in 1997 were already mentioned in the
that said position of Credit and Collection Manager entails great IAP report of the 1999 incident for which respondent was meted the
duties and responsibilities and involves discretionary powers. penalty of 15- day suspension without salary, travel and transportation
o On the other hand, the work of a Marketing Assistant is clerical in allowance; thus, the same could no longer be used to justify his transfer.
nature, which does not involve the exercise of any Respondent’s demotion, which was a punitive action, was in effect a
discretion. Such job entails mere data gathering on vital marketing second penalty for the same negligent act of respondent.
informations relevant to petitioners' motorcycles and making
reports to his direct supervisor. He is a mere staff member in the
office of the Senior VP for Marketing. 57. Fungo v. Lourdes School, July 27, 2007
o These two positions are not of the same level of authority as the Doctrine: Loss of confidence must not be indiscriminately used as a shield by
position of Credit and Collection Manager is reposed with the employer against a claim that the dismissal of an employee was arbitrary. And,
managerial duties while as a Marketing Assistant, respondent
in order to constitute a just cause for dismissal, the act complained of must be
merely collates raw data.
There is constructive dismissal when an employee's functions, which were work-related and shows that the employee concerned is unfit to continue working
originally supervisory in nature, were reduced; and such reduction is not for the employer.
grounded on valid grounds such as genuine business necessity.
Moreover, petitioners failed to refute respondents claim that as Credit and Resignation is the voluntary act of employees who are compelled by personal
Collection Manager, he was provided with a service car which was no reasons to disassociate themselves from their employment. It must be done with
longer available to him as Marketing Assistant; thus, such was a reduction
the intention of relinquishing an office, accompanied by the act of abandonment. It In January 1996, petitioner's husband, Nicolas Fungo, an elementary
is inconsistent with the act of filing a complaint for illegal dismissal. school teacher in the same school, was dismissed from the service
because of his low performance rating given by Fr. Bustamente.
There is constructive dismissal if an act of clear discrimination, insensibility, or Petitioner then wrote respondent Fr. Bustamante questioning the
performance rating given to her husband. She attached to her letter
disdain by an employer becomes so unbearable on the part of the employee that it
documents containing the summary of efficiency ratings of all the teachers.
would foreclose any choice by him except to forego her continued employment. She retrieved these documents from the filing cabinet.
On March 8, 1996 petitioner received a letter from respondent Fr.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from Bustamante requiring her to explain in writing why she should not be
work shall be entitled to reinstatement without loss of seniority rights and other dismissed from employment for willful breach of trust reposed on her.
privileges and to his full backwages, inclusive of allowances, and to his other Petitioner further alleged in her petition that in the morning of April 1, 1996,
benefits or their monetary equivalent computed from the time his compensation Fr. Manuel Remirez, the school treasurer, summoned her to his office.
Thereupon, he compelled her to tender her resignation within 30 minutes,
was withheld from him up to the time of his actual reinstatement. If the relationship
otherwise, she will not receive her separation pay. Considering that her
is now so strained, such as in the case of a constructively dismissed confidential husband was jobless and that her family was in financial predicament,
employee, payment of separation pay shall be made in lieu of reinstatement. petitioner submitted her resignation letter.
Petitioner filed with the LA a case for illegal dismissal. The Labor Arbiter
Recit Ready Digest: found that petitioner was constructively dismissed from employment.
Petitioner’s husband was dismissed from employment because of his poor However, this was reversed by the NLRC, when it found the petitioner to
performance rating as an elementary school teacher. Petitioner questioned why have voluntarily resigned.
such rating was given to her husband by her boss. Later on, she was forced to
resign from employment under the threat of non-payment of her separation pay. Issue: Whether or not petitioner was constructively dismissed from employment.
According to the Supreme Court she was constructively dismissed because her
Held/Ratio: Yes, she was constructively dismissed.
continued employment was rendered impossible, unreasonable, or unlikely due to
the threat of withholding her separation pay. Loss of confidence cannot simply be
invoked by the employer to shield himself from the consequences of illegal Respondents argue that petitioner's act of retrieving the document from
the files inside the rector's office was improper and constituted a willful
dismissal. Petitioner cannot be said to have resigned voluntarily because
breach of the trust reposed upon her by Fr. Bustamante. Such breach of
resignation implies abandonment of work, which is inconsistent with the act of filing trust is a just cause for terminating her services.
a case for illegal dismissal. To be a valid ground for dismissal, loss of trust and confidence must be
based on a willful breach of trust and founded on clearly established facts.
Facts: A breach is willful if it is done intentionally, knowingly and purposely,
Rodelia S. Fungo, petitioner, alleged in her petition that on June 1, 1981, without justifiable excuse, as distinguished from an act done carelessly,
she was employed as secretary of respondent Fr. Servillano B. thoughtlessly, heedlessly or inadvertently.
Bustamante, rector of Lourdes School of Mandaluyong. Respondent Fr. Loss of confidence must not be indiscriminately used as a shield by the
Bustamante authorized her to file and keep confidential documents in his employer against a claim that the dismissal of an employee was arbitrary.
office. He entrusted to her the duplicate keys of the filing cabinet and she And, in order to constitute a just cause for dismissal, the act complained of
was allowed to take any document therefrom whenever she had to bring must be work-related and shows that the employee concerned is unfit to
some matters to his attention. continue working for the employer.
Guidelines for the application of loss of confidence as a just cause for
dismissing an employee from the service: (a) it should not be simulated;
(b) it should not be a subterfuge for causes which are improper, illegal, or 58. The University of the Immaculate Conception v. NLRC, January 26, 2011
unjustified; (c) it may not be arbitrarily asserted in the face of DOCTRINE: Constructive dismissal occurs when there is cessation of
overwhelming evidence to the contrary; (d) it must be genuine, not a mere work because continued employment is rendered impossible, unreasonable, or
afterthought to justify earlier action taken in bad faith. unlikely as when there is a demotion in rank or diminution in pay or when a clear
In the instant case, Fr. Bustamante entrusted to petitioner various discrimination, insensibility, or disdain by an employer becomes unbearable to the
documents in his office. She could take any document from the filing employee leaving the latter with no other option but to quit.
cabinet inside his office. While she retrieved documents pertaining to the
efficiency ratings of all teachers in the school for the year 1990-1991, such
act did not constitute a breach of trust and confidence since she did not RECIT READY:
show those documents to any other person except to Fr. Bustamante Teodora Axalan was a faculty member holding the position of Associate
himself. Significantly, he did not dispute the fact that petitioner had access Professor in the University of the Immaculate Conception in Davao. She was
to the records. dismissed due to 2 instances wherein she was allegedly absent without leave,
When petitioner asked Fr. Bustamante why her husband's performance attending seminars in Quezon City and Baguio City, respectively. After conducting
rating was low, Fr. Remirez summoned her to his office and urged her to hearings and receiving evidence, the ad hoc grievance committee found Axalan to
tender her resignation within 30 minutes. He threatened her that if she have incurred AWOL on both instances and recommended that Axalan be
would not resign, her separation pay would be forfeited. These suspended without pay for six months on each AWOL charge. The university
circumstances glaringly show that respondents wanted to terminate her president approved the committee’s recommendation and wrote Axalan a letter
employment, but they made it appear that she voluntarily resigned. informing her of her absences and of her total penalty of one-year suspension
Resignation is the voluntary act of employees who are compelled by without pay for both AWOL charges effective immediately.
personal reasons to disassociate themselves from their employment. It ISSUE: Whether or not there was constructive dismissal.
must be done with the intention of relinquishing an office, accompanied by HELD: NO, there was no constructive dismissal, Axalan having been validly validly
the act of abandonment. It would have been illogical therefore for the suspended for cause and in accord with procedural due process.
petitioner to resign and then file a complaint for illegal dismissal. In this case there was no cessation of employment relations between the
Thus, we rule that petitioner was constructively dismissed from her parties. It is unrefuted that Axalan promptly resumed teaching at the university
employment. There is constructive dismissal if an act of clear right after the expiration of the suspension period. In other words, Axalan never
discrimination, insensibility, or disdain by an employer becomes so quit. Hence, Axalan cannot claim that she was left with no choice but to quit, a
unbearable on the part of the employee that it would foreclose any choice crucial element in a finding of constructive dismissal. Thus, Axalan cannot be
by him except to forego her continued employment. deemed to have been constructively dismissed.
Under Article 279 of the Labor Code, an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of FACTS:
allowances, and to his other benefits or their monetary Teodora C. Axalan is a regular faculty member holding the position of
equivalent computed from the time his compensation was withheld from Associate Professor II in the University of the Immaculate Conception in Davao.
him up to the time of his actual reinstatement. Considering, however, that She was dismissed due to 2 instances wherein she was allegedly absent without
the nature of petitioner's work requires constant interaction with Fr. leave, attending seminars in Quezon City and Baguio City, respectively.
Bustamante, their working relationship has been strained. Thus, the
payment of separation pay and other benefits in lieu of reinstatement is in On the first instance, Axalan claimed that she held online classes. She
order. was convinced that she cannot be considered absent and opted not to write the
letter of apology requested of her by the University President to avoid any
administrative charge. On the second instance, Axalan claimed that she asked The Court recognizes the right of employers to discipline its employees for
permission from the VP for Academics who denied giving the same. serious violations of company rules after affording the latter due process and if the
evidence warrants. The university, after affording Axalan due process and finding
After conducting hearings and receiving evidence, the ad hoc grievance her guilty of incurring AWOL on two separate occasions, acted well within the
committee found Axalan to have incurred AWOL on both instances and bounds of labor laws in imposing the penalty of six-month suspension without pay
recommended that Axalan be suspended without pay for six months on each for each incidence of AWOL.
AWOL charge. The university president approved the committee’s
recommendation and wrote Axalan a letter informing her of her absences and of As a learning institution, the university cannot be expected to take lightly
her total penalty of one-year suspension without pay for both AWOL charges absences without official leave among its employees, more so among its faculty
effective immediately. members even if they happen to be union officers. To do so would send the wrong
signal to the studentry and the rest of its teaching staff that irresponsibility is widely
ISSUE tolerated in the academe.
Whether or not there was constructive dismissal.
The law protects both the welfare of employees and the prerogatives of
HELD management. Courts will not interfere with prerogatives of management on the
NO, there was no constructive dismissal, Axalan having been validly discipline of employees, as long as they do not violate labor laws, collective
validly suspended for cause and in accord with procedural due process. bargaining agreements if any, and general principles of fairness and justice.
Constructive dismissal occurs when there is cessation of work because

continued employment is rendered impossible, unreasonable, or unlikely as when 59. Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January
there is a demotion in rank or diminution in pay or when a clear discrimination, 19, 2011
insensibility, or disdain by an employer becomes unbearable to the employee G.R. No. 177937
leaving the latter with no other option but to quit. 19 January 2011
Nachura
In this case however, there was no cessation of employment relations
between the parties. It is unrefuted that Axalan promptly resumed teaching at the Doctrine:
university right after the expiration of the suspension period. In other Due process requirements under the Labor Code are mandatory and may not be
words, Axalan never quit. Hence, Axalan cannot claim that she was left with no supplanted by police investigations or court proceedings. Employers should not
choice but to quit, a crucial element in a finding of constructive dismissal. rely solely on the findings of the Prosecutor’s Office. They are mandated to
Thus, Axalan cannot be deemed to have been constructively dismissed. conduct their own separate investigation, and to accord the employee every
opportunity to defend himself.
Significantly, at the time the Labor Arbiter rendered his Decision on 11
October 2004, Axalan had already returned to her teaching job at the university on An illegally dismissed or constructively dismissed employee is entitled to: 1)
1 October 2004. The Labor Arbiter’s Decision ordering the reinstatement reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and
of Axalan, who at the time had already returned to work, is thus absurd. 2) backwages. These 2 reliefs are separate and distinct from each other and are
awarded conjunctively.
There being no constructive dismissal, there is no legal basis for the Labor
Arbiter’s order of reinstatement as well as payment of backwages, salary Recit-Ready Digest:
differentials, damages, and attorney’s fees.
Ranchez was a probationary employee of Robinsons which was eventually hired terminating here because construtctive dismissal had already been effected
as a cashier. She reported loss of cash amounting to P20,299 to her supervisor. A earlier. CA affirmed NLRC.
strip-search as done which yielded nothing. The operations manager then reported
the matter to the police and requested for an inquest. An information for Qualified Issue/s: WON Ranchez was illegally terminated. (YES)
Theft was filed which resulted to her imprisonment for 2 weeks. Thereafter,
Robinsons sent to her by mail a notice of termination and/or notice of expiration of Held/Ratio:
probationary employment A probationary employee enjoys security of tenure. Its services may be terminated
for any of the following: 1) just or 2) authorized cause, and 3) when he fails to
WON Ranchez was illegally dismissed by Robinsons. (YES) qualify as a regular employee in accordance with reasonable standards prescribed
by the employer.
Based on the facts, Robinsons failed to accord Ranchez substantive and
procedural due process. The investigation was left to the determination of the Art. 283 provides that the employer shall furnish the worker, whose employment is
police authorities and the prosecutor’s office. Administrative investigation was not sought to be terminated, a written notice containing a statement of the cause of
conducted by Robinsons. Ranchez was constructively dismissed. It was termination, and shall afford the latter ample opportunity to be heard and defend
unreasonable for her to be charged with abandonment for not reporting for work himself with the assistance of representative if he so desires.
upon her release in jail. Work had been rendered unreasonable, unlikely, and
impossible, considering the treatment accorded her by Robinsons. Based on the facts, Robinsons failed to accord Ranchez substantive and
procedural due process. The investigation was left to the determination of the
Facts: police authorities and the prosecutor’s office. Administrative investigation was not
Ranchez was a probationary employee of Robinsons for a period of 5 months. She conducted by Robinsons. On the same day that the missing money was reported
underwent 6 weeks of training as a cashier before she was hired. by respondent to her immediate superior, the company already pre-judged her guilt
without proper investigation, and instantly reported her to the police which resulted
2 weeks after she was hired, she reported to her supervisor the loss of cash to her imprisonment for 2 weeks.
amounting to P20,299 which she had placed inside the company locker. Manuel,
the operations manager, ordered that she be strip-searched by the company Due process requirements under the Labor Code are mandatory and may not be
guards. However, the search on her and her personal belongings yielded nothing. supplanted by police investigations or court proceedings. Employers should not
She acknowledged her responsibility and requested that she be allowed to settle rely solely on the findings of the Prosecutor’s Office. They are mandated to
and pay the lost amount. However, Manuel did not heed her request and instead conduct their own separate investigation, and to accord the employee every
reported the matter to the police and requested for an inquest. An information for opportunity to defend himself.
qualified theft was filed and Ranchez was constrained to spend 2 weeks in jail for
failure to post bail. Ranchez was constructively dismissed. It was unreasonable for her to be charged
with abandonment for not reporting for work upon her release in jail. Work had
Ranchez filed a complaint for illegal dismissal and damages. Thereafter, been rendered unreasonable, unlikely, and impossible, considering the treatment
Robinsons sent to her by mail a notice of termination and/or notice of expiration of accorded her by Robinsons.
probationary employment. LA dismissed the illegal dismissal complaint for lack of
merit. NLRC reversed LA: Ranchez was denied due process. Strip-searching and Art. 279 provides that an employee who is unjustly dismissed from work shall be
sending her to jail for 2 weeks amounted to constructive dismissal because entitled to reinstatement without loss of seniority rights and other privileges, to full
continued employment had been rendered impossible, unreasonable, and unlikely. backwages, inclusive of allowances, and to other benefits or their monetary
The subsequent lapse of her probationary contract did not have the effect of validly equivalent computed from the time his compensation as withheld from him up to
the time of his actual reinstatement. However, due to the strained relations of the
parties, the payment of separation pay has been considered acceptable alternative effect, an illegally dismissed employee is entitled to either reinstatement, if viable,
to reinstatement, when the latter is no longer desirable or viable. or separation pay if reinstatement is no longer viable, and backwages.
An illegally dismissed or constructively dismissed employee is entitled to: 1) Facts

reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and Petitoner Dreamland with its president, Westley Prentice, is a corporation
2) backwages. These 2 reliefs are separate and distinct from each other and are engaged in the hotel, restaurant and allied businesses. Repondent
awarded conjunctively. Stephen Johnson is an Australian citizen who came to the Philippines as a
businessman/ investor without the authority to be employed as the
In this case, since respondent was a probationary employee at the time she was employee/ officer of any business as he was not able to secure his Alien
constructively dismissed by petitioners, she is entitled to separation pay and Employment Permit.
backwages. Reinstatement of respondent is no longer viable considering the Sometime in June 21, 2007, Prentice and Johnson entered into an
circumstances. The backwages that should be awarded to respondent shall be Employment Agreement which stipulates among others, that Johnson shall
reckoned from the time of her constructive dismissal until the date of the serve as Operations Manager of Dreamland from August 1, 2007 and shall
termination of her employment. serve as such for a period of three (3) years.
From the start of August 2007, as stipulated in the Employment
Agreement, respondent Johnson already reported for work. It was then
60. Dreamland Hotel v. Johnson that he found out to his dismay that the resort was far from finished.
March 12, 2014 However, he was instructed to supervise construction and speak with
potential guests. He also undertook the overall preparation of the
Doctrine: An illegally dismissed employee is entitled to two reliefs: backwages and guestrooms and staff for the opening of the hotel, even performing menial
reinstatement. The two reliefs provided are separate and distinct. In instances tasks.
where reinstatement is no longer feasible because of strained relations between As Johnson remained unpaid since August 2007 and he has loaned all his
the employee and the employer, separation pay is granted. money to petitioners, he asked for his salary after the resort was opened in
October 2007 but the same was not given to him by petitioners. Johnson
Recit Ready: Dreamland employed Australian citizen, Stephen Johnson to serve became very alarmed with the situation as it appears that there was no
as its operations manager for a period of 3 years. However, when Johnson arrived, intention to pay him his salary.
he found out that the resort was far from finished. He was then tasked to supervise On November 3, 2007, after another embarrassment was handed out by
construction and speak with potential guests. petitioner Prentice in front of the staff, which highlighted his lack of real
authority in the hotel and the disdain for him by petitioners, respondent
Johnson remained unpaid so he asked for his salary when the resort finally Johnson was forced to submit his resignation. Johnson filed a case for
opened but the resort refused. After another embarrassment handed out to illegal dismissal and non-payment of salaries against petitioners.
Johnson by the resort in front of the staff, Johnson was forced to submit his LA dismissed the complaint, holding that Johnson voluntarily resigned
resignation. Johnson then filed a case for illegal dismissal and non-payment of from his employment. On appeal, the NLRC reversed the LA’s decision
salaries. The Supreme Court ruled that the refusal of Dreamland without justifiable and ordered petitioners to pay. CA dismissed the appeal on the ground of
reason to pay Johnson’s salary forced the latter to resign, thus his resignation was technicalities.
in effect a constructive dismissal. Since Johnson was constructively dismissed, he
was illegally dismissed. Thus, an illegally dismissed employee is entitled to two Issue: WON Johnson voluntarily resigned
reliefs: backwages and reinstatement. The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because of strained Held: NO
relations between the employee and the employer, separation pay is granted. In Although the resort did not open until approximately October 8, 2007,
Johnson’s employment began, as per the Employment Agreement, on While the Court agrees with the NLRC that the award of separation pay
August 1, 2007. During the interim period, Johnson was frequently and unpaid salaries is warranted, the court does not lose sight of the fact
instructed by Prentice to supervise the construction staff and speak with that the employment contract states that Johnson’s employment is for a
potential future guests who visited the site out of curiosity. term of three years.
The petitioners maintain that they have paid the amount of P7,200 to Accordingly, the award of backwages should be computed from November
Johnson for his three weeks of service from October 8, 2007 until 3, 2007 to August 1, 2010 – which is three years from August 1, 2007.
November 3, 2007, the date of Johnson’s resignation, which Johnson did Furthermore, separation pay is computed from the commencement of
not controvert. Even so, the amount the petitioners paid to Johnson as his employment up to the time of termination, including the imputed service for
3-week salary is significantly deficient as Johnson’s monthly salary as which the employee is entitled to backwages.
stipulated in their contract is P60,000.
Thus, the amount which Johnson should have been paid is P45,000 and
not P7,200. In light of this deficiency, there is more reason to believe that 61. INTEC Cebu v. CA
the petitioners withheld the salary of Johnson without a valid reason. G.R. No. 189851
It only goes to show that while it was Johnson who tendered his June 22, 2016
resignation, it was due to the petitioner’s acts that he was constrained to
resign. The petitioners cannot expect Johnson to tolerate working for them Doctrines:
without any compensation. 1. Constructive dismissal occurs when there is cessation of work
Since Johnson was constructively dismissed, he was illegally dismissed. because continued employment is rendered impossible,
Thus, an illegally dismissed employee is entitled to two reliefs: backwages unreasonable or unlikely; when there is a demotion in rank or diminution
and reinstatement. The two reliefs provided are separate and distinct. In in pay or both; or when a clear discrimination, insensibility, or disdain by
instances where reinstatement is no longer feasible because of strained an employer becomes unbearable to the employee.
relations between the employee and the employer, separation pay is 2. To constitute abandonment, there must be clear proof of deliberate
granted. and unjustified intent to sever the employer-employee relationship.
In effect, an illegally dismissed employee is entitled to either 3. An employee who takes steps to protest his dismissal cannot logically be
reinstatement, if viable, or separation pay if reinstatement is no longer said to have abandoned his work. The filing of such complaint is proof
viable, and backwages. enough of his desire to return to work, thus negating any suggestion
The accepted doctrine is that separation pay may avail in lieu of of abandonment.
reinstatement if reinstatement is no longer practical or in the best interest
of the parties. Separation pay in lieu of reinstatement may likewise be Recit-ready:
awarded if the employee decides not to be reinstated. Under the doctrine Petitioner is engage in the manufacture of electrical components. On the basis of
of strained relations, the payment of separation pay is considered an forestalling alleged losses and coping with slumping demands, Petitioner reduced
acceptable alternative to reinstatement when the latter option is no longer the work hours of Respondents. At the same time, Petitioner hired 188 workers
desirable or viable. alleged to be OJT. Petitioner alleged that they were hired even prior to the work
In the present case, the NLRC found that due to the strained relations reduction. Respondents allege the workers were hired to replace the Respondents.
between the parties, separation pay is to be awarded to Johnson in lieu of LA for Respondents, NLRC for Petitioner, CA for Respondents. Finally, SC for
his reinstatement. Respondents. Petitioner’s defense ultimately depended on management
The NLRC held that Johnson is entitled to backwages from November 3, prerogative in coping with business loses, and that Respondents abandoned their
2007 up to the finality of the decision; separation pay equivalent to one work. SC held that management prerogative must be exercised in good faith. Here
month salary; and unpaid salaries from August 1, 2007 to November 1, Petitioner failed to substantiate business losses to justify work reduction, thus it
2007 amounting to a total of P172,800. was tantamount to constructive dismissal. Second, SC held that Respondents
cannot be made liable for abandonment. Their filing of a case for illegal dismissal There was thus illegal reduction of work hours.
is proof of desire to return to work, negating abandonment. Constructive dismissal occurs when there is cessation of work
because continued employment is rendered impossible,
Facts: unreasonable or unlikely; when there is a demotion in rank or diminution
Petitioner Intec Cebu Inc. is engaged with the assembly of mechanical in pay or both; or when a clear discrimination, insensibility, or disdain by
system and printed circuit board for cassette tape recorder, CD and CD an employer becomes unbearable to the employee.
ROM player. Respondents (37 in total) were hired as production workers. Intec's unilateral and arbitrary reduction of the work day scheme had
In 2005, Petitioner reduced respondents’ work days from 6 to 2-4 days significantly greatly reduced respondents' salaries thereby rendering
allegedly due to lack of job orders. At the same time, Petitioner hired 188 it liable for constructive dismissal.
contractual employees to perform the same tasks. Respondents then There is no merit to Intec's charge of abandonment against respondents.
claimed they were effectively terminated and thus filed a complaint for To constitute abandonment, there must be clear proof of deliberate
illegal dismissal. and unjustified intent to sever the employer-employee relationship.
LA ruled in favor of the employee Respondents and held Petitioner liable Clearly, the operative act is still the employee's ultimate act of putting an
for backwages and separation pay (A 1little under 7m). NLRC reversed end to his employment. Furthermore, it is a settled doctrine that the filing
and directed Petitioner to simply give separation pay (Around 1.125m) of a complaint for illegal dismissal is inconsistent with abandonment of
CA reversed NLRC and upheld LA ruling. However, some Respondents employment. An employee who takes steps to protest his dismissal
were dropped for failure to sign Verification and CNFS. cannot logically be said to have abandoned his work. The filing of
such complaint is proof enough of his desire to return to work, thus
Issue: W/N employees were constructively dismissed negating any suggestion of abandonment.
Procedural lapse: Petitioner wrongly availed of R65 when proper remedy
Held: was R45
Now, Petitioner alleges that the acts were done to forestall business WHEREFORE, petition is DISMISSED.
losses, and that the contractual workers hired were simply OJT trainees
hired even before the work day reduction of Respondents. Petitioners
additionally allege abandonment when Respondents filed for leave after Temporary Suspension of Operations/Floating Status
receipt of the second notice. 62. Manila Mining Corp. Employees Association v. Manila Mining Corp.
The Court has held that management is free to regulate, according to its September 29, 2010 (repeated case from ULP, digest below is post-employment
own discretion and judgment, all aspects of employment. The exercise of specific):
management prerogative, however, is not absolute as it must be exercised
in good faith and with due regard to the rights of labor. Thus, it was DOCTRINE:
incumbent upon Intec to prove that the implementation of the reduced The employer can lawfully close shop anytime as long as cessation of or
working days is valid and done in good faith. withdrawal from business operations is bona fide in character and not impelled by
Petitioner presented evidence of alleged business loses and loss of a motive to defeat or circumvent the tenurial rights of employees, and as long as
demand. Upon investigation, SC surmised that while a general overview he pays his employees their termination pay in the amount corresponding to their
would suggest losses, a closer look would suggest that, in the months that length of service.
Respondents’ work hours were reduced, Petitioner enjoyed profits.
Furthermore, the losses were merely caused by Petitioner’s purchase of RECIT READY DIGEST
property and equipment. As for demand, SC said the delivery receipts MMC had to suspend operations because it was not able to secure a permit from
were undated, prepared by Petitioner, and were merely projections. In DENR. It thus initially laid off more than 400 employees as it temporarily shut down
sum, there was no reason for the cost-cutting measure. its mining operations. These employees allege that the closure is not valid and was
mere subterfuge to avoid CBA negotiations. MMC argues that it was a valid o It concedes that upon expiration of the 6-month period, coupled
closure, but does not want to pay separation pay because the causes/ with losses suffered by MMC, the complainants were
circumstances for the closure was beyond its control (its permit was allegedly up to constructively dismissed
the discretion of the DENR). Supreme Court says closure is valid, since it was due o However, MMC explains that the 6-month period does not refer to
to lack of permit which was a requirement for operations. However, separation pay a situation where the employer does not have any control over the
must still be paid as the lay-off exceeded 6 months, since Article 283 of the Labor nature, extent and period of the temporary suspension of
Code applies. operations. In this case, the suspension of MMC’s operation was
left to the discretion of the DENR
FACTS: LA: temporary shut down and the lay off of the employees is valid.
Manila Mining Corporation (MMC) is a publicly- listed corporation engaged NLRC: ordered the payment of separation pay equivalent to one month
in large-scale mining for gold and copper ore. pay for every year of service. It ratiocinated that the temporary lay-off,
Upon expiration of the tailings permit on 25 July 2001, DENR- EMB did not which exceeded more than six (6) months, had the effect of severance of
issue a permanent permit due to the inability of MMC to secure an the employer-employee relationship.
Environmental Compliance Certificate (ECC) CA: modified the award of separation pay from 1 month to ½ month
An essential component of an ECC is social acceptability or the consent of instead for every year of service
the residents in the community to allow TP No. 7 to operate, which MMC
failed to obtain. Hence, it was compelled to temporarily shut down its ISSUES:
mining operations, resulting in the temporary lay-off of more than 400 W/N lay-off is illegal (NO. However, even if lay-off is legal and suspension of
employees in the mine site. operations valid, MMC still liable to pay separation pay)
Laid- off employees file complaints for reinstatement. They allege:
o MMC was not suffering from business losses RATIO:
o MMC did not want to bargain collectively with the Union, so that Despite all efforts exerted by MMC, it did not succeed in obtaining the
instead of submitting their counterproposal to the CBA, MMC consent of the residents of the community where the tailings pond would
decided to terminate all union officers and active members operate, one of the conditions imposed by DENR-EMB in granting its
o Petitioners questioned the timing of their lay-off, and alleged that application for a permanent permit. It is precisely MMCs faultless failure to
first, there was no showing that cost-cutting measures were taken secure a permit which caused the temporary shutdown of its operations.
by MMC However, MMC must still pay separation pay.
o No criteria were employed in choosing which employees to lay-off Article 286 of the Labor Code4 allows the bona fide suspension of
o The individuals laid-off were those who signed the attendance operations for a period not exceeding six (6) months. During the
sheet of the union organizational meeting suspension, an employee is not deemed terminated. Further, the
o They were denied due process because they were not given a 30- employee is entitled to be reinstated once the employer resumes
day notice informing them of the lay-off. Neither was the DOLE operations within the 6-month period.
informed of this lay- off, as mandated by law
Respondents justified the temporary lay-off as bona fide in character and a 4 ART. 286. When employment not deemed terminated. ─ The bona fide suspension of
valid management prerogative pending the issuance of the permit to the operation of a business or undertaking for a period not exceeding six (6) months, or the
continuously operate. They further argue: fulfillment by the employee of a military or civic duty shall not terminate employment. In all
o Temporary lay-off of the employees as valid and done in the such cases, the employer shall reinstate the employee to his former position without loss of
exercise of management prerogative seniority rights if he indicates his desire to resume his work not later than one (1) month
from the resumption of operations of his employer or from his relief from the military or civic
duty.
o Yet, Article 286 is silent with respect to the rights of the employee
if the suspension of operations lasts for more than 6 months. 63. NIPPON HOUSING PHIL. INC. V. MAIAH ANGELA LEYNES
o MMC says for purposes of determining employer responsibility, an G.R. No. 177816, August 3, 2011
employment should not be deemed terminated, if the suspension
of operation go beyond six (6) months as long as the continued DOCTRINES:
suspension is due to a cause beyond the control of the employer. 1. The rule is settled, however, that "offdetailing" (being on floating status) is
WRONG. not equivalent to dismissal, so long as such status does not continue
o The decision to suspend operation ultimately lies with the beyond a reasonable time and that it is only when such a "floating status"
employer, who in its desire to avert possible financial losses lasts for more than six months that the employee may be considered to
5
suspends its operations. Thus, Article 283 of Labor Code have been constructively dismissed.
operates. 2. A complaint for illegal dismissal filed prior to the lapse of said sixmonth
Under Article 283, the employer can lawfully close shop and/or the actual dismissal of the employee is generally considered as
anytime as long as cessation of or withdrawal from prematurely filed.
business operations is bona fide in character and not 3. One of the recognized authorized causes for the termination of
impelled by a motive to defeat or circumvent the tenurial employment, redundancy exists when the service capability of the
rights of employees, and as long as he pays his workforce is in excess of what is reasonably needed to meet the demands
employees their termination pay in the amount of the business enterprise
corresponding to their length of service. 4. Where dismissal is for an authorized cause like redundancy, the
The cessation of operations, in the case at bar is of such employer is, instead, required to serve a written notice of termination on
nature. It was proven that MMC stopped its operations the worker concerned and the DOLE, at least one month from the intended
precisely due to failure to secure permit to operate a date thereof
tailings pond. Separation pay must nonetheless be given
to the separated employees. RECIT READY and FACTS:
Maiah Leynes was hired as Property Manager for respondent NHPI’s
building maintenance business. She handled the project for their only
5 ARTICLE 283. Closure of establishment and reduction of personnel.- The employer client, Bay Gardens Condominium. She was also responsible for the hiring
may also terminate the employment of any employee due to the installation of labor-saving and deployment of manpower, salary and position determination as well as
devices, redundancy, retrenchment to prevent losses or the closing or cessation of the assignment of the schedules and responsibilities of employees. In one
operation of the establishment or undertaking unless the closing is for the purpose of incident, Leynes had a misunderstanding with Engr. Cantuba, the Building
circumventing the provisions of this Title, by serving a written notice on the workers and the
Engineer assigned at the Project, regarding the extension of the latters
Ministry of Labor and Employment at least one (1) month before the intended date thereof.
working hours. NHPIs Vice President went on to issue a memorandum,
attributing the incident to simple personal differences and directing Leynes
In case of termination due to the installation of labor-saving devices or redundancy, the
to allow Engr. Cantuba to report back for work.
worker affected thereby shall be entitled to a separation pay equivalent to at least his one
Disappointed with the foregoing management
(1) month pay or to at least one (1) month pay for every year of service, whichever is higher.
decision, Leynes submitted to NHPIs President, a letter asking for an
In case of retrenchment to prevent losses and in cases of closures or cessation of
emergency leave of absence for the supposed purpose of coordinating
operations of establishment or undertaking not due to serious business losses or financial
with her lawyer regarding her resignation letter. While NHPI offered the
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
Property Manager position to Engr. Carlos Jose as a consequence Leynes
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) signification of her intention to resign, it also appears that Leynes sent
months shall be considered one (1) whole year. another letter to NHPI on the same day, expressing her intention to return
to work on and to call off her planned resignation upon the advice of her when such a "floating status" lasts for
lawyer. Leynes was constrained to send out a written protest regarding the more than six months that the employee may be considered to have been
verbal information she supposedly received from Reyes that a substitute constructively dismissed.
has already been hired for her position. Leynes was further served by
petitioner with a letter and memorandum relieving her from her position In constructive dismissal cases, the employer is, concededly, charged with the
and directing her to report to NHPIs main office while she was on floating burden of proving that its conduct and action or the transfer of an employee are for
status. valid and legitimate grounds such as genuine business necessity.
Aggrieved, Leynes lost no time in filing against NHPI and its abovenamed
officers the complaint for illegal dismissal, unpaid salaries, benefits, Article 286 of the Labor Code has been applied to other industries when, as a
damages and attorney’s fees docketed before the NLRC. She claimed that consequence of the
her being relieved from her position without just cause and replacement by bona fide suspension of the operation of a business or undertaking, an empl
one Carlos Jose amounted to an illegal dismissal from employment. oyer is constrained to put employees on floating status for a period not exceeding
NHPI and its officers asserted that the management exercise of the six months.
prerogative to put an employee on floating status for a period not
exceeding six months was justified in view of her threatened resignation 2) NO. A complaint for illegal dismissal filed prior to the lapse of said sixmonth
from her position and BGCCs request for her replacement. and/or the actual dismissal of the employee is generally considered as prematurely
During the pendency of the case, however, Reyes eventually served the filed.
DOLE Leynes with the 8 August 2002 notice terminating her services
effective 22 August 2002, on the ground of redundancy or lack of a posting 3) YES. With no other client aside from BGCC for the building management side
commensurate to her position at the Project. Leynes was offered by NHPI of its business, we find that NHPI was acting well within its prerogatives when it
the sum of P28,188.16 representing her unpaid wages, proportionate 13th eventually terminated Leynes services
month pay, tax refund and service incentive leave pay (SILP). on the ground of redundancy. One of the recognized authorized causes for
the termination of employment, redundancy exists when the service capability of
Issues: the workforce is in excess of what is reasonably needed to meet the demands of
1. Whether or not placing an employee on floating status is tantamount to the business enterprise.
constructive dismissal.
2. Was the complaint for illegal dismissal proper? 4) YES. Where dismissal is for an authorized cause like redundancy, the
3. Was the dismissal valid on the ground of redundancy? employer is, instead, required to serve a written notice of termination on the worker
4. Was there a violation on the 30 day notice requirement? concerned and the DOLE, at least one month from the intended date thereof.
5. Was Leynes entitled to separation pay, and other monetary awards? Here, NHPI specifically
made Leynes termination from service effective 22 August 2002, but only inf
Held: ormed said employee of the same on 8 August 2002
and filed with the DOLE the required Establishment Termination Report only on
1) NO. Acting on Leynes letter protesting against the hiring of her replacement and 16 August 2002. For its failure to comply strictly with the 30day minimum
reiterating her lack of intention to resign from her position, the record, moreover, requirement for said notice and effectively violating Leynes right to due process,
shows that NHPI simply placed her on floating status until such time that another NHPI should be held liable to pay nominal damages in the sum of P50,000.00. The
project could be secured for her. penalty should understandably be stiffer because the dismissal process was
initiated by the employer's exercise of its management prerogative.
The rule is settled, however, that "offdetailing" is not equivalent to dismissal, so
long as such status does not continue beyond a reasonable time and that it is only
5) YES, AND NO. Having been validly terminated on the ground of redundancy, The 23 respondents were employed by petitioner SKM Art Craft
Leynes is entitled to separation pay equivalent to one month salary for every year Corporation which is engaged in the handicraft business.
of service but not to the backwages adjudicated in her favor by the Labor Arbiter. On April 18, 2000, around 1:12 a.m., a fire occurred at the inspection and
For lack of showing of bad faith, malice or arbitrariness on the part of NHPI, there receiving/repair/packing area of SKM’s premises in Intramuros, Manila.
is, however, no justifiable ground for an award of moral and exemplary damages. The fire investigation report stated that the structure and the beach rubber
For lack of factual or legal bases, we find no cause to award attorneys fees in favor building were totally damaged. Also burned were four container vans and
of Leynes. In the absence of the same showing insofar as NHPIs corporate officers a trailer truck. The estimated damage was P22 million.
are concerned, neither is there cause to hold them jointly and severally liable for
On May 8, 2000, petitioner informed respondents that it will suspend its
the monetary awards.
operations for six months, effective May 9, 2000. Only eight days after
receiving notice of the suspension of SKM’s operations, the 23
respondents filed a complaint for illegal dismissal with NLRC. They alleged
64. SKM Art Craft Corporation v. Bauca, et. al
that there was discrimination in choosing the workers to be laid off and that
G.R. No. 171282. November 27, 2013.  petitioner had discovered that most of them were members of a newly-
organized union.
DOCTRINE: Employment will not be deemed terminated if the bona fide
In its defense, SKM claimed that Article 286 of the Labor Code allows the
suspension of operations does not exceed six months. But if the suspension of
bona fide suspension of a business or undertaking for a period not
operations exceeds six months, the employment will be considered terminated.
exceeding six months. SKM claimed that the fire cost it millions in losses
and that it is impossible to resume its operations.
RECIT-READY DIGEST: Bauca and 22 other respondents were employees of
SKM Art Craft Corporation which is engaged in the handicraft business. A fire LA: The fire that burned a part of SKM’s premises may validate the
occurred at the inspection and receiving/repair/packing area of SKM’s premises in suspension of respondents’ employment, but the suspension must not
Intramuros, Manila. The structure and the beach rubber building were totally exceed six months. Since petitioner failed to recall respondents after the
damaged, as well as four container vans and a trailer truck. The estimated damage lapse of six months, Bauca and co-respondents were illegally dismissed.
was P22 million. SKM later informed respondents that it will suspend its operations NLRC: The suspension of operations is valid under Article 286 of the
for six months, effective May 9, 2000. Only 8 days after the receiving notice of Labor Code. It was not meant to remove respondents because they were
suspension of SKM’s operations, the respondents already filed a complaint for union members. The illegal dismissal complaint filed by respondents was
illegal dismissal alleging that there was discrimination in choosing the workers to premature for it was filed during the six-month period of suspension of
be laid off and that petitioner had discovered that most of them were members of a operations.
newly-organized union. In its defense, SKM claims that the Labor Code allows the CA: SKM failed to prove that its suspension of operations is bona fide. The
bona fide suspension of a business or undertaking for a period not exceeding six list of items and materials allegedly burned · was not even certified or
months. It cost it millions in losses and that it is impossible to resume its normal signed by SKM’s accountant or comptroller. And even if the suspension of
operations for a significant period of time.  The Court ruled that while the operations is considered bona fide, the respondents were not reinstated
suspension of business operations is valid (and the complaint for illegal dismissal after six months. Thus, they are deemed to have been illegally dismissed.
filed by respondents was premature since it was filed only eight days after
petitioner announced that it will suspend its operations for six months), Bauca and
fellow respondents were illegally dismissed since they were not recalled after six ISSUE/S:
months, after the bona fide suspension of SKM’s operations. 1) Whether or not SKM properly suspended operations for substantial losses
- YES
FACTS: 2) Whether or not employees of SKM were deemed ilegally dismissed – YES.
HELD/RATIO: Serreno is constructively dismissed. Held: NO. He is currently in a “floating-status”.
1) The suspension of operations was valid because the fire caused Serreno even refused to accept the offer of work as a regular security guard.
substantial losses to petitioner and damaged its factory. SKM also Exocet is advised direct him to report for work, if any security assignment is still
submitted pictures of its premises after the fire, the certification by the available to him. If respondent Serrano still refuses to be assigned to any available
Barangay Chairman that SKM’s factory was burned, and the fire guard position, he shall be deemed to have abandoned his employment with
investigation report of the Bureau of Fire Protection. To prove the petitioner.
damages, petitioner submitted a list of burned machines, its inventory for
April 2000 and the fire investigation report which stated that the estimated Facts:
damage is P22 million. The list of materials burned was not the only Petitioner Exocet Security and Allied Services Corporation (Exocet) is
evidence submitted by petitioner. It was corroborated by pictures and the engaged in the provision of security personnel to its various clients or
fire investigation report, and they constitute substantial evidence of principals. By virtue of its contract with JG Summit Holdings Inc. (JG
petitioner’s losses. Moreover, the complaint for illegal dismissal filed by Summit), Exocet assigned respondent Armando D. Serrano (Serrano) on
respondents was premature since it was filed only eight days after September 24, 1994 as "close-in" security personnel for one of JG
petitioner announced that it will suspend its operations for six months. Summit's corporate officers, Johnson Robert L. Go. After eight years,
2) Respondents were already considered illegally dismissed since petitioner Serrano was re-assigned as close-in security for Lance Gokongwei, and
failed to recall them after six months, when its bona fide suspension of then to his wife, Mary Joyce Gokongwei. As close-in security, records
operations lapsed. We stress that under Article 286 of the Labor Code, the show that Serrano was receiving a monthly salary of ₱11,274.30.
employment will not be deemed terminated if the bona fide suspension of On August 15, 2006, Serrano was relieved by JG Summit from his duties.
operations does not exceed six months. But if the suspension of For more than six months after he reported back to Exocet, Serrano was
operations exceeds six months, the employment will be considered without any reassignment. On March 15, 2007, Serrano filed a complaint
terminated. SKM’s manifestation dated October 2, 2001 that it is willing to for illegal dismissal against Exocet with the National Labor Relations
admit respondents if they return to work was belatedly made, almost one Commission (NLRC).
year after petitioner’s suspension of operations expired in November 2000. For its defense, Exocet denied dismissing Serrano alleging that, after
August 15, 2006, Serrano no longer reported for duty assignment as VIP
security for JG Summit, and that on September 2006, he was demanding
65. Exocet Security v. Serrano for VIP Security detail to another client. However, since, at that time,
Exocet did not have clients in need of VIP security assignment, Serrano
Doctrine: The Department of Labor and Employment (DOLE) issued Department was temporarily assigned to general security service. Exocet maintained
Order No. 14, Series of 2001 (DO 14-01), entitled "Guidelines Governing the that it was Serrano who declined the assignment on the ground that he is
Employment and Working Conditions of Security Guards and Similar Personnel in not used to being a regular security guard. Serrano, Exocet added, even
the Private Security Industry," Section 6.5, in relation to Sec. 9.3, of which states refused to report for immediate duty, as he was not given a VIP security
that the lack of service assignment for a continuous period of six (6) months is an assignment.
authorized cause for the termination of the employee, who is then entitled to a
separation pay equivalent to half month pay for every year of service. Issue: WoN Serrano was constructively dismissed. NO
Recit Ready Digest: Serreno is a “close-in” security personnel of JG Summit. Held:

Serrano was relieved by JG Summit from his duties. For more than six months While there is no specific provision in the Labor Code which governs the
after he reported back to Exocet, Serrano was without any reassignment. Due to a "floating status" or temporary "off-detail" of security guards employed by
lack of “close-in” security work. He was offered a regular security guard private security agencies, this situation was considered by this Court in
assignment but he refused. Serreno filed a case for illegal dismissal. Issue: WoN several cases as a form of temporary retrenchment or lay-off. The concept
has been defined as that period of time when security guards are in the Labor Code, and serve a written notice on Serrano and the DOLE one
between assignments or when they are made to wait after being relieved (1) month before the intended date of termination, and pay Serrano
from a previous post until they are transferred to a new one. As the separation pay equivalent to half month pay for every year of his actual
circumstance is generally outside the control of the security agency or the service.
employer, the Court has ruled that when a security guard is placed on a
"floating status," he or she does not receive any salary or financial benefit Suspension
provided by law. 66. CAONG, JR. v. REGUALOS
The Department of Labor and Employment (DOLE) issued Department G.R. No. 179428
Order No. 14, Series of 2001 (DO 14-01), entitled "Guidelines Governing January 26, 2011
the Employment and Working Conditions of Security Guards and Similar
Personnel in the Private Security Industry," Section 6.5, in relation to Sec. DOCTRINE: An employer has free rein and enjoys a wide latitude of discretion to
9.3, of which states that the lack of service assignment for a continuous regulate all aspects of employment, including the prerogative to instill discipline on
period of six (6) months is an authorized cause for the termination of the his employees and to impose penalties, including dismissal, if warranted, upon
employee, who is then entitled to a separation pay equivalent to half erring employees. The only limitation on the exercise of management prerogative
month pay for every year of service. is that the policies, rules, and regulations on work-related activities of the
In the controversy now before the Court, there is no question that the employees must always be fair and reasonable, and the corresponding penalties,
security guard, Serrano, was placed on floating status after his relief from when prescribed, commensurate to the offense involved and to the degree of the
his post as a VIP security by his security agency’s client. Yet, there is no infraction. 
showing that his security agency, petitioner Exocet, acted in bad faith
when it placed Serrano on such floating status. What is more, the present RECIT READY: Caong, Tresquio, and Daluyon were employed by Regualos under
case is not a situation where Exocet did not recall Serrano to work within a boundary agreement, as drivers of his jeepneys. All 3 drivers failed to remit their
the six-month period as required by law and jurisprudence. Exocet did, in boundary payments. As a consequence, Regualos barred all three from driving
fact, make an offer to Serrano to go back to work. It is just that the their jeepneys until their deficiencies are paid. They filed separate complaints for
assignment—although it does not involve a demotion in rank or diminution illegal dismissal against respondent who barred them from driving the vehicles due
in salary, pay, benefits or privileges—was not the security detail desired by to deficiencies in their boundary payments. The SC ruled that petitioners’
Serrano. suspension from driving cannot be categorized as dismissal, considering that there
Indeed, from the facts presented, Serrano was guilty of willful was no intent on the part of respondent to sever the employer-employee
disobedience to a lawful order of his employer in connection with his work, relationship between him and petitioners. Respondents policy of suspending
which is a just cause for his termination under Art. 288 (previously Art. drivers who fail to remit the full amount of the boundary was fair and reasonable
282) of the Labor Code. Nonetheless, Exocet did not take Serrano’s willful under the circumstances. It is acknowledged that an employer has free rein and
disobedience against him. Hence, Exocet is considered to have waived its enjoys a wide latitude of discretion to regulate all aspects of employment, including
right to terminate Serrano on such ground. the prerogative to instill discipline on his employees and to impose penalties,
In this factual milieu, since respondent Serrano was not actually or including dismissal, if warranted, upon erring employees. This is a management
constructively dismissed from his employment by petitioner Exocet, it is prerogative. Indeed, the manner in which management conducts its own affairs to
best that petitioner Exocet direct him to report for work, if any security achieve its purpose is within the managements discretion. The only limitation on
assignment is still available to him. If respondent Serrano still refuses to be the exercise of management prerogative is that the policies, rules, and regulations
assigned to any available guard position, he shall be deemed to have on work-related activities of the employees must always be fair and reasonable,
abandoned his employment with petitioner. and the corresponding penalties, when prescribed, commensurate to the offense
If no security assignment is available for respondent, petitioner Exocet involved and to the degree of the infraction. 
should comply with the requirements of DO 14-01, in relation to Art. 289 of
FACTS: LA ruled for respondent. NLRC affirmed. CA found no grave abuse of
Caong, Tresquio, and Daluyon were employed by Regualos under a discretion on the part of the NLRC. All three found that an employer-
boundary agreement, as drivers of his jeepneys. In November 2001, they employee relationship existed between respondent and petitioners. The
filed separate complaints for illegal dismissal against respondent who latter were not dismissed considering that they could go back to work once
barred them from driving the vehicles due to deficiencies in their boundary they have paid their arrears.
payments. ISSUE: Whether or not the jeepney drivers were illegally dismissed. – NO.
In July 2001, Caong was assigned a brand- new jeepney for a boundary
fee of P550.00 per day. He was suspended on October 9-15, 2001 for HELD:
failure to remit the full amount of the boundary. Consequently, he filed a It is already settled that the relationship between jeepney
complaint for illegal suspension. Upon expiration of the suspension period, owners/operators and jeepney drivers under the boundary system is that
he was readmitted by respondent, but he was reassigned to an older of employer-employee and not of lessor-lessee. The fact that the drivers
jeepney for a boundary fee of P500.00 per day. He claimed that, on do not receive fixed wages but only get the amount in excess of the so-
November 9, 2001, due to the scarcity of passengers, he was only able to called boundary that they pay to the owner/operator is not sufficient to
remit P400.00 to respondent. On November 11, 2001, he returned to work negate the relationship between them as employer and employee.
after his rest day, but respondent barred him from driving because of the Indeed, petitioners suspension cannot be categorized as dismissal,
deficiency in the boundary payment. considering that there was no intent on the part of respondent to sever the
In 1998, Tresquio assigned to drive a new jeepney for a boundary fee of employer-employee relationship between him and petitioners. In fact, it
P500.00 per day. On November 6, 2001, due to the scarcity of was made clear that petitioners could put an end to the suspension if they
passengers, he was only able to remit P450.00. When he returned to work only pay their recent arrears. As it was, the suspension dragged on for
on November 8, 2001 after his rest day, he was barred by respondent years because of petitioners stubborn refusal to pay. It would have been
because of the deficiency of P50.00. different if petitioners complied with the condition and respondent still
Daluyon was assigned to a relatively new jeepney for a boundary fee of refused to readmit them to work. Then there would have been a clear act
P500.00 per day. On November 7, 2001, due to the scarcity of of dismissal. But such was not the case. Instead of paying, petitioners
passengers, he was only able to pay P470.00 to respondent. The following even filed a complaint for illegal dismissal against respondent.
day, respondent barred him from driving his jeepney. Respondents policy of suspending drivers who fail to remit the full amount
During the mandatory conference, respondent manifested that petitioners of the boundary was fair and reasonable under the circumstances.
were not dismissed and that they could drive his jeepneys once they paid Respondent explained that he noticed that his drivers were getting lax in
their arrears. Petitioners, however, refused to do so. remitting their boundary payments and, in fact, herein petitioners had
Petitioners averred that they were illegally dismissed by respondent already incurred a considerable amount of arrears. He had to put a stop to
without just cause. Petitioners questioned respondents policy of it as he also relied on these boundary payments to raise the full amount of
automatically dismissing the drivers who fail to remit the full amount of the his monthly amortizations on the jeepneys. Demonstrating their obstinacy,
boundary as it allegedly (a) violates their right to due process; (b) does not petitioners, on the days immediately following the implementation of the
constitute a just cause for dismissal; (c) disregards the reality that there policy, incurred deficiencies in their boundary remittances.
are days when they could not raise the full amount of the boundary It is acknowledged that an employer has free rein and enjoys a wide
because of the scarcity of passengers. latitude of discretion to regulate all aspects of employment, including the
Respondent alleged that petitioners were lessees of his vehicles and not prerogative to instill discipline on his employees and to impose penalties,
his employees; hence, the Labor Arbiter had no jurisdiction. He claimed including dismissal, if warranted, upon erring employees. This is a
that he noticed that some of his lessees, including petitioners, were not management prerogative. Indeed, the manner in which management
fully paying the daily rental of his jeepneys. conducts its own affairs to achieve its purpose is within the managements
discretion. The only limitation on the exercise of management prerogative
is that the policies, rules, and regulations on work-related activities of the identify which employee took what. PAL conducted an investigation but refused to
employees must always be fair and reasonable, and the corresponding clarify what they believed was the participation of Montinola in the alleged incident.
penalties, when prescribed, commensurate to the offense involved and to After, PAL suspended Montinola for 1 year without pay. On the issue of whether
the degree of the infraction.  PAL followed due process in the suspension of Montinola (that is, giving notice and
A company policy must be implemented in such manner as will accord hearing), the Court said that it did not as PAL did not clearly state on what grounds
social justice and compassion to the employee. In case of noncompliance the administrative charge was based. This consituted bad faith in her suspension
with the company policy, the employer must consider the surrounding entitling Montinola to moral, exemplary damages and to attorney’s fees.
circumstances and the reasons why the employee failed to comply. When
the circumstances merit the relaxation of the application of the policy, then FACTS
its noncompliance must be excused. Nancy Montinola was a flight attendant in PAL since 1996. In 2008
In the present case, petitioners merely alleged that there were only few Montinola and other flight crew members were subjected to custom
passengers during the dates in question. Such excuse is not acceptable searches in Honolulu, Hawaii. The Hawaii customs found various food
without any proof or, at least, an explanation as to why passengers were items and informed PAL about this in an e-mail, essentially saying that the
scarce at that time. It is simply a bare allegation, not worthy of belief. We flight crew had taken these items from the aircraft for their own. However
also find the excuse unbelievable considering that petitioners incurred the the report did not state which crew member took what.
shortages on separate days, and it appears that only petitioners failed to PAL conducted an investigation on the incident. Since Montinola was one
remit the full boundary payment on said dates. of those mentioned in the email PAL required her to comment on the
Having established that the case at bench does not involve termination of incident. She gave a handwritten explanation 3 days later saying that he
employment, We find that the strict, even rigid, application of the twin- did not take anything from the aircraft. Montinola was given a notice of
notice rule is not warranted. In the case at bench, private respondent, administrative charge. There was a clarificatory hearing where PAL’s
upon finding that petitioners had consistently failed to remit the full amount administrative personnel attended and Montinola objected to the
of the boundary, conducted a meeting on November 4, 2001 informing clarificatory hearing stating that PAL had failed to specify her participation
them to strictly comply with the policy regarding their remittances and in the alleged pilferage. PAL however said that if she objected to the
warned them to discontinue driving if they still failed to remit the full clarificatory hearing then she would waive her right to it. Montinola just
amount of the boundary.  allowed the hearing to proceed since she wanted to fully cooperate in the
investigations.
67. Montinola v PAL Montinola was found guilty of violating PAL’s Code of Discipline and was
G.R. No 198656 suspended for 1 year without pay. The CA sustained that Montinola’s
September 8, 2014 suspension had been illegal since it was characterized by arbitrariness
and bad faith because it was not duly proven that Montinola had indeed
DOCTRINE: Due process in an employer’s suspension of an employee is absent taken items from the airplane. CA however deleted the lower tribunal’s
where although notice and hearing are conducted, the employer does not clarify award of moral, exemplary damages, and attorney’s fees stating that not
the factual basis of alleged violation of the Company rules resulting in the every employee who is illegally dismissed or suspended is entitled to
administrative charge. damages.
Settled is the rule that moral damages are recoverable only where the
dismissal or suspension of the employee was attended by bad faith or
RECIT READY: Montinola was a PAL flight attendant. In Honolulu, the customs fraud, or constituted an act oppressive to labor, or was done in a manner
officials searched the whole cabin crew and found food items from the plane in contrary to morals, good customs or public policy. Bad faith does not
their personal belongings. Customs emailed PAL a report but the report did not simply mean negligence or bad judgment. It involves a state of mind
dominated by ill will or motive. It implies a conscious and intentional design the evidence by themselves do not show that Montinola pilfered airline
to do a wrongful act for a dishonest purpose or some moral obliquity. The items.
person claiming moral damages must prove the existence of bad faith by Together with the manner in which the investigation proceeded, i.e., that
clear and convincing evidence for the law always presumes good faith. Montinola was prevented from asking for clarification of the charges
In the case at bar, there is no showing that PAL was moved by any ill will against her, the absence of substantial evidence is so apparent that
or motive in suspending private respondent. It is evident that petitioner disciplining an employee only on these bases constitutes bad faith.
gave private respondent every opportunity to refute the charges against PAL apparently granted Montinola procedural due process by giving her a
her and to present her side as part of due process. These negate the notice of administrative charge and conducting a hearing. However, this
existence of bad faith on the part of petitioner. And as to attorney’s fees, was more apparent than real. The notice of administrative charge did not
there was no legal or factual basis for that award. specify the acts committed by Montinola and how these acts violated
PAL’s Code of Discipline. The notice did not state which among the items
ISSUE: Whether Montinola is entitled to moral and exemplary damages, and confiscated by the US customs officials were originally found in
attorney’s fees. Montinola’s possession. Worse, the panel of PAL officers led by Atty.
Pascual did not entertain any query to clarify the charges against her. This
HELD: Yes, Montinola is entitled to moral and exemplary damages, and attorney’s is tantamount to denial of opportunity to be heard.
fees. To constitute proper notice, the facts constitutive of the violations of these
rules — and not just the rules of conduct — must be clearly stated. Proper
As to moral damages: notice also requires that the alleged participation of the employee be
The written notice of administrative charge did not serve the purpose clearly specified. Without these, the most fundamental requirement of a
required under due process. PAL did not deny her allegation that there fair hearing cannot be met.
would be a waiver of the clarificatory hearing if she insisted on a specific
notice of administrative charge. With Montinola unable to clarify the
contents of the notice of administrative charge, there were irregularities in As to exemplary damages:
the procedural due process accorded to her. If the case involves a contract, Article 2332 of the Civil Code provides that
Moreover, PAL denied Montinola substantial due process. "the court may award exemplary damages if the defendant acted in a
The employer has the burden of proof in showing that disciplinary action wanton, fraudulent, reckless, oppressive or malevolent manner." Thus, in
was made for lawful cause. The employer must consider and show facts Garcia v. NLRC, this court ruled that in labor cases, the court may award
adequate to support the conclusion that an employee deserves to be exemplary damages "if the dismissal was effected in a wanton, oppressive
disciplined for his or her acts or omissions. or malevolent manner."
PAL, however, merely relied on these pieces of information in finding It is socially deleterious for PAL to suspend Montinola without just cause in
administrative liability against Montinola: the manner suffered by her. Hence, exemplary damages are necessary to
o a list of offenses found in PAL’s Code of Discipline that Montinola deter future employers from committing the same acts.
allegedly violated;
o a list of flight crew members that were checked at the Honolulu As to attorney’s fees:
airport; and ART. 2208. In the absence of stipulation, attorney’s fees and expenses of
o a list of all items confiscated from all these flight crew members. litigation,other than judicial costs, cannot be recovered, except:
The lists are not sufficient to show the participation of any of the flight crew o When exemplary damages are awarded;
members, least of all Montinola. None of the evidence presented show o When the defendant’s act or omission has compelled the plaintiff
that the customs officials confiscated any of these items from her. Thus, to litigate with third persons or to incur expenses to protect his
interest;
o In actions for the recovery of wages of household helpers, NLRC: AFTER ONE YEAR, REVERSED THE ILLEGAL DISMISSAL and
laborers and skilled workers; said they were employed only for a fixed period and so the dismissal was
First, considering that we have awarded exemplary damages in this case, valid.
attorney’s fees can likewise be awarded. CE wanted this executed. LA: YES, execute BUT CE MUST PAY
Second, PAL’s acts and omissions compelled Montinola to incur expenses BACKWAGES FOR THE DURATION OF ONE YEAR (from the time the
to protect her rights with the National Labor Relations Commission and the LA decision to the NLRC decision) pursuant to Art 223 of the Labor Code.
judicial system. She went through four tribunals, and she was assisted by Amounting to around 150k already.
counsel. These expenses would have been unnecessary if PAL had CE contests this saying that it should be SEPARATION PAY and not
sufficient basis for its decision to discipline Montinola. ACCRUED SALARIES.
Finally, the action included recovery for wages. To bring justice to the In an Order, the NLRC said that there was no strong basis for petitioner's
illegal suspension of Montinola, she asked for backwages for her year of contention that reinstatement was physically impossible due to petitioner's
suspension: implementation of a retrenchment program.
Issue:
Consequences of Dismissal (1) Whether the NLRC should have ordered the payment of separation pay since
68. Composite Enterprises v. Caparoso, August 8, 2007 respondents' reinstatement to their former positions was physically impossible due
Doctrine:It is not enough for a company to merely declare that it has implemented to petitioner's implementation of a retrenchment program?
a retrenchment program. It must produce adequate proof that such is the actual
situation to justify the retrenchment of employees. Normally, the condition of
business losses is shown by audited financial documents like yearly balance Held/Ratio:
sheets, profit and loss statements and annual income tax returns. The financial
statements must be prepared and signed by independent auditors, failing which (1) NO. NLRC IS RIGHT. PAY BACKWAGE ACCRUALS!
these can be assailed as self-serving documents.
Payment of separation pay as a substitute for reinstatement is allowed only under
Recit-ready: (don’t hate but I made the FACTS SUPER CONCISE and RECIT exceptional circumstances, viz: (1) when reasons exist which are not attributable to
READY already so go read that. Promise, may puso yan. - Jeah) the fault or are beyond the control of the employer, such as when the employer --
who is in severe financial strait, has suffered serious business losses, and has
Facts: ceased operations -- implements retrenchment, or abolishes the position due to
Composite Enterprises (CE) is engaged in the distribution and/or supply of the installation of labor-saving devices; (2) when the illegally dismissed employee
confectioneries. Respondents were employed as its deliverymen until they has contracted a disease and his reinstatement will endanger the safety of his co-
were terminated. Respondents filed a complaint for illegal dismissal employees; or, (3) where a strained relationship exists between the employer and
against petitioner with the NLRC. Petitioner denied that respondents were the dismissed employee.
illegally dismissed, alleging that they were employed on a month-to-month
basis and their contracts expired. As regards retrenchment, it is a management prerogative consistently recognized
LA: ILLEGALLY DISMISSED. SHOULD BE REINSTATED. and affirmed by this Court. It is, however, subject to faithful compliance with the
CE appealed this to the NLRC. It also filed a Manifestation with Motion substantive and procedural requirements laid down by law and jurisprudence. For
manifesting that it cannot reinstate respondents to their former positions retrenchment to be considered valid, the following substantial requirements must
since their previous positions were no longer available. Accordingly, be met: (a) the losses expected should be substantial and not merely de minimis in
petitioner moved that it be allowed to pay respondents separation pay in extent; (b) the substantial losses apprehended must be reasonably imminent such
lieu of reinstatement. as can be perceived objectively and in good faith by the employer; (c) the
retrenchment must be reasonably necessary and likely to effectively prevent the Sagum was hired by IEEPI, the association of licensed electric engineers
expected losses; and (d) the alleged losses, if already incurred, and the expected in the country. She started out as a clerk but eventually got promoted several times
imminent losses sought to be forestalled, must be proved by sufficient and due to her efficiency, loyalty and dedication to the service. The last position she
convincing evidence. held was as OIC for the Executive Director, wherein she had 2 subordinates: Dela
Torre and Magayones. Barely a year after her promotion as OIC, she was
In the discharge of these requirements, it is the employer who has the onus, this preventively suspended for 30 days, subjected to an administrative investigation,
being in the nature of an affirmative defense. In other words, it is not enough for and later on dismissed by the institute. She claims that the reason for this was
a company to merely declare that it has implemented a retrenchment because of certain acts of her which did not sit well with the Executive Committee
program. It must produce adequate proof that such is the actual situation to (pls refer to long digest for enumeration). The company however claims that she
justify the retrenchment of employees. Normally, the condition of business was dismissed for loss of trust and confidence as well as gross negligence, which
losses is shown by audited financial documents like yearly balance sheets, profit was based on irregularities discovered after the conduct of a company-wide audit.
and loss statements and annual income tax returns. The financial statements must Sagum filed a complaint for illegal dismissal. The LA ruled for Sagum, but ordered
be prepared and signed by independent auditors, failing which these can be the payment of separation pay instead of reinstatement. She appealed this portion
assailed as self-serving documents. of the decision while the company appealed the finding of illegal dismissal. The
NLRC reversed the LA and said there was no illegal dismissal. Upon appeal to the
In this case, petitioner sought to justify the payment of separation pay instead of CA, the decision of the LA was reinstated in its entirety.
reinstatement on the basis of its implementation of a retrenchment program for The issue now is whether there were strained relations which would bar
"serious and persistent financial difficulties." However, petitioner only submitted as petitioner’s reinstatement. The Court ruled in the negative. The existence of
evidence the notice of its intention to implement a retrenchment program, which it strained relations is a factual finding and should be initially raised, argued and
sent to the DOLE. It did not submit its financial statements duly audited by an proven before the Labor Arbiter. Petitioner is correct that the finding of strained
independent external auditor. Its failure to do so seriously casts doubt on its claim relations does not have any basis on the records. Private respondents first raised
of losses and insistence on the payment of separation pay. the issue in their Comment to Petitioners Motion for Partial Reconsideration before
the Court of Appeals.
The Court finds that the NLRC did not commit any grave abuse of discretion in In Globe-Mackay Cable and Radio Corporation v. NLRC, it was held that
issuing the Order dated June 28, 2002, affirming the Order of the Labor Arbiter the principle of strained relations cannot be applied indiscriminately. Otherwise, an
dated June 14, 2001. illegally dismissed employee can never be reinstated because invariably, some
hostility is engendered between litigants. Every labor dispute almost always results
in strained relations, and the phrase cannot be given an overarching interpretation,
69. Sagum v. CA otherwise, an unjustly dismissed employee can never be reinstated. The mere
persistence of the employer in saying that there was already a loss of trust and
Doctrine: To protect labors security of tenure, the doctrine of strained relations confidence does not amount to proof, so petitioner must be reinstated.
should be strictly applied so as not to deprive an illegally dismissed employee of
his right to reinstatement. Every labor dispute almost always results in strained Facts:
relations, and the phrase cannot be given an overarching interpretation, otherwise, Petitioner was hired as a Recording/Filing Clerk by the Integrated
an unjustly dismissed employee can never be reinstated. The mere persistence of Electrical Engineers of the Philippines, Inc., the association of licensed
the employer in saying that there was already a loss of trust and confidence does electric engineers in the country and herein respondent. Because of her
not amount to proof. efficiency, loyalty and dedication to the service, she was promoted several
times, from Membership Secretary to Acting Executive Secretary to
Recit-ready: Executive Secretary. As such ES, she had served 11 National Presidents.
She was later appointed as Office Manager in concurrent capacity as ES.
Her duties included, among other things, taking charge of the purchase of Petitioner partly appealed the ruling to the NLRC for reinstatement and full
materials and printing requirements of the association, a member of the backwages while respondents prayed for the reversal of the decision and
bidding committee, and recommended approval for all purchases to the dismissal of the case. The NLRC reversed the LA and dismissed the case.
National Secretary. She was again promoted to Officer-in-Charge for the Upon petition for review with the CA, the ruling of the LA was reinstated
Executive Director, and she had 2 subordinates to assist her: Maan Dela and the order of payment of separation in lieu of reinstatement was
Torre and Jude Magayones. retained due to strained relations.
Barely a year after she was appointed as OIC, she was preventively
suspended for 30 days. She was served 2 written notices, subjected to an Issue: W/N there was strained relations between the parties as to warrant the
administrative hearing, and later dismissed for gross negligence and loss grant of separation pay instead of reinstatement
of trust and confidence. According to her, the reason for this was that she
said and did some things which the Executive Committee did not like, Held/Ratio: NO.
namely: The existence of strained relations is a factual finding and should be
o In one meeting, the EXCOM questioned the participation of DBR initially raised, argued and proven before the Labor Arbiter. Petitioner is
Printing in its bidding process. According to them, DBR was correct that the finding of strained relations does not have any basis on the
disqualified from participating because its owner was the live-in records. Indeed, nowhere was the issue raised in private respondent’s
partner of Dela Torre. Sagum clarified that there was no official pleadings before the Labor Arbiter and the NLRC. Private respondents first
order prohibiting DBR from joining and being chosen in the bidding raised the issue in their Comment to Petitioners Motion for Partial
process, and that the Board of Directors actually approved the Reconsideration before the Court of Appeals.
awards of the projects to DBR. In Globe-Mackay Cable and Radio Corporation v. NLRC, it was held that
o The EXCOM discussed in one meeting the move to demote Dela the principle of strained relations cannot be applied indiscriminately.
Torre from Administrative Secretary to Clerk, but petitioner gave Otherwise, an illegally dismissed employee can never be reinstated
her unsolicited advice by saying it would be illegal to demote Dela because invariably, some hostility is engendered between litigants. As a
Torre. rule, no strained relations should arise from a valid and legal act of
One day, she was served a notice of suspension by one of the members asserting ones right; otherwise, an employee who asserts his right could
of the EXCOM and she was made to turn over the keys to the vault, be easily separated from the service by merely paying his separation pay
drawer, cabinet and petty cash. She was then escorted out of the on the pretext that his relationship with his employer had already become
premises by an unknown person, who turned out to be a newly hired strained. 
security guard. When the respondent refused to allow her to report for To protect labors security of tenure, the doctrine of strained relations
work and instead terminated her after the expiration of the 30-day should be strictly applied so as not to deprive an illegally dismissed
suspension, she filed a complaint for illegal dismissal. employee of his right to reinstatement. Every labor dispute almost always
The respondent claims that Sagum’s dismissal was brought about by the results in strained relations, and the phrase cannot be given an
audit investigations conducted by the association. This started when the overarching interpretation, otherwise, an unjustly dismissed employee can
National Treasurer discovered irregularities in the bidding process, never be reinstated. In the case at bar, there are no hard facts upon which
especially that pertaining to the participation of DBR and the awarding of to base the application of the doctrine of strained relationship. The mere
several projects to it despite non-submission of requirements or late persistence of the employer in saying that there was already a loss of trust
submission of bid documents. This triggered a company-wide audit of all and confidence does not amount to proof, so petitioner must be reinstated.
printing transactions in the previous years, and it was found that the Nonetheless, there is no basis for her claim for moral and exemplary
printing requirements of the institute were overpriced. damages as it does not show that respondents acted in a wanton and
The LA held that Sagum’s dismissal was illegal, but it ordered the award of reckless manner. The measures undertaken were relevant to the
separation pay instead of reinstatement together with limited backwages. company-wide audit and investigation conducted within the institute. The
suspension of petitioner without prior investigation is akin to preventive
suspension which was necessary pending investigation of company
records which she had access to. FACTS:
Riviera Home Improvements, Inc. is engaged in the business of selling
70. Agabon v. NLRC and installing ornamental and construction materials. It employed
November 17, 2004 petitioners Virgilio Agabon and Jenny Agabon as gypsum board and
G.R. No. 158693 cornice installers. when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of
Doctrine: If the dismissal was for cause, but procedural due process was not money claims and on December 28, 1999, the Labor Arbiter rendered a
complied with, the dismissal is not deemed illegal. However, the employer should decision declaring the dismissals illegal and ordered private respondent to
indemnify the employee for violation of due process rights in the form of nominal pay the monetary claims of backwages, separation pay, holiday pay, SIL
th
damages. pay, premium pay for holidays and rest days, 13 month pay differential.
On appeal, the NLRC reversed the Labor Arbiter because it found that the
Recit-ready digest petitioners had abandoned their work, and were not entitled to backwages
Petitioners then filed a complaint for illegal dismissal and payment of money and separation pay. The other money claims awarded by the Labor Arbiter
claims. The LA declared the dismissals illegal, but the NLRC reversed because it were also denied for lack of evidence.
found that petitioners had abandoned their work. The CA affirmed the NLRC, but The Court of Appeals reversed the NLRC, ruling that the dismissal of the
still ordered the payment of money claims. petitioners was not illegal because they had abandoned their employment
and were already looking for another employer. However, it still ordered
The SC said that the dismissal was valid since petitioners had abandoned their the payment of money claims.
work. For a valid finding of abandonment, these two factors should be present: (1) Petitioners assert that they were dismissed because the private
the failure to report for work or absence without valid or justifiable reason; and (2) respondent refused to give them assignments unless they agreed to work
a clear intention to sever employer-employee relationship. Since they had been on a pakyaw basis when they reported for duty. They did not agree on this
subcontracting for another company, it can be said that they had the intent to sever arrangement because it would mean losing benefits as SSS members.
the employment relationship. However, they were not afforded procedural due Petitioners also claim that private respondent did not comply with the twin
process, as they did not send the notices to the last known address. When the requirements of notice and hearing.
dismissal was for a just or authorized cause but due process was not observed, Private respondent, on the other hand, maintained that petitioners were
the dismissal should be upheld. However, the employer should be held liable for not dismissed but had abandoned their work. In fact, private respondent
non-compliance with the procedural requirements of due process. sent two letters to the last known addresses of the petitioners advising
them to report for work, and the manager even talked to Agabon by
Under the Wenphil or Belated Due Process rule, the employer would be penalized telephone informing him about a new assignment at Pacific Plaza Towers.
to pay an indemnity to the employee. The Serrano rule modified the extent of the However, petitioners did not report for work because they had
sanction by ruling that the dismissal is ineffectual and the employer mustpay full subcontracted to perform installation work for another company.
backwages from the time of termination until it is judicially declared that the Petitioners also demanded for an increase in their wage to P280.00 per
dismissal was for a just or authorized cause. However, Serrano overlooked the fact day. When this was not granted, petitioners stopped reporting for work and
that payment of backwages and other benefits like reinstatement is justified only if filed the illegal dismissal case.
the employee was unjustly dismissed. Since Serrano could cause unfairness, the
SC decided to revert again to the Wenphil doctrine, but imposed stiffer sanctions. ISSUE:
Thus, a dismissal for cause without following procedural due process does not 1. W/N petitioners were illegally dismissed
nullify the dismissal, but makes the employer liable to pay nominal damages. 2. W/N procedural due process was followed
dismissal is sought a hearing or an opportunity to be heard and after
HELD: hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and
1. NO. 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his
To dismiss an employee, the law requires not only the existence of a just separation.
and valid cause but also enjoins the employer to give the employee the From the foregoing rules four possible situations may be derived, with the
opportunity to be heard and to defend himself. Article 282 of the Labor following liabilities for the employer:
Code enumerates the just causes for termination by the employer: (a) a. The dismissal is for a just cause under Article 282 of the
serious misconduct or willful disobedience by the employee of the lawful Labor Code, for an authorized cause under Article 283, or for
orders of his employer or the latters representative in connection with the health reasons under Article 284, and due process was
employees work; (b) gross and habitual neglect by the employee of his observed: the dismissal is undoubtedly valid and the employer
duties; (c) fraud or willful breach by the employee of the trust reposed in will not suffer any liability.
him by his employer or his duly authorized representative; (d) commission b. The dismissal is without just or authorized cause but due
of a crime or offense by the employee against the person of his employer process was observed;
or any immediate member of his family or his duly authorized c. The dismissal is without just or authorized cause and there
representative; and (e) other causes analogous to the foregoing. was no due process: Article 279 mandates that the employee is
Abandonment is the deliberate and unjustified refusal of an employee to entitled to reinstatement without loss of seniority rights and other
resume his employment. It is a form of neglect of duty, hence, a just cause privileges and full backwages, inclusive of allowances, and other
for termination of employment by the employer.For a valid finding of benefits or their monetary equivalent computed from the time the
abandonment, these two factors should be present: (1) the failure to report compensation was not paid up to the time of actual reinstatement.
for work or absence without valid or justifiable reason; and (2) a clear d. the dismissal is for just or authorized cause but due process
intention to sever employer-employee relationship, with the second as the was not observed: The dismissal should be upheld. However,
more determinative factor which is manifested by overt acts from which it the employer should be held liable for non-compliance with the
may be deduced that the employees has no more intention to work. The procedural requirements of due process.
intent to discontinue the employment must be shown by clear proof that it
was deliberate and unjustified. The present case squarely falls under the fourth situation. The dismissal
In February 1999, petitioners were frequently absent having subcontracted should be upheld because it was established that the petitioners
for an installation work for another company. Subcontracting for another abandoned their jobs to work for another company. Private respondent,
company clearly showed the intention to sever the employer-employee however, did not follow the notice requirements and instead argued that
relationship with private respondent. The petitioners had done this once sending notices to the last known addresses would have been useless
before, and had already been warned of dismissal should it happen again; because they did not reside there anymore. This is not a valid excuse
still, they did not head the warning. because the law mandates the twin notice requirements to the employees
last known address. Thus, it should be held liable for non-compliance with
2. NO. the procedural requirements of due process.
Prior to 1989, the rule was that a dismissal or termination is illegal if the
Procedurally, (1) if the dismissal is based on a just cause under Article employee was not given any notice. The 1989 case of Wenphil Corp. v.
282, the employer must give the employee two written notices and a National Labor Relations Commission, reversed this rule, evolving into
hearing or opportunity to be heard if requested by the employee before what was known as the Wenphil or Belated Due Process Rule: where the
terminating the employment: a notice specifying the grounds for which 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 This is not to say that the Court was wrong when it ruled the way it did
will be penalized to pay an indemnity to the employee. in Wenphil, Serrano and related cases. Social justice is not based on rigid
On January 27, 2000, in Serrano, the rule on the extent of the sanction formulas set in stone. It has to allow for changing times and
was changed. The violation by the employer of the notice requirement in circumstances.
termination for just or authorized causes was not a denial of due process Where the dismissal is for a just cause, as in the instant case, the lack of
that will nullify the termination. However, the dismissal is ineffectual and statutory due process should not nullify the dismissal. However, the
the employer must pay full backwages from the time of termination until it employer should indemnify the employee for the violation of his statutory
is judicially declared that the dismissal was for a just or authorized cause. rights. The indemnity to be imposed should be stiffer to discourage the
The rationale for the re-examination of the Wenphil doctrine abhorrent practice of dismiss now, pay later, which was sought to be
in Serrano was the significant number of cases involving dismissals deterred in the Serrano ruling. The sanction should be in the nature of
without requisite notices. The imposition of penalty by way of damages for indemnification or penalty and should depend on the facts of each case,
violation of the notice requirement was not serving as a deterrent. taking into special consideration the gravity of the due process violation of
Serrano was confronting the practice of employers to dismiss now and pay the employer.
later by imposing full backwages. Under the Civil Code, nominal damages is adjudicated in order that a right
However, Serrano did not consider the full meaning of Article 279, which of the plaintiff, which has been violated or invaded by the defendant, may
means that the termination is illegal only if it is not for any of the justified or be vindicated or recognized, and not for the purpose of indemnifying the
authorized causes provided by law. Payment of backwages and other plaintiff for any loss suffered by him.
benefits, including reinstatement, is justified only if the employee was The violation of the petitioners right to statutory due process by the private
unjustly dismissed. respondent warrants the payment of indemnity in the form of nominal
The fact that the Serrano ruling can cause unfairness and injustice which damages. The amount of such damages is addressed to the sound
elicited strong dissent has prompted the revisiting of the doctrine. In cases discretion of the court, taking into account the relevant circumstances. In
involving dismissals for cause but without observance of the twin this case, it was fixed at P30, 000.
requirements of notice and hearing, the better rule is to abandon PETITION DENIED.
the Serrano doctrine and to follow Wenphil by holding that the dismissal
was for just cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed in Wenphil. 71. JAKA Food Processing Corporation v Pacot
By doing so, this Court would be able to achieve a fair result by dispensing G.R. No. 151378
justice not just to employees, but to employers as well. The unfairness of March 28, 2005
declaring illegal or ineffectual dismissals for valid or authorized causes but
not complying with statutory due process may have far-reaching DOCTRINES:
consequences. This would encourage frivolous suits, where even the most 1. If the dismissal is based on a just cause but the employer failed to comply
notorious violators of company policy are rewarded by invoking due with the notice requirement, the sanction to be imposed upon him should
process. This also creates absurd situations where there is a just or be tampered because the dismissal was initiated by an act imputable to
authorized cause for dismissal but a procedural infirmity invalidates the the employee (indemnity of P30k).
termination. 2. If the dismissal is based on an authorized cause but the employer failed to
On the other hand, the constitutional policy to provide full protection to comply with the notice requirement, the sanction should be stiffer because
labor is not meant to be a sword to oppress employers. An employee who the dismissal process was initiated by the employer’s exercise of his
is clearly guilty of conduct violative of Article 282 should not be protected management prerogative (indemnity of P50k).
by the Social Justice Clause of the Constitution. 3. The rule is that in all cases of business closure or cessation of operation or
undertaking of the employer, the affected employee is entitled to
separation pay. The exception is when the closure of business of A dismissal for just cause under Article 282 implied that the employee concerned
cessation of operations is due to serious business losses or financial has committed, or is guilty of, some violation against the employer, i.e. the
reverses; duly proved, in which case, the right of affected employees to employee has committed some serious misconduct, is guilty of some fraud against
separation pay is lost for obvious reasons. the employer or he has neglected his duties. Thus, it can be said that the
employee himself initiated the dismissal process. On another breadth, a dismissal
EMERGENCY RECIT for an authorized cause under Article 283 does not necessarily imply delinquency
Darwin Pacot, et al. were employees of JAKA Foods but were terminated due to or culpability on the part of the employee. Instead, the dismissal process is initiated
business losses. The termination was not effected with due process – there were by the employer’s exercise of his management prerogative, i.e. when the employer
no written notices to the employee and the DOLE. They filed a complaint for illegal opts to install labor saving devices, when he decides to cease business operations
dismissal with the NLRC. The Supreme Court ruled that since they were or when, as in this case, he undertakes to implement a retrenchment program.
terminated for an authorized cause, which is not due to the delinquency or
culpability of the employee but due to the exercise of management prerogative of The clear-cut distinction between the two is further reinforced by the fact that in the
the employer, the sanction is stiffer. The employees are awarded the higher first, payment of separation pay is not required, while in the second, the law
indemnity of P50k (instead of the P30k usually awarded to those terminated for requires payment of separation pay. Thus, there ought to be a difference in
just causes without due process). However, they are not entitled to separation pay. treatment.
Though separation pay is awarded in cases of business closure or cessation of
operation, the exception is when the closure or cessation is due to serious It is hereby held that:
business losses or financial reverses. 1. If the dismissal is based on a just cause but the employer failed to comply
with the notice requirement, the sanction to be imposed upon him should
FACTS: be tampered because the dismissal was initiated by an act imputable to
Darwin Pacot, et al. were hired by JAKA Foods Processing Corporation until the the employee.
latter terminated their employment because the corporation was in dire financial 2. If the dismissal is based on an authorized cause but the employer failed to
straits. The termination, however, was effected without complying with the comply with the notice requirement, the sanction should be stiffer because
requirement under Article 283 of the Labor Code regarding the service of a written the dismissal process was initiated by the employer’s exercise of his
notice upon the employees and the DOLE at least 1 month before intended date of management prerogative.
termination.
In this case, evidence shows that JAKA was suffering from serious business
Pacot, et al. filed with the NLRC complaints for illegal dismissal, underpayment of losses at the time the employees were terminated. The Audited Financial
wages and nonpayment of service incentive leave and 13th month pay against Statements show a deficit of P188,218,419.00 or 94% of stockholder’s equity of
JAKA and its HR Manager, Rosana Castelo. The Labor Arbiter rendered a P200,000,000.00 in 1996, a deficit of P247,222,569.00 or 123.61% in 1997, and a
decision declaring the termination illegal and ordering JAKA to reinstate them with deficit of P355,794,897.00 or 177% in 1998. It is therefore established that there
full backwages and separation pay, if reinstatement is possible. was a ground for respondent’s dismissal – retrenchment which is one of the
authorized causes under Article 283. It is also established that JAKA failed to
ISSUE: comply with the notice requirement. The Supreme Court deemed it proper to
What are the legal consequences of a situation where an employee is dismissed award a stiffer penalty – payment of indemnity in the amount of P50,000.00.
for an authorized cause but such dismissal was effected without compliance with
the notice requirement under the Labor Code? However, the payment of separation pay equivalent to 1 month salary for every
year of service is denied. The rule is that in all cases of business closure or
HELD: cessation of operation or undertaking of the employer, the affected employee is
entitled to separation pay. The exception is when the closure of business of
cessation of operations is due to serious business losses or financial reverses; Issue: W/N respondents were illegally dismissed. Held: No. ITC’s closure or
duly proved, in which case, the right of affected employees to separation pay is cessation of business was done in good faith and for valid reasons. The records
lost for obvious reasons. reveal that the decision to permanently close business operations was arrived at
after a suspension of operation for several months precipitated by lack of raw
72. Industrial Timber v. Ababon, materials used for milling operations, the expiration of the anti-pollution permit, and
March 30, 2006 the termination of the lease contract with IPGC over the plywood plant at Butuan
City. The closure is therefore valid. [SEE DOCTRINE] Consequently, respondents
DOCTRINE could not have been illegally dismissed to be entitled to full backwages. However,
Just as no law forces anyone to go into business, no law can compel anybody to they are entitled to separation pay equivalent to one month pay or at least one-half
continue the same. It would be stretching the intent and spirit of the law if a court month pay for every year of service, whichever is higher.
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 FACTS
provide the workers continued employment. In 1985, IPGC, the owner of a plywood plant located at Butuan City,
leased the said plant to ITC for a period of five years. Thereafter, ITC
In sum, under Article 283 of the Labor Code, three requirements are necessary for commenced operation of the plywood plant and hired 387 workers.
a valid cessation of business operations: In 1990, ITC notified the DOLE and its workers that it will undergo a no
1. Service of a written notice to the employees and to the DOLE at plant operation due to lack of raw materials and will resume only after it
least one month before the intended date thereof; can secure logs for milling.
2. Cessation of business must be bona fide in character; and Meanwhile, IPGC notified ITC of the expiration of the lease contract in
3. Payment to the employees of termination pay amounting to one August 1990 and its intention not to renew the same.
month pay or at least one-half month pay for every year of service, ITC notified the DOLE and its workers of the plants shutdown due to the
whichever is higher non-renewal of anti-pollution permit that expired in April 1990. This fact
and the alleged lack of logs for milling constrained ITC to lay off all its
RECIT READY workers until further notice.
IPGC leased a plywood plant to ITC for a period of five years. Thereafter, ITC This was followed by a final notice of closure or cessation of business
commenced operation of the plywood plant and hired 387 workers. In 1990, three operations in August 1990 with an advice for all the workers to collect the
things happened: (1) ITC notified the DOLE and its workers that it will undergo a benefits due them under the law and CBA.
no plant operation due to lack of raw materials and will resume only after it can In October 1990, IPGC took over the plywood plant after it was issued a
secure logs for milling; (2) IPGC notified ITC of the expiration of the lease contract Wood Processing Plant Permit, which included the anti-pollution permit, by
in and its intention not to renew the same; and (3) ITC’s anti-pollution permit the DENR coincidentally on the same day the ITC ceased operation of the
expired. This was followed by a final notice of closure or cessation of business plant.
operations, with an advice for all the workers to collect the benefits due them under This prompted respondents to file a complaint against ITC and IPGC for
the law and CBA. IPGC took over ITC’s business and continued it (note, however, illegal dismissal, unfair labor practice and damages. They alleged that the
that ITC’s employees were still dismissed). The closure of ITC prompted cessation of ITC’s operation was intended to bust the union and that both
respondents to file a complaint against ITC and IPGC for illegal dismissal and corporations are one and the same entity being controlled by one owner.
ULP. They alleged 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 ISSUE #1: W/N respondents were illegally dismissed. No.
one owner.
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 3. Payment to the employees of termination pay amounting to one
circumventing the provisions on termination of employment embodied in month pay or at least one-half month pay for every year of service,
the Labor Code. whichever is higher.
6
A reading of Article 238 shows that a partial or total closure or cessation In this case, ITC’s closure or cessation of business was done in good faith
of operations of establishment or undertaking may either be due to serious and for valid reasons.
business losses or financial reverses or otherwise. The records reveal that the decision to permanently close business
o Under the first kind, the employer must sufficiently and operations was arrived at after a suspension of operation for several
convincingly prove its allegation of substantial losses. months precipitated by lack of raw materials used for milling operations,
o Under the second kind, the employer can lawfully close shop the expiration of the anti-pollution permit, and the termination of the lease
anytime as long as cessation of or withdrawal from business contract with IPGC over the plywood plant at Butuan City.
operations was bona fide in character and not impelled by a o In Shoppers Gain Supermarket v. NLRC, the Court held that the
motive to defeat or circumvent the tenurial rights of employees, non-renewal of petitioner-corporation’s lease contract and its
and as long as he pays his employees their termination pay in the consequent closure and cessation of operations may be
amount corresponding to their length of service. considered an event beyond petitioners control, in the nature of a
Just as no law forces anyone to go into business, no law can compel force majeure situation. As such, it amounts to an authorized
anybody to continue the same. It would be stretching the intent and spirit cause for termination.
of the law if a court interferes with management's prerogative to close or The closure is therefore valid. Consequently, respondents could not have
cease its business operations just because the business is not suffering been illegally dismissed to be entitled to full backwages. However, they
from any loss or because of the desire to provide the workers continued are entitled to separation pay equivalent to one month pay or at least one-
employment. half month pay for every year of service, whichever is higher.
In sum, under Article 283 of the Labor Code, three requirements are
necessary for a valid cessation of business operations: ISSUE #2: W/N petitioner complied with the notice requirement. No.
1. Service of a written notice to the employees and to the DOLE at
least one month before the intended date thereof; The law requires that it must notify the DOLE and its employees at least
2. Cessation of business must be bona fide in character; and one month before the intended date of closure.
In this case, ITC notified its employees and the DOLE of the no plant
6 ART. 283. Closure of establishment and reduction of personnel. The employer may also operation in March 1990 due to lack of raw materials. This was followed by
terminate the employment of any employee due to the installation of labor saving devices, a shutdown notice dated June 1990 due to the expiration of the anti-
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the pollution permit. However, this shutdown was only temporary as ITC
establishment or undertaking unless the closing is for the purpose of circumventing the assured its employees that they could return to work once the renewal is
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor acted upon by the DENR.
and Employment at least one (1) month before the intended date thereof. In case of In August 1990, the ITC sent its employees a final notice of closure or
termination due to the installation of labor saving devices or redundancy, the worker cessation of business operations to take effect on the same day it was
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month released. This falls short of the notice requirement for termination of
pay or to at least one (1) month pay for every year of service, whichever is higher. In case of employment due to authorized cause considering that the DOLE was not
retrenchment to prevent losses and in cases of closures or cessation of operations of furnished and the notice should have been furnished both the
establishment or undertaking not due to serious business losses or financial reverses, the employees and the DOLE at least one month before the intended date
separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month
of closure.
pay for every year of service, whichever is higher. A fraction of at least six (6) months shall Where the dismissal is based on an authorized cause under Article 283 of
be considered one (1) whole year. the Labor Code but the employer failed to comply with the notice
requirement, the sanction should be stiff as the dismissal process was SPI offered to give P15,000 each to the minority employees but this was still not
initiated by the employer’s exercise of his management prerogative, as accepted. The CA in its decision required SPI to give the P15,000 all the same. In
opposed to a dismissal based on a just cause under Article 282 with the the SC, the Court declared that the minority employees are not entitled to
same procedural infirmity where the sanction to be imposed upon the separation benefits (see first doctrine). As such, the P15,000 benefits was deleted,
employer should be tempered as the dismissal process was, in effect, since it was not accepted by the minority employees. The SC also said that the
initiated by an act imputable to the employee. notice for dismissal was improper and awarded a mitigated nominal damages for
Therefore, we deem it wise and reasonable to award P50,000.00 to each the same.
employee as nominal damages.
Facts:
During the CBA negotiations between Sangwoo Philippines, Inc. Employees
73. Sangwoo Phil. v. Sangwoo Phils. Employees Union Union-Olalia (SPEU) and Sangwoo Philippines, Inc. (SPI), the latter filed with the
G.R. No. 173154 & 173229 December 9, 2013 DOLE a letter-notice of temporary suspension of operations for 1 month, due to
Joben Odulio lack of orders from its buyers. SPEU was furnished a copy of the said letter.
Consequences of dismissal
Then, SPI temporarily ceased operations. Thereafter, it successively 2 letters copy
Doctrine: furnished SPEU, for the extension of the temporary shutdown until March 2004.
Article [297] of the Labor Code does not obligate an employer to pay Meanwhile, on October 28, 2003, SPEU filed a complaint for unfair labor practice,
separation benefits when the closure is due to serious losses. To require illegal closure, illegal dismissal, damages and attorney's fees.
an employer to be generous when it is no longer in a position to do so, in
our view, would be unduly oppressive, unjust, and unfair to the employer. Then, SPI posted, in conspicuous places within the company premises, notices of
An employer which has a valid cause for dismissing its employee but its permanent closure and cessation of business operations, effective March 16,
conducts the dismissal with procedural infirmity is liable to pay the 2004, due to serious economic losses and financial reverses.
employee nominal damages in the amount of P30,000 if the ground for
dismissal is a just cause, or the amount of P50,000 if the ground for DOLE was informed of this notice, together with a letter notifying of the company’s
dismissal is an authorized cause. However, in instances where the permanent closure. SPI offered separation benefits of 1/2 month pay for every year
payment of such damages becomes impossible, unjust, or too of service to each of its employees. 234 employees of SPI accepted the offer,
burdensome, the Court may reduce the amount of nominal damages received the said sums and executed quitclaims. Those who refused the offer, i.e.,
awarded to employees from P50,000 to P10,000 since the authorized the minority employees, were nevertheless given until March 25, 2004 to accept
cause of termination was the employer's closure or cessation of business their checks and correspondingly, execute quitclaims. However, the minority
which was done in good faith and due to circumstances beyond the employees did not claim the said checks.
employer's control.
LA ruled in favor of SPI, finding that the latter was suffering from serious business
ER: SPI has been suffering business losses and temporarilu ceased operations. losses. It is also no guilty of ULP. Lastly, the LA said that since SPI’s closure of
SPEU (the union), filed a complaint for ULP. SPI then decided to close business was due to serious business losses, it is not mandated to grant
permanently and posted notice of the same within conspicuous places of the separation benefits to minority employees. NLRC sustained LA’s ruling, with some
company premises. SPI offered ½ month pay for every year of services to its modifications: it ruled that the members of SPEU are entitled to payment of
employees. 234 employees accepted but some did not. LA and NLRC both separation pay equivalent to 1/2 month pay for every year of service. NLRC opined
decided that there was no ULP and the cessation of the business was bona fide. that since SPI already gave separation benefits to 234 of its employees, the
However, NLRC disagreed with LA and said that, the minority employees are minority employees should not be denied of the same.
nevertheless entitled to the ½ separation pay SPI had offered to others. In the CA,
Before the CA, a TRO enjoined the NLRC resolution’s enforcement. The CA bound to incur should litigation drag on. However, since SPEU chose not to
suggested a compromise agreement. SPI offered P15,000 for each minority accept, said offer did not ripen into an enforceable obligation on the part of SPI
employees, however it was not accepted. Thus, the CA held in its decision that from which financial assistance could have been realized by the minority
minority employees were not entitled to separation pay considering that the employees.
company's closure was due to serious business losses. It pronounced that
requiring an employer to be generous when it was no longer in a position to be so (b) INSUFFICENT NOTICE OF CLOSURE
would be oppressive and unjust. Nevertheless, the CA still ordered SPI to pay the Article 297 of the Labor Code provides that before any employee is terminated due
minority employees P15,000.00 each. to closure of business, it must give a 1 month prior written notice to the employee
and to the DOLE. In this relation, case law instructs that it is the personal right of
Issue: the employee to be personally informed of his proposed dismissal as well as the
(a) whether or not the minority employees are entitled to separation pay? NO. reasons therefor; and such requirement of notice is not a mere technicality or
(b) whether or not SPI complied with the notice requirement of Article 297 (formerly formality which the employer may dispense with Since the purpose of previous
Article 283) of the Labor Code? notice is to, among others, give the employee some time to prepare for the
eventual loss of his job, the employer has the positive duty to inform each and
Held: every employee of their impending termination of employment. To this end,
(a) NON-ENTITLEMENT jurisprudence states that an employer's act of posting notices to this effect in
conspicuous areas in the workplace is not enough. Verily, for something as
Closure of business is the reversal of fortune of the employer whereby there is a significant as the involuntary loss of one's employment, nothing less than an
complete cessation of business operations and/or an actual locking-up of the doors individually- addressed notice of dismissal supplied to each worker is proper.
of establishment, usually due to financial losses. Closure of business, as an
authorized cause for termination of employment, aims to prevent further financial Based on existing jurisprudence, an employer which has a valid cause for
drain upon an employer who cannot pay anymore his employees since business dismissing its employee but conducts the dismissal with procedural infirmity is
has already stopped. In such a case, the employer is generally required to give liable to pay the employee nominal damages in the amount of P30,000 if the
separation benefits to its employees, unless the closure is due to serious business ground for dismissal is a just cause, or the amount of P50,000 if the ground for
losses. dismissal is an authorized cause. However, in instances where the payment of
such damages becomes impossible, unjust, or too burdensome, modification
Article [297] of the Labor Code does not obligate an employer to pay separation becomes necessary in order to harmonize the disposition with the prevailing
benefits when the closure is due to serious losses. To require an employer to be circumstances. Thus, in the case of Industrial Timber Corporation v. Ababon, the
generous when it is no longer in a position to do so, in our view, would be unduly Court reduced the amount of nominal damages awarded to employees from
oppressive, unjust, and unfair to the employer. P50,000 to P10,000 since the authorized cause of termination was the employer's
closure or cessation of business which was done in good faith and due to
The LA, NLRC, and the CA all consistently found that SPI indeed suffered from circumstances beyond the employer's control.
serious business losses which resulted in its permanent shutdown and
accordingly, held the company's closure to be valid. WHEREFORE, the petitions are PARTLY GRANTED. The Decision of the Court of
Appeals is hereby AFFIRMED with MODIFICATION deleting the award of financial
SPI is not obliged to give separation benefits to the minority employees pursuant to assistance in the amount of P15,000 to each of the minority employees. Instead,
Article 297 of the Labor Code. As such, SPI should not be directed to give financial SPI is ORDERED to pay nominal damages in the amount of P10,000 to each of
assistance amounting to P15,000.00 to each of the minority employees based on the minority employees.
the Formal Offer of Settlement. If at all, such formal offer should be deemed only
as a calculated move on SPI's part to further minimize the expenses that it will be
74. Equitable Banking v. Sadac In reaction to the memorandum, Sadac addressed a letter to Morales with copies
G.R. No. 102467 June 13, 1997 furnish to the directors, stating that the findings of the investigation contained
Equitable Banking COrporation, etc., petitioners, libelous statements and the decision of the board will amount to illegal dismissal;
vs Hon. NLRC and Ricardo Sadac, respondents. with request for a full hearing by the directors so he could clear his name.
By Mico Clavano
Vice-chairman Romulo answered Sadac that they are exercising its managerial
prerogative to control, conduct business in the manner deems fit and to regulate
RECIT READY: An illegal dismissal case was filed. The employee won the case! the same.
What is in contention here is the computation as to the backwages that the LA
initially granted. The LA included as part of the computation of backwages, the In reaction thereto, Sadac requested for a full hearing and formal investigation but
future increases in the salary the employee could have gotten. the same remained unheeded. On 9 November 1989, respondent Sadac filed a
complaint for illegal dismissal with damages against petitioner Bank and individual
Issue: Are the future increases part of the backwages to be awarded for illegal members of the Board of Directors thereof. After learning of the filing of the
dismissal? HELL NO. complaint, petitioner Bank terminated the services of respondent Sadac. Finally,
on 10 August 1989, Sadac was removed from his office.
There is no vested right to salary increases. Sadac may have received salary
increases in the past only proves fact of receipt but does not establish a degree of Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled to
assuredness that is inherent in backwages. The conclusion is that Sadac’s reinstatement and payment of full back wages. NLRC affirmed the decision upon
computation of his full backwages which includes his prospective salary increases appeal by the Bank. Sadac filed for execution of judgment where it gave its
cannot be permitted. computation which amounted to P 6.03 M representing his back wages and the
increases he should have received during the time he was illegally dismissed. The
Facts: Bank opposed to Sadac’s computation. The Labor Arbiter favor Sadac’s
Sadac was appointed VP for the legal department of bank with monthly salary, computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed
allowance and Christmas bonus, with specific legal tasks to perform for the bank. the decision of NLRC. Hence, this petition.
Later, nine lawyers of the bank's legal department addressed a petition-letter to the Issue: Whether or not the computation of back wages shall include the general
chairman of the board of directors accusing Sadac of abusive conduct, inefficiency, increases.
mismanagement, ineffectiveness and indecisiveness.
Ruling:
Sadac promptly manifested to file criminal, civil and administrative charges against To resolve the issue, the court revisits its pronouncements on the interpretation of
the nine lawyers. An investigation was conducted. The Chairman then sent Sadac the term backwages. Backwages in general are granted on grounds of equity for
a memorandum informing him of the charge, the findings of the investigation and earnings which a worker or employee has lost due to his illegal dismissal. It is not
expressed the boards' loss of confidence upon him and that they advise and private compensation or damages but is awarded in furtherance and effectuation
awaits for Sadac's resignation. of the public objective of the Labor Code. Nor is it a redress of a private right but
rather in the nature of a command to the employer to make public reparation for Recit-Ready: Respondents were employees of ABC Security and Honest Care as
dismissing an employee either due to the former’s unlawful act or bad faith. security guards and janitor. When they received salaries, they were made to sign 2
payslips – one in ink, one in pencil. They filed a CONSOLIDATED COMPLAINT
AFFIDAVIT praying for payment of minimum wage because they weren’t being
In the case of Bustamante v. National Labor Relations Commission, It said that the
paid minimum wage. Additionally, they prayed for other monetary awards and
Court deems it appropriate to reconsider such earlier ruling on the computation of benefits. They also allege that the company was possibly changing the payroll in
back wages by now holding that conformably with the evident legislative intent as pencil to show that they were being paid minimum wage.
expressed in Rep. Act No. 6715, back wages to be awarded to an illegally Following the filing of such complaint, they were terminated. Petitioners (Carlos
dismissed employee, should not, as a general rule, be diminished or reduced by was the President of the consolidated companies of ABC and Honest care) argue
the earnings derived by him elsewhere during the period of his illegal dismissal. that the employees resigned, they were not terminated. LA dismissed complaint
The underlying reason for this ruling is that the employee, while litigating the for lack of merit. NLRC reversed and awarded backwages (from dismissal up to
promulgation of judgment), other benefits; held Carlos solidarily liable. CA
legality (illegality) of his dismissal, must still earn a living to support himself and
affirmed.
family, while full backwages have to be paid by the employer as part of the price or W/N there was illegal dismissal? YES. Petitioner as employer had the
penalty he has to pay for illegally dismissing his employee. The clear legislative burden of proof to show there was no dismissal or no illegal dismissal.
intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers Here, it failed to present substantial evidence to do so.
than was previously given them. Thus, a closer adherence to the legislative policy W/N awards were proper? Yes. Generally, if there is illegal dismissal there
behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., should be reinstatement, backwages, and other benefits which were lost
without deducting from backwages the earnings derived elsewhere by the during the time employee was illegally dismissed. Here, the SC modified it
to separation pay (since reinstatement was no longer possible due to
concerned employee during the period of his illegal dismissal.
strained relationships), backwages (from dismissal up to FINALITY of
judgment), and other benefits.
There is no vested right to salary increases. Sadac may have received salary W/N Carlos can be held solidarily liable? Yes. He admitted he was the
increases in the past only proves fact of receipt but does not establish a degree of general manager so he has control over the affairs of the company.
assuredness that is inherent in backwages. The conclusion is that Sadac’s Corporate veil of fiction is pierced.
computation of his full backwages which includes his prospective salary increases W/N respondents can move for the execution of money awards pending
cannot be permitted. appeal? Yes. According to NLRC Rules of Procedure, it does not stay
execution.
75. Carlos, ABC Security Services, Honest Care Janitorial v. CA, Pizarro, et Facts:
al. ABC Security provides security services while Honest Care provides
August 28, 2007 janitorial services. These two corporations consolidated in ABC Security
and are now represented by its President, Alex Carlos.
Doctrine: An employee who is unjustly dismissed from work shall be entitled to Respondents are employees of ABC Security as security guards assigned
reinstatement (or separation pay if reinstatement is not possible) without loss of to Greenvalley Country Club (except one who was employed by Honest
seniority rights and other privileges and to full back wages (from dismissal up to Care as janitor supervisor at different offices).
finality of judgment), inclusive of allowances, and to other benefits or their Respondents filed a CONSOLIDATED COMPLAINT AFFIDAVIT praying
th
monetary equivalents computed from the time compensation was withheld up to for payment of minimum wage, 13 month pay, holiday pay, SIL, COLA,
the time of actual reinstatement. clothing allowance.
The next day and subsequently, the respondents were dismissed from o The general payrolls cannot be given statute of substantial
their jobs. They claimed that everytime they received their salaries, they evidence since there are evident inconsistencies and high
nd
signed 2 sets of pay slips (1st – written in ink; 2 – written in pencil) which probability that these were manipulated by the company. In fact,
showed the salaries they received which was actually below minimum. as held by the NLRC, one testified that he could not have signed
They claim that the one in pencil were possibly altered by the company to the payroll since at that date of the payroll, he was not in the
show compliance with labor laws. Country Club but was posted in another office.
ABC Security’s defense: the employees submitted resignation letters with Awards: PROPER. No reason to disturb monetary awards for backwages,
th
their signatures. They reassigned the respondents as part of management separation pay, overtime pay, 13 month pay, premium pay, holiday pay,
prerogative since the Greenvalley Country Club assignment ended but SIL.
respondents refused to transfer so they resigned instead. Also, they o An employee who is unjustly dismissed from work shall be entitled
resigned since there was a loss of bowling equipment which they were to reinstatement without loss of seniority rights and other
asked to pay for. ABC also provided the General Payroll as evidence of privileges and to full back wages, inclusive of allowances,
their receipt of proper wages. and to other benefits or their monetary equivalents computed
LA: dismissed complaint for lack of merit. from the time compensation was withheld up to the time of
NLRC: reversed – gave greater weight to testimonies of petitioners. actual reinstatement.
Ordered ABC Security to pay backwages (to be computed from dismissal To further the constitutional guaranty of security of tenure.
up to PROMULGATION of judgment), separation pay, overtime pay, and The grant of backwages allows the illegally dismissed
held Carlos solidarily liable. employee to recover what was lost as a result of his
Petitioners filed M/R to vacate ruling; Respondents filed M/R to add dismissal.
monetary awards, attys fees. o Should you deduct the earnings earned by employees elsewhere
NLRC: denied. Petitioners filed R65 (Certiorari) with CA. during the period of illegal dismissal? No. they are entitled to full
CA: affirmed NLRC decision in toto. Voluntary resignation defense of ABC backwages.
is not plausible considering the respondents filed illegal dismissal action. o But in this case, reinstatement is not anymore feasible due to
strained relations, so separation pay (one month salary for every
Issue: year of service) should be granted.
1. W/N there was illegal dismissal? YES o When is the end for the computation of backwages and separation
2. W/N awards are proper? YES with modification that backwages shall be pay?
computed from date of dismissal up to FINALITY of judgment. ABC Security argues: it’s not their fault that there was
3. W/N Carlos should be solidarily liable? YES delay in the disposition of the case.
4. W/N respondents can move for the execution of monetary award SC: invalid argument. There is already a long-standing
pending appeal? YES and well entrenched jurisprudential rule that computation
shall be up to the time of finality of the Court’s decision
Held/Ratio: (Gaco v. NLRC)
Dismissal: ILLEGAL Carlos’ liability: SOLIDARILY LIABLE. Petitioner Carlos admitted that he is
o Burden is on the employer to prove that the employee was not not only the stockholder of petitioners ABC Security and Honest Care
dismissed or if dismissed, not illegally. Janitorial, but the General Manager of said corporations as well. Being the
o Here, petitioner failed to discharge this burden. They only relied on General Manager of these corporations, it is assumed that petitioner
the alleged resignation letters. Resignation must be done with the Carlos possessed complete control of their affairs. We cannot allow
intention of relinquishing an office. This is inconsistent with petitioner Carlos to hide behind the cloak of corporate fiction in order to
respondent’s act of filing a case for illegal dismissal.
evade liability. It bears repeating that the corporate veil must be pierced TCMC claims that they cannot be compelled to pay backwages for the period
and disregarded when it is utilized to commit fraud, illegality or inequity. when Pedro was in jail.
Execution of award: PROPER.
o Under the NLRC Rules of Procedure, SECTION 10. Effect of RULING: The payment of backwages is generally granted on the ground of equity.
Petition for Certiorari on Execution. A petition for certiorari with the The award of backwages is not conditioned on the employee’s ability or inability to,
st
Court of Appeals or the Supreme Court shall not stay the in the interim, earn any income. To add, Pedro 1 criminal complaint was
nd
execution of the assailed decision unless a restraining order is dismissed. As to the 2 complaint, he is presumed innocent until his guilt is proved
issued by said courts. beyond reasonable doubt.
Facts:
76. Tomas Claudio Memorial Colleges (TCMC) v. CA Pedro is the Liason Officer of the school with the DECS and CHED with
G.R. No. 152568 the rank of Assistant Registrar.
February 16, 2004 FIRST ARREST: On June 10, 1996, Pedro was arrested by the police
Digest by: Kristine Uy without a warrant for violation of the Dangerous Drugs Act. A criminal
complaint was later filed against him. A preliminary investigation was then
Doctrine: The payment of backwages is generally granted on the ground of equity. conducted by the Municipal Court which found probable cause to hold him
It is a form of relief that restores the income that was lost by reason of the unlawful for trial. The court, on the said date, issued a warrant for Pedro’s arrest.
dismissal; the grant thereof is intended to restore the earnings that would have The records were elevated to the Provincial Prosecutor.
accrued to the dismissed employee during the period of dismissal until it is In the meantime, TCMC’s President, sent a memo dated June 13, 1996 to
determined that the termination of employment is for a just cause. The award of Pedro informing him that his employment was already terminated. The
backwages is not conditioned on the employee’s ability or inability to, in the basis of the termination was Pedro’s frequent absences and his failure to
interim, earn any income. return to TCMC when he is asked to go to DECS or CHED. Further, TCMC
barely initiated its inquiry to Pedro’s drug activities when TCMC found that
Recit-ready: Pedro is the Liaison Officer of TCMC. He was 1st arrested without Pedro was arrested as a drug pusher and drug user (a just cause for
warrant for violation of the Dangerous Drugs Act. A preliminary investigation was termination according to TCMC). Pedro was allegedly apprehended for
then conducted for which probable cause was found. A criminal complaint was shabu possession.
then filed against Pedro. In the meantime, TCMC dismissed him effective Pedro was then barred from entering the school.
immediately based on an anonymous tip that Pedro was a drug pusher and drug On July 5, 1996, Pedro was released on bail.
user and also based on Pedro’s arrest. Pedro was then released on bail. The On October 2, 1996, the Prosecutor dismissed the above criminal
prosecutor, however, dismissed the criminal complaint since the warrantless complaint because the basis of the complaint was hearsay and
search done on his person was improper since he was not committing a crime at warrantless search done by the police on the person of Pedro was
the time, neither was he about to commit a crime. improper as he had not committed, was not actually committing or was
about to commit an offense when they were invited to the police station.
Pedro was then arrested a 2nd time also for violation of the Dangerous Drugs Act. SECOND ARREST: Pedro was arrested again by the police. The Chief of
Pedro again, was released on bail. It is only at this point that Pedro filed a Police filed a criminal complaint for violation of Section 27, Article III of the
complaint for illegal dismissal. The LA dismissed his complaint which was affirmed Dangerous Drugs Act. An information was filed with the RTC of Morong.
by the NLRC. Upon reaching the CA, the CA found that while there was just cause On February 17, 1997, Pedro was released on bail.
to terminate Pedro, TCMC did not follow the procedure in terminating Pedro. The It was only on June 11, 1997 that Pedro filed a complaint for illegal
CA ordered TCMC to pay backwages to Pedro from the time of his termination. dismissal.
TCMC claims that the termination of Pedro was based on an anonymous unlawful dismissal; the grant thereof is intended to restore the earnings
telephone call branding Pedro as not only a drug user but also a pusher. that would have accrued to the dismissed employee during the period of
After a discreet investigation, the information was confirmed by unnamed dismissal until it is determined that the termination of employment is for a
tricycle drivers, students and school personnel. According to TCMC, Pedro just cause. It is not private compensation or damages but is awarded in
was connected to a syndicate supplying prohibited drugs and was selling furtherance and effectuation of the public objective of the Labor Code. Nor
the same in a nearby billiard hall, in restaurants, and in other places is it a redress of a private right but rather in the nature of a command to
immediately outside the perimeter of the school gate. the employer to make public reparation for dismissing an employee either
The LA dismissed the complaint which was affirmed by the NLRC. due to the formers unlawful act or bad faith.
However, on certiorari with the CA, while it affirmed the NLRC’s decision, The award of backwages is not conditioned on the employees ability or
the CA ordered TCMC to pay backwages to Pedro from June 13, 1996 inability to, in the interim, earn any income. While it may be true that on
(the date of the memo terminating Pedro) up to the finality of the said June 11, 1996, Pedro was detained, the State Prosecutor found no
decision. The CA ratiocinated that while there was valid cause for Pedro’s probable cause for the detention of the private respondent and resolved to
dismissal, TCMC did not follow the procedure for the termination of his dismiss the case. Pedro has not yet been convicted by final judgment in
nd
employment. for the 2 criminal complaint. Indeed, he is presumed innocent until his
TCMC claims that it cannot be lawfully compelled to pay backwages for guilt is proved beyond reasonable doubt.
the period of time that Pedro was in jail.
Issue: May TCMC be compelled to pay for backwages including for the time Pedro 77. Chronicle Securities v. NLRC
was in jail? – Yes. G.R. Nos. 157907
Date: November 25, 2004
Held/Ratio: Digest by: Isa Avanceña
The normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement Recit-Ready (Doctrine in bold)
to his former position without loss of seniority rights and secondly, the - CRUZ was fired as editor in chief of the Manila Chronicle of CHRONICLE
payment of backwages corresponding to the period from his illegal (company) due to his role in the publication of a controversial article.
dismissal up to actual reinstatement. The statutory intent on this matter is Subsequently, CHRONICLE ceased the publication of its newspaper. The
clearly discernible. Reinstatement restores the employee who was unjustly issue is whether CRUZ is entitled to backwages even beyond the date of
dismissed to the position from which he was removed, that is, to his status closure. An employer found guilty of unfair labor practice in
quo ante dismissal, while the grant of backwages allows the same dismissing his employee may not be ordered so to pay backwages
employee to recover from the employer that which he had lost by way of beyond the date of closure of business where such closure was due
wages as a result of his dismissal. These twin remedies-reinstatement and to legitimate business reasons and not merely an attempt to defeat
payment of backwages make the dismissed employee whole who can then the order of reinstatement.
look forward to continued employment. Thus do these two remedies give
meaning and substance to the constitutional right of labor to security of Facts:
tenure. The two forms of relief are distinct and separate, one from the - CHRONICLE hired CRUZ (who was then the executive editor of
other. Though the grant of reinstatement commonly carries with it an the Today newpaper) as the publicist and the editor in chief of its
award of backwages, the inappropriateness or non-availability of one does (CHRONICLE’s) national daily broadsheet, the Manila Chronicle.
not carry with it the inappropriateness or non-availability of the other. o As compensation for his services, CRUZ received a monthly
The payment of backwages is generally granted on the ground of equity. It compensation of P60,000.00 plus a brand new car.
is a form of relief that restores the income that was lost by reason of the
- CRUZ quit his job with Today to assume the duties and responsibilities as computation of the backwages due CRUZ to be based on a period beyond
the editor in chief of the Manila Chronicle. January 19, 1998 would be an injustice to CHRONICLE.
o CRUZ went about the task of improving the over-all image of the - The Court’s power to exact retribution from erring employers for cases of
Manila Chronicle. He made full use of its color capabilities and illegal dismissal should not go beyond what is recognized as just and fair
introduced new columns and sections. under the circumstances. While the Court is inclined more often than not
o In time, these initiatives helped improve the financial condition of toward the worker and uphold his cause in his conflicts with his employer,
the Manila Chronicle, boosting circulation and increasing such favoritism has not blinded it to the rule that justice is in every case for
advertising revenue. the deserving, to be dispensed in the light of the established facts and the
- However, due to CRUZ’s role in the publication of a controversial article applicable law and doctrine.
that was carried by the newspaper sometime in July 1994, CHRONICLE
terminated his services. Consequently, CRUZ filed a complaint for illegal
dismissal against CHRONICLE. 78. Intercontinental Broadcasting v. Benedicto
- LA: CRUZ illegally dismissed G.R. No. 152843 | July 20, 2006
- NLRC: Affirmed LA, CRUZ illegally dismissed
- CA: Affirmed LA and NLRC Doctrines:
- Note: CHORNICLE ceased publication and closed its newspaper business
on 19 January 1998 1. When a judgment involving monetary award is appealed by the employer,
the appeal is perfected only upon the posting of a cash or surety
Issues/Held/Rationale: bond issued by a reputable bonding company duly accredited by the
THE ONLY ISSUE IN THIS CASE IS THE PROPER COMPUTATION OF NLRC in an amount equivalent to the monetary award in the judgment.
BACKWAGES (specifically, w/n CRUZ is entitled to backwages even beyond Nevertheless, such amount of the bond may be reduced by the NLRC in
the CHRONICLE’s closure of its newspaper business on 19 January 1998) meritorious cases, on motion of the appellant. Even if filed beyond the
NO, no payment of backwages beyond the date of closure. reglementary period, appeals may be entertained in the interest of justice.
- CHRONICLE is no longer appealing the fact of illegal dismissal or the fact 2. Illegaly dismissed employees are entitled to backwages and commissions
that they have to pay backwages only up to the time of compulsory retirement (till they turn 65).
o According to CHRONICLE: Backwages should only be computed
from the date of illegal dismissal up to the time when Recit Ready Digest:
reinstatement was still possible (obviously, reinstatement would no In 1993, Benedicto was hired as a marketing manager for IBC 13. He was 63
longer have been possible after closure of the business) years old. His compensation package includes a fixed salary + 1% commission for
- SC: An employer found guilty of unfair labor practice in dismissing his
consummated advertising contracts. During his employment, he was able to close
employee may not be ordered so to pay backwages beyond the date of
a five year deal with VTV corporation worth 600 million. In 1994, he was
closure of business where such closure was due to legitimate business
terminated. He was 64 years old. In 1998, the LA promulgated its ruling in favor of
reasons and not merely an attempt to defeat the order of reinstatement. Benedicto, ordering the payment of backwages and commission, to be computed
- In the case at bar, the CHRONICLE ceased publication on 19 January
from his dismissal until the decision. He was then 68 years old. Petitioner appealed
1998. The cessation of publication was a permanent one and it was
the ruling saying that the award should be limited to what Benedicto is entitled to
precipitated by the papers dire financial condition which was aggravated up to the time of his compulsory retirement (hence, it should only be until 1995, not
by a crippling strike causing it to finally shut down; the closure of the 1998). On October 1995, petitioner filed its appeal and it included a motion to re-
newspaper business was made on legal and valid grounds; it was never compute the award on which the appeal bond was based. The motion was not
resorted to as a means to deprive the private respondent of the
acted upon and so on December 1995, it proceeded to file its appeal bond based
opportunity to be reinstated to his former position. To allow the on the LA award. The issues are (1) W/N the appeal should be given due course
despite the fact that the appeal bond was paid beyond the reglementary period; o Petitioner also questions the award by the labor arbiter of
and (2) Up to what period is the employee entitled to the backwages and Benedicto’s 1% commission.
commissions. On the first issue, payment of appeal bond within the reglementary On October 15, 1998 (10 days after receipt of decision), petitioner filed
period is necessary to perfect an appeal (see doctrine no.1). However, late with the NLRC its memorandum on appeal with motion to re-compute the
payment may be excused and appeals may be entertained in the interest of award on which the appeal bond was to be based. This motion was not
justice. In this case, petitioner posted the bond when the NLRC did not act on its acted upon, hence, on December 10, 1998, petitioner proceeded to file the
motion for re-computation of the award. There was thus substantial compliance appeal bond based on the amounts awarded in the judgment appealed
that justified a liberal application of the requirement on the timely filing of the from.
appeal bond. On the second issue, respondent can claim backwages only up to The NLRC dismissed the appeal and ruled that petitioner failed to perfect
the time of his compulsory retirement. Backwages are granted on grounds of its appeal since it did not file the appeal bond within the reglementary
equity for earnings lost by an employee due to his illegal dismissal thus it should period. CA confirmed the NLRC decision.
be computed based on the period he could have worked had he not been illegally Benedicto died during the pendency of the decision and was substituted
dismissed. His right to the commissions is also coterminous with his employment by his wife and children.
with petitioner and this ended when he reached the compulsory retirement age.
Issues:
Facts:
1. W/N the the appeal bond was paid beyond the reglementary period
Intercontinental Broadcasting Corporation is a GOCC in charge of the 2. W/N the backwages were properly computed
operation of television Channel 13 (IBC 13).
In 1993, Reynaldo Benedicto was appointed by the general as marketing
Held:
manager with a monthly compensation of P20,000 plus 1% commission
from collections of all advertising contracts consummated.
In 1994, Benedicto was terminated from his position. On the late payment of appeal bond – there was late payment but there was
Benedicto filed a complaint with the NLRC for illegal dismissal and substantial compliance that justified the liberal application of the rules
damages. He alleged that after his appointment, he was able to increase
the televiewing, listening and audience ratings of petitioner which resulted The NLRC and the CA dismissed petitioner’s appeal. Both held that
in its improved competitive financial strength. Specifically, in 1994, he petitioner failed to perfect its appeal. Petitioner had ten calendar days from
claimed that he successfully initiated, pursued and consummated an its receipt of the labor arbiter’s decision on October 5, 1998 to appeal.
advertising contract with VTV Corporation for a period of five years While it filed its memorandum on appeal with motion to re-compute award
involving the amount of P600 million. on October 15, 1998, the appeal bond was posted after the appeal period.
The LA ruled in favor of Benedicto. He (1) ordered his reinstatement with Under the second paragraph of Article 223 of the Labor Code, when a
full backwages from the time of his dismissal up to his actual reinstatement judgment involving monetary award is appealed by the employer, the
(amounting to P920,000 at the time of the promulgation of the decision); appeal is perfected only upon the posting of a cash or surety bond issued
and (2) directed petitioner to pay his 1% commission on the contract with by a reputable bonding company duly accredited by the NLRC in an
VTV Corporation (P645,000). amount equivalent to the monetary award in the judgment. This assures
o Note: Petitioner insists that the award should be limited to what the workers that if they finally prevail in the case, the monetary award will
Benedicto was entitled to as of the compulsory retirement age of be given to them on dismissal of the employer’s appeal. It is also meant to
65 years. When this decision was promulgated, he was already 68 discourage employers from using the appeal to delay or evade payment of
years old. their obligations to the employees.
Nevertheless, such amount of the bond may be reduced by the NLRC in rendered. All these different concepts of commissions are
meritorious cases, on motion of the appellant. Indeed, an unreasonable incongruent with the claim that an employee can continue to
and excessive amount of bond is oppressive and unjust, and has the effect receive them indefinitely after reaching his mandatory retirement
of depriving a party of his right to appeal. age. Benedicto’s right to the commissions was coterminous
It is true that the perfection of an appeal in the manner and within the with his employment with petitioner and this ended when he
period prescribed by law is not only mandatory but jurisdictional, and reached the compulsory retirement age.
failure to perfect an appeal has the effect of making the judgment final and The stipulation providing for commissions (which did not specify the period
executory. However, technicality should not be allowed to stand in the way of entitlement) would be too burdensome if interpreted to mean that
of equitably and completely resolving the rights and obligations of the Benedicto had a right to it even after his employment with petitioner.
parties. We have allowed appeals from the decisions of the labor arbiter to Doubts in contracts should be settled in favor of the greatest reciprocity of
the NLRC, even if filed beyond the reglementary period, in the interest of interests
justice. Disposition: case remanded to LA for recomputation.
In this case, petitioner posted the bond when the NLRC did not act
on its motion for re-computation of the award. There was thus
substantial compliance that justified a liberal application of the 79. Velasco v. NLRC, June 26, 2006
requirement on the timely filing of the appeal bond. Moreover,
petitioner presented a meritorious ground in questioning the Doctrine: An employee unjustly dismissed from work is entitled to reinstatement
computation of the backwages. and backwages, among others, though it has long been recognized that if
reinstatement is no longer possible or practicable, the employer may be made
On W/N backwages were properly computed: instead to pay separation pay in lieu of reinstatement. The accepted doctrine is
that separation pay may avail in lieu of reinstatement if reinstatement is no longer
First, the award of backwages is proper. There is no dispute on the practical or in the best interest of the parties. The normal consequences of a
existence of the ee-er relationship, the dismissal without just or authorized finding that an employee has been illegally dismissed are, firstly, that the employee
cause, and the lack of procedural due process. becomes entitled to reinstatement to his former position without loss of seniority
However, Benedicto was entitled to backwages only up to the time he rights and, secondly, the payment of backwages corresponding to the period from
reached 65 years old, the compulsory retirement age under the law. his illegal dismissal up to actual reinstatement. Since piece-rate workers are paid
When Benedicto was illegally dismissed on October 11, 1994, he was by the piece, there is a need to determine the varying degrees of production and
already 64 years old. Since backwages are granted on grounds of equity days worked by each worker in order to determine the proper amount of
for earnings lost by an employee due to his illegal dismissal, Benedicto backwages.
was entitled to backwages only for the period he could have worked had
he not been illegally dismissed. Recit-Ready: Tayags were hired as carpenter by Petitioner as were paid on
apiece rate basis. They were laid off by petitioner due to business losses. Tayags
In the same manner, petitioner should pay his commission only for the
filed for complaints for illegal dismissal. Meanwhile, Petitioners alleged that they
same period (for one year only until 1995).
o By nature, commissions are given to employees only if the did not terminate the Tayags; rather, they abandoned their work. LA ruled against
employer receives income. Employees, as a reward, receive a Tayags; NLRC and CA reversed and ruled that the burden rests on Petiitoner to
prove that Tayags abandoned their work, to which petitioner failed to do so, they
percentage of the earnings of the employer, which they, through
awarded separation pay. Problem tho was that in the conclusion of NLRC, while
their efforts, helped produce. Commissions are also given in the
form of incentives or encouragement so that employees will be finding that they did not abandon their work, it suddenly stated that there was no
illegal dismissal (which is so labo cause body of ruling says THEY DID NOT
inspired to put a little more industry into their tasks. Commissions
ABANDON WORK but on the contrary, the last sentence of conclusion was NO
can also be considered as direct remunerations for services
ILLEGAL DISMISSAL; SC will explain this later on) W/N CA erred in ruling that the Issue: W/N CA erred in ruling that the Tayags were illegally dismissed because
Tayags were illegally dismissed because NLRC had purportedly concluded NLRC had purportedly concluded otherwise.
otherwise. SC: NO, CA did not err. SC said that the phrase no illegal dismissal was
clearly off tangent with the rest of the NLRC’s resolution. SC cannot give weight to Held/Ratio: NO.
this “stray” sentence and that the correct ruling (which is the content of the body of Upon examination of NLRC’s Resolution, the phrase “there being no
the resolution) is that Tayags did not abandon their work plus they are entitled to showing also that there was illegal dismissal” is clearly off-tangent with
both separation pay and backwages for having been illegally dismissed. The the rest of the Resolution, as well as the dispositive portion thereof.
accepted doctrine is that separation pay may avail in lieu of reinstatement if NLRC correctly held that the burden was upon Petitioner to substantiate
reinstatement is no longer practical or in the best interest of the parties. Separation his claim that Tayags had abandoned their work and NLRC correctly
pay in lieu of reinstatement may likewise be awarded if the employee decides not concluded that Petitioner failed to establish this. It is not clear why the
to be reinstated. Here, Tayags had opted to seek separation pay in lieu of NLRC stated that there was “no showing also that there was illegal
reinstatement and we defer to the findings that separation pay in lieu of dismissal” when its preceding discussion so obviously pointed to the
reinstatement is warranted in this case. case was likewise remanded to the NLRC contrary. Yet when it is clear that the cited passage cannot stand with the
for the proper determination of the appropriate amount of backwages due to each rest of the decision, including the dispositive portion, the Court cannot
Tayag without impeding the award of separation pay. obviously confer binding effect on the conclusion that there was no
illegal dismissal, as it runs contrary against the grain of the rest of
Facts: the Resolution.
The Tayags were hired by Velasco (owner-manager of Modern Furniture) The normal consequences of a finding that an employee has been illegally
as carpenters and were paid on a piece-rate basis. dismissed are, firstly, that the employee becomes entitled to reinstatement
Petitioner started laying off workers due to business losses, with the to his former position without loss of seniority rights and, secondly, the
promise that they will be rehired should business prosper again payment of backwages corresponding to the period from his illegal
The Tayags filed complaints for illegal dismissal. Petitioners alleged that it dismissal up to actual reinstatement.
was the Tayags who stopped reporting for work, they were not terminated Under Art 279, an employee unjustly dismissed from work is entitled to
but instead they abandoned their work reinstatement and backwages, among others. However, if reinstatement is
LA: since Petitioner denied terminating the employees, the burden to no longer possible or practicable, the employer may be made instead to
prove by substantial evidence that they were terminated fell upon the pay separation pay to the employee in lieu of reinstatement. The
Tayags, to which the Tayags failed to substantiate. dispositive portion of the Resolution is consistent with the premise that the
NLRC: reversed LA; burden was upon Petitioner; held that Tayags were Tayags entitled to reinstatement but they could instead receive separation
only required to report for work when called upon by Petitioner; no pay if reinstatement is no longer practicable.
instance from evidence adduced wherein Petitioner called upon the The accepted doctrine is that separation pay may avail in lieu of
Tayags to report for work. Tayags did not report to work simply because reinstatement if reinstatement is no longer practical or in the best interest
they were not given work. Hence, they did not abandon their work and that of the parties. Separation pay in lieu of reinstatement may likewise be
they are entitled to separation pay. awarded if the employee decides not to be reinstated.
CA: affirmed NLRC. Petitioners argued that CA erred in concluding that The Court finds no reason to disturb the ruling that the Tayags should be
the Tayags were illegally dismissed, as well as granting separation pay awarded separation pay in lieu of reinstatement.
since NLRC in fact stated in the conclusion of its Resolution that: “Viewed It is not controverted that Petiitoner has undergone financial hardship, and
in this light, the relief available to complainants-appellants is reinstatement that the Tayags had opted to seek separation pay in lieu of reinstatement.
without backwages there being no showing also that there was illegal We defer to the findings that separation pay in lieu of reinstatement is
dismissal.” warranted in this case.
The Tayags are also correct in pointing out that they are entitled to full ● Abad then proceeded to file a complaint for illegal dismissal with non-
backwages by reason of their illegal dismissal, notwithstanding the award payment of benefits and pay with LA. The LA held in favor of the bank.
of separation pay. This prompted Abad to file an appeal with the NLRC. There, the NLRC
The Santos rule has been repeatedly affirmed by this Court, and must be ruled again in favor of the bank. However, it ordered the bank to pay Abad
th
applied to this case Even assuming that the Tayags had not adduced an amount equivalent to his 13 month pay. Afterwards, Abad appealed
any evidence to establish the amount of backwages to be paid, it cannot the decision to the CA. The CA agreed that the dismissal of Abad was
be denied that under the law, particularly Article 279 of the Labor Code, valid as the bank was able to establish that it lost its trust and confidence
they are entitled to backwages as a matter of right, owing to their illegal in him. The CA, however, awarded separation pay to Abad based on
dismissal. Hence, the NLRC and the CA erred in not awarding backwages social justice.
as well. However, the Court recognizes that there may be some difficulty in
ascertaining the proper amount of backwages, considering that the Tayags Issue: Whether it is valid to award separation pay to a dismissed employee.
were apparently paid on a piece-rate basis. Court noted that as the piece-
rate workers had been paid by the piece, “there [was] a need to determine Held: Yes, subject to certain exceptions.
the varying degrees of production and days worked by each worker,” and ● The award of separation pay is required for dismissals due to causes
that “this issue is best left to the [NLRC].” Hence in this case, case should specified under Articles 283 and 284 of the Labor Code, as well as for
be remanded to the NLRC for the proper determination of the appropriate illegal dismissals in which reinstatement is no longer feasible. On the other
amount of backwages due to each Tayag without impeding the award of hand, an employee dismissed for any of the just causes enumerated under
separation pay Article 282 of the Labor Code is not, as a rule, entitled to separation pay.
● As an exception, allowing the grant of separation pay or some other
financial assistance to an employee dismissed for just causes is
80. Philippine Commercial International Bank vs Anastacio Abad based on equity. The Court has granted separation pay as a measure
G.R. 158045 | Feb. 28, 2005 of social justice even when an employee has been validly dismissed,
Chris Co as long as the dismissal was not due to serious misconduct of
reflective of personal integrity or morality.
Doctrine: An employee dismissed for just cause under Article 282 of the Labor ● The Court held that this standards can be applied in cases of dismissal
Code may still be awarded separation pay as a measure of social justice. Such based on loss of trust and confidence. Applying the standards, it ruled that
financial assistance, however, is not given when the employee has been validly the first standard is inapplicable thus, it now discussed the applicability of
dismissed for serious misconduct, or for cause that reflect on moral character or the second standard. Here, the Court ruled that while Abad violated the
personal integrity. rules and regulations, there was no indication that his actions were
perpetrated for his self-interest or for an unlawful purpose. In fact,
Facts: (I made underlined the important facts instead since the case is very short.) his actions was actually motivated by his desire to accommodate a
● Abad, a senior assistant manager of PCI Bank was dismissed from his valued client of the bank.
work on 3 August 1998. He has been working for the bank since 1973. On
13 March 1998, he received a Memorandum from the bank concerning the
irregular clearing of a check of one of its valued clients. He argued that he 81. BAGO V. NLRC
never instructed the validation of those checks. But during the actual 4 APRIL 2007
investigation of the bank, it found several transactions which violated its GR NO 170001
Policies and Rules and Regulations. The Bank finally served a
memorandum terminating Abad’s employment effective upon the receipt of Doctrine: As a general rule, employers are allowed a wide latitude of discretion in
such document. terminating the employment of managerial personnel or those who, while not of
similar rank, perform functions which by their nature require the employer’s full With regard to the charge of rumor-mongering, Abordo submitted
trust and confidence. Proof beyond reasonable doubt is not required. It is sufficient statements of 3 witnesses to substantiate her charge.
that there is some basis for loss of confidence, such as when the employer has Thereafter, HRDD directed petitioners to explain within 5 days why
reasonable ground to believe that the employee concerned is responsible for the appropriate sanction should not be imposed on them relative to the
purported misconduct, and the nature of his participation therein renders him spreading of malicious rumors. In compliance, petitioners submitted a
unworthy of the trust and confidence demanded by his position. letter addressed to the Assistant VP of SICI’s legal department.
o In the letter, petitioners asked for apologies and acknowledged
Recit-ready: Petitioners were employees of SICI who were accused of their faults. They admitted that they were driven by jealousy and
manipulating money out of agents and rumor-mongering by the Branch Head. An anger and that they already asked forgiveness from Abordo. They
internal audit was conducted which showed that they indeed participated in were asking for another chance from the management.
dishonest acts. An admission from the branch accountant and cashier regarding BUT in the said letter, petitioners did not respond to the charge of rumor-
the manipulation of money was also gathered during the audit. Petitioners were mongering. Hence, HRDD gave them an extension of time to comply.
requested by the management to file their reply on the audit. The petitioners wrote In their subsequent reply, petitioners wrote:
that they have already asked for forgiveness from the branch head and o While it is true that they did not answer the first memo sent, they
acknowledged their faults. However, they also stated that such letter does not deny that such act was an admission of the offense charged and
amount to an admission to the offenses charged. Notice of hearing was sent, but that they’ve already asked forgiveness. Since there was no sign of
there was no record that the petitioners attended the hearing. Thereafter, they remorse on the part of Abordo anymore, they decided not to
were terminated on the ground of loss of confidence. They filed a complaint for answer the memo any longer.
illegal dismissal. SC ruled that they were validly dismissed. The work functions of As for the result of the internal audit on the money manipulation,
the petitioners involved the exercise of judgment and discretion hence, they can be petitioners responded that their admission to the participation to the
dismissed on the ground of loss of confidence. Moreover, it was incorrect for them misdeed was deliberate just so the issue would be put to an end already.
to assume that mere rank and file employees cannot be dismissed on such ground She proceeded to ask for another chance from the company.
as seen in jurisprudence. As for the alleged denial of due process, the records of Petitioners were informed about the conduct of a formal hearing on the
the case show otherwise. In addition to the conduct of an internal audit during charges during which they could be assisted by a counsel and present
which the petitioners were heard, the requirements of twin-notice and hearing were additional evidence. While employees were interviewed during the
complied with. scheduled hearing, there was no showing that petitioners attended the
hearing.
Facts:
Petitioners were later terminated. Thereafter, petitioners filed a complaint
Celia Abordo, the head of Standard Insurance Company Incorporated for illegal dismissal.
(SICI) Tuguegarao branch, filed a complaint against petitioners before the LA: ruled that there was illegal dismissal and ordered for the reinstatement
Human Resources Development Department (HRDD) of SICI. Petitioners of the petitioners, plus backwages, other benefits, and damages.
here were charged with manipulating money out of agents/zone
SICI manifested that they opt to adopt a payroll reinstatement. LA
managers, including Abordo’s commission, and spreading rumors that
approved.
Abordo is having an affair with the claims assistant.
NLRC reversed the decision of LA and ruled that there was valid
A special audit was conducted upon Abordo’s recommendation. The audit
termination on the grounds of loss of trust and confidence and dishonesty.
showed that the agents were not given the commission due to them. The
On the CA level, petitioners raised the issue of “lack of further investigation
above act of dishonesty was discussed with SICI and it was admitted by
despite their insistent denial on the charge and lack of opportunity to
the branch cashier and the branch accountant that there was a connivance
cross-examine the witnesses.” They also insisted that they are merely rank
between Branch Cashier, Accountant, Underwriter, and the Encoder. The
and file employees who cannot be terminated on the ground of loss of
branch encoder and underwriter later on admitted the act as well.
confidence.
o However, SC cited its previous ruling in Etcuban Jr. v.Sulpicio that
Issue: W/N petitioners were validly dismissed whether or not the company was prejudiced was immaterial. What
matters is that the fraudulent scheme constitutes a clear betrayal
Held: YES (petitioners raised three arguments: 1) they’re rank and file employees, of trust and confidence.
hence, loss of confidence cannot apply, 2) the company was not financially As for the alleged denial of due process, the records of the case show
prejudiced, and 3) they were denied due process due to lack of notice) otherwise. In addition to the conduct of an internal audit during which the
petitioners were heard, the requirements of twin-notice and hearing were
SC ruled that it is incorrect for them to assume that mere rank and file complied with.
employees cannot be dismissed on such ground. Jurisprudence holds As for the propriety of dismissal as a penalty in light of petitioners’ eight
otherwise albeit it requires "a higher proof of involvement" in the years of service during which they committed no infraction, SC reiterated
questioned acts. the doctrine established in Salvador v. Philippine Mining Service Corp:
CA correctly ruled that petitioners’ work is of such nature as to require a o To be sure, length of service is taken into consideration in
substantial amount of trust and confidence on their part. Their work imposing the penalty to be meted an erring employee. However,
includes performing other related functions as may be assigned to the case at bar involves dishonesty and pilferage by petitioner
them by their superior from time to time, which functions "required which resulted in respondent’s loss of confidence in him. Unlike
the use of judgment and discretion." other just causes for dismissal, trust in an employee, once lost is
As a general rule, employers are allowed a wide latitude of discretion difficult, if not impossible, to regain.
in terminating the employment of managerial personnel or those Hence, dismissal was proper.
who, while not of similar rank, perform functions which by their
nature require the employer’s full trust and confidence. Proof beyond
reasonable doubt is not required. It is sufficient that there is some basis for 82. Panuncillo v. CAP Phils.,
loss of confidence, such as when the employer has reasonable ground to G.R. No. 161305
believe that the employee concerned is responsible for the purported February 9, 2007
misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position. DOCTRINES:
o This must be distinguished from the case of ordinary rank-and-file Under the Labor Code, the employer may terminate an employment on the
employees, whose termination on the basis of these same ground of serious misconduct or willful disobedience by the employee of the
grounds requires a higher proof of involvement in the events in lawful orders of his employer or representative in connection with his
question; mere uncorroborated assertions and accusations by the work. Infractions of company rules and regulations are valid causes for
employer will not suffice. termination of employment.
Even assuming that petitioners may be considered a rank and file Before terminating the services of an employee, the law requires two written
employee, sufficient evidence of their involvement in the dishonest notices: (1) one to apprise him of the particular acts or omissions for which his
scheme of SICI’s accountant and cashier who were also charged and dismissal is sought; and (2) the other to inform him of his employer's decision
found guilty exists. Not only was their participation established, they also to dismiss him. As to the requirement of a hearing, the essence of due process
admitted their involvement. lies in an opportunity to be heard, and not always and indispensably in an
But even assuming further that petitioners may not be dismissed for loss actual hearing. When an employee admits the acts complained of, no formal
of confidence, they can, on the ground of fraud or betrayal of trust. hearing is even necessary.
Petitioners argued that SICI was not financially prejudiced and its income Reinstatement is incompatible with a finding of guilt.
was not diminished by the act. Article 223, par. 3 of the LC: An order of reinstatement by the LA is
immediately executory even pending appeal. The unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his opportunity to explain her side, admitting her acts. When an employee admits the
salaries effective from the time the employer failed to reinstate him despite the acts complained of, as in this case, no formal hearing is even necessary; (3) NO,
issuance of a writ of execution. Unless there is a restraining order issued, it is Panuncillo is NOT entitled to collect any backwages from the time the NLRC
ministerial upon the LA to implement the order of reinstatement. Even if the decision became final and executory up to the time the CA reversed said decision,
order of reinstatement of the LA is reversed on appeal, it is obligatory on the since the Court found that Panuncillo was validly dismissed and thus NOT entitled
part of the employer to reinstate and pay the wages of the dismissed to reinstatement, and no writ of execution was issued for the implementation of the
employee during the period of appeal until reversal by the higher court. If the NLRC order for reinstatement, pending appeal to CA.
employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to FACTS:
reimburse whatever salary he received for he is entitled to such, more so if he Petitioner Milagros Panuncillo was hired as Office Senior Clerk by respondent
actually rendered services during the period. CAP Phils (CAP). To secure the education of her son, Panuncillo procured an
Article 223, par.6 of the LC: “xxx the decision of the NLRC shall be final and educational plan from CAP, which she later sold to Josefina Pernes. Before
executory after ten (10) calendar days from receipt thereof by the parties.” the actual transfer of the plan could be effected, however, Panuncillo pledged
Article 224 of the LC: “The SOLE or any RD, the NLRC or any LA, or med- it to John Chua who, sold it to Benito Bonghanoy. Bonghanoy sold it to
arbiter or voluntary arbitrator may, motu proprio or on motion of any Gaudioso Uy.
interested party, issue a writ of execution on a judgment within five (5) (1st incident) Josefina informed CAP that Panuncillo had “swindled” her but
years from the date it becomes final and executory, requiring a sheriff or a duly that she was willing to settle the case amicably so long as Panuncillo pay.
deputized officer to execute or enforce final decisions, orders or awards of the The Integrated Internal Audit Operations (IIAO) of CAP required Panuncillo to
SOLE or RD, the NLRC, the LA or med-arbiter, or voluntary arbitrators xxx” explain. Panuncillo explained that she needed money exteremely, so she was
constrained to sell the CAP plan to Pernes. She admitted she had defrauded
RECIT-READY DIGEST: Milagros Panuncillo was hired as Office Senior Clerk by Pernes unintentionally, because of the difficult circumstances.
st
CAP Philippines Inc. In order to secure the education of her son, Panuncillo Panuncillo received a show-cause memorandum (1 memo) for her to explain
procured an educational plan which she later sold to Josefina Pernes, but before why she should not be disciplinarily dealt with. Petitioner did not comply. The
selling it to Pernes, she had pledged it to Chua. The plan was transferred to two IIAO of CAP conducted an investigation. It recommended that an
other buyers. Josefina reported to CAP that Panuncillo swindled her. 2 other administrative action be taken against Panuncillo for violating Section 8.4 of
incidents of fraud involving Panuncillo were reported by Casqeujo and Dinoro to CAP’s Code of Discipline reading: “Committing or dealing any act or conniving
CAP. CAP conducted an investigation, sent 2 show-cause memorandums to with co-employees or anybody to defraud the company or customer/sales
Panuncillo for her to explain her side. Eventually, CAP terminated Panuncillo. She associates.” The IIAO also reported that CAP received a copy of demand letter
sought reconsideration of her dismissal and asked for the availement of her from Evelia Casquejo addressed to Panuncillo requiring her to pay for the
retirement benefits. CAP denied it. Panuncillo filed a complaint for illegal dismissal, transfer of the lapsed plan (2nd incident). Panuncillo received another show-
13th month pay, service incentive leave pay, damages and attorney’s fees against cause memorandum (2nd memo) for her to explain why she should not be
CAP. ISSUE: (1) W/N Panuncillo was validly dismissed; (2) W/N procedural due disciplinarily dealt with in connection with the complaints of Josefina and
process in terminating her was violated; and (3) W/N Panuncillo is entitled to Evelia. Panuncillo again admitted having received the payment for a lapsed
backwages from the time the NLRC decision became final and executory up to the plan because of extreme needs to pay for her debts.
time the CA reversed said decision. HELD: (1) YES, Panuncillo’s repeated CAP terminated the services of petitioner. Petitioner sought
violation of CAP’s Code of Discipline justified CAP’s termination of her reconsideration, asking CAP to reconsider the retirement letter she allegedly
employment. CAP exercised its management prerogative when it dismissed sent. Panuncillo intends to avail of the retirement benefits. Pending resolution
Panuncillo. (2) NO, CAP observed procedural due process before terminating of Panuncillo’s motion, CAP received a letter from one Gwendolyn N. Dinoro,
Panuncillo’s employment. CAP sent her two show-cause memorandums for her informing that she had been paying her "quarterly dues" through Panuncillo
toexplain, but she only answered the 2nd memo. Panuncillo was given ample but found out that none had been remitted CAP, so she was being penalized
rd rd
with interest charges (3 incident). CAP sent another memo (3 memo) to The Court found that CAP observed the two-notice rule before terminating the
Panuncillo, denying her and informing her that she could not avail of the services of an employee. When CAP received the letter-complaint of Josefina,
retirement benefits of CAP, because of the 3 incidents of fraud reported by Panuncillo was directed to explain her side thereon. She wrote a letter,
Pernes, Casquejo and Dinoro. To allow Panuncillo to retire with benefits, is to admitting the allegation. CAP sent her a show-cause memorandum giving her
tolerate and encourage others to do the same. chance to explain, but she did not answer the 1st memo. She only answered
Panuncillo thus filed a complaint for illegal dismissal, 13th month pay, the 2nd memo. She was informed of the termination of her services to which
service incentive leave pay, damages and attorney's fees against CAP. she filed a motion for reconsideration. Panuncillo was given ample opportunity
LA: found a valid cause for Panuncillo’s dismissal but found such dismissal to to explain her side. When an employee admits the acts complained of, as in
be too harsh, so it ordered her reinstatement to a position one rank lower than this case, no formal hearing is even necessary.
her previous position. NLRC: reversed the LA. CA: reversed the NLRC and
affirmed the LA. 3. NO, Panuncillo is NOT entitled to collect any backwages from the time the
NLRC decision became final and executory up to the time the CA reversed
ISSUES: said decision.
1. W/N Panuncillo was validly dismissed. – YES Panuncillo argues that even if the order of reinstatement of the NLRC was
2. W/N procedural due process in terminating Panuncillo was violated. – NO reversed on appeal, it is still obligatory on the part of an employer to reinstate
3. W/N Panuncillo is entitled to backwages from the time the NLRC decision and pay the wages of a dismissed employee during the period of appeal, since
became final and executory up to the time the CA reversed said decision. – NO the order of the NLRC to reinstate her and to pay her wages was immediately
executory.
HELD: Respondent argues that Panuncillo’s being demoted to a position one rank
1. YES, Panuncillo was validly dismissed. lower than her original position is not in accordance Art. 223, par. 3. The
Whether CAP did not suffer any damage resulting from the transactions provision applies where an employee was illegally dismissed.
entered into by Panuncillo, is immaterial. While a settlement of the case In Panuncillo’s case, the LA found that there was just cause for her dismissal,
between Panuncillo and Evelia may have eventually been forged, that did not but that dismissal was too harsh, hence, his order for her reinstatement to a
obliterate the misappropriation committed by Panuncillo against a client of lower position. But in the case of Colgate Palmolive Philippines, Inc. v. Ople,
CAP. With Panuncillo’s repeated violation of Section 8.4 of respondent's Code the Court ruled that reinstatement is incompatible with a finding of guilt.
of Discipline, she violated the trust and confidence of respondent and its Article 223, par. 3 of the Labor Code provides that an order of
customers. Clearly, CAP exercised its management prerogative when it reinstatement by the Labor Arbiter is immediately executory even pending
dismissed Panuncillo. appeal. The unjustified refusal of the employer to reinstate a dismissed
This Court has upheld a company's management prerogatives so long as they employee entitles him to payment of his salaries effective from the time the
are exercised in good faith and not for the purpose of defeating or employer failed to reinstate him despite the issuance of a writ of
circumventing the rights of the employees under special laws or under valid execution. Unless there is a restraining order issued, it is ministerial upon the
agreements. The employer may terminate an employment on the ground Labor Arbiter to implement the order of reinstatement. Even if the order of
of serious misconduct or willful disobedience by the employee of the lawful reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
orders of his employer or representative in connection with his part of the employer to reinstate and pay the wages of the dismissed
work. Infractions of company rules and regulations are valid causes for employee during the period of appeal until reversal by the higher court. If the
termination of employment. In protecting the rights of the laborer, it cannot employee has been reinstated during the appeal period and such
authorize the oppression of the employer. reinstatement order is reversed with finality, the employee is not required to
reimburse the salary he received for he is entitled to such, more so if he
2. NO, procedural due process in terminating Panuncillo was NOT violated. rendered services during the period.
In this case, since the NLRC found Panuncillo’s dismissal illegal and thereof, pending the determination of the validity of the NLRC resolutions
ordered her reinstatement, the NLRC decision became final and subject of the petition.
executory after 10 days from receipt of the decision by the parties for In this case, the Court held hat Panuncillo is NOT entitled to collect any
reinstatement, pursuant to Article 223, par. 6, which provides that, “the backwages from the time the NLRC decision became final and executory
decision of the NLRC shall be final and executory after ten (10) calendar days up to the time the Court of Appeals reversed said decision, since the
from receipt thereof by the parties.” Court found that Panuncillo was validly dismissed and thus NOT entitled
However, there was still a need for the issuance of a writ of execution of to reinstatement, contrary to the NLRC decision. It does not appear that a
the NLRC decision, pursuant to Article 224, which provides that: “The SOLE writ of execution was issued for the implementation of the NLRC order
or any RD, the NLRC or any LA, or med-arbiter or voluntary arbitrator for reinstatement, pending appeal to CA. Had one been issued, CAP
may, motu proprio or on motion of any interested party, issue a writ of would have been obliged to reinstate Panuncillo and pay her salary until
execution on a judgment within five (5) years from the date it becomes final the said order of the NLRC for her reinstatement was reversed by the CA,
and executory, requiring a sheriff or a duly deputized officer to execute or and Panuncillo would not have been obliged to reimburse CAP for whatever
enforce final decisions, orders or awards of the SOLE or RD, the NLRC, the salary she received in the interim.
LA or med-arbiter, or voluntary arbitrators xxx” While under Article 223, par. 6 of the Labor Code, the decision of the NLRC
Unlike the order for reinstatement of a Labor Arbiter, which is self- becomes final and executory after the lapse of ten calendar days from receipt
executory, that of the NLRC is not. There is still a need for the issuance thereof by the parties, the adverse party is not precluded from assailing it via
of a writ of execution. Petition for Certiorari under Rule 65 before the CA and then to SC via a
In Pioneer Texturizing Corp. v. NLRC, the Court said that Article 223 of the LC Petition for Review under Rule 45. If during the pendency of the review no
makes an award by the LA for reinstatement immediately executory, even order is issued by the courts enjoining the execution of a decision of the LA or
pending appeal, and the posting of a bond by the employer shall not stay the NLRC, which is favorable to an employee, the LA or the NLRC must exercise
execution for reinstatement. To require the application for and issuance of a extreme prudence and observe judicial courtesy when the circumstances so
writ of execution as prerequisites its execution would be contrary to the intent warrant. The petition is DENIED.
of the provision. An application for a writ of execution and its issuance could
be delayed for numerous reasons. A mere postponement of a scheduled
hearing, for instance, or an inaction on the part of the LA or NLRC could delay 83. Garcia v. Philippine Airlines, January 20, 2009
the issuance of the writ, thereby setting at naught the strict mandate and noble *Confusing, but very important!
purpose envisioned by Article 223.
On appeal, however, the appellate tribunal concerned may enjoin or Doctrine:
suspend the reinstatement order in the exercise of its sound discretion. 1. GR: Even if the order of reinstatement of the LA is reversed on appeal, it is
If a LA does not issue a writ of execution of the NLRC order for the obligatory on the part of the employer to reinstate and pay the wages of the
reinstatement of an employee, even if there is no restraining order, he could dismissed employee during the period of appeal until reversal by the higher court.
probably be merely observing judicial courtesy, which is advisable “if there is a The LA’s order of reinstatement is immediately executory and the employer has to
strong probability that the issues before the higher court would be rendered either re-admit them to work under the same terms and conditions prevailing prior
moot and moribund as a result of the continuation of the proceedings in the to their dismissal, or to reinstate them in the payroll, and that failing to exercise the
lower court.” In such a case, it is as if a temporary restraining order was options in the alternative, employer must pay the employees salaries.
issued. BUT: After the LA’s decision is reversed by a higher tribunal, the employee may be
In the case of Zamboanga City Water District v. Buhat, the Court explained barred from collecting the accrued wages, if it is shown that the delay in enforcing
that “the issuance of the temporary restraining order did not nullify the rights of the reinstatement pending appeal was without fault on the part of the employer.
private respondents to their reinstatement and to collect their wages during the
period of the effectivity of the order but merely suspended the implementation
The test is two-fold: (1) there must be actual delay or the fact that the order As to Ground #2, SC sustained the CA. The corporate rehabilitation was ruled to
of reinstatement pending appeal was not executed prior to its reversal; and be proper justification for non-compliance with Art. 223, because the failure of PAL
(2) the delay must not be due to the employer’s unjustified act or omission. to reinstate pending appeal in this case was considered to be without fault on the
2. While reinstatement pending appeal aims to avert the continuing threat or part of the employer or attempt to delay or evade reinstatement on the part of the
danger to the survival or even the life of the dismissed employee and his family, it employer.
does not contemplate the period when the employer-corporation itself is similarly in Hence, the NLRC Resolution ordering immediate execution remained annulled,
a judicially monitored state of being resuscitated in order to survive. given that the failure to reinstate pending appeal was without fault on the part of
the employer.
Recit-Ready Digest: PAL dismissed two employees (the petitioners in this case)
after they were caught sniffing shabu in the PAL Technical Center’s Toolroom. Facts:
They filed an illegal dismissal case before the LA, which they won. In this initial LA PAL filed administrative charges against its employees (Garcia & Dumago,
decision, the LA ordered PAL to immediately comply with the reinstatement aspect the petitioners in this case) after they were allegedly caught in the act of
of the decision. Before this decision became final, though, PAL was placed under sniffing shabu when a team of company security personnel and law
rehabilitation by the SEC. The NLRC eventually reversed the LA’s decision. Later, enforcers raided the PAL Technical Center’s Toolroom Section on July 24,
however, the LA granted the issuance of the writ of execution for its initial decision 1995.
(which ordered immediate compliance with reinstatement), an issuance that was PAL dismissed petitioners for transgressing the PAL Code of Discipline,
affirmed by the NLRC. The CA reversed the NLRC, & held that (1) A subsequent prompting them to file a complaint for illegal dismissal and damages against
finding of a valid dismissal removes the basis for implementing the reinstatement PAL.
aspect of a LA’s decision (Ground #1), and (2) the impossibility to comply with the The LA resolved the case in the petitioners’ favor, ordering PAL immediately
reinstatement order due to corporate rehabilitation provides a reasonable comply with the reinstatement aspect of the decision.
justification for the failure to exercise the options under Art. 223 of the Labor Code o Prior to the promulgation of the LA’s decision, however, the SEC
(Ground #2). placed PAL under a Rehabilitation Receiver, as the company was
As to Ground #1, SC reversed the CA. SC discussed that there are two conflicting suffering from serious financial losses.
views because of the wording of Art. 223 (see “Held” for quote of provision). The NLRC reversed the LA’s decision, dismissing the complaint of
View #1 holds that “Even if the order of reinstatement of the LA is petitioners for lack of merit. Entry of judgment was issued for this NLRC
reversed on appeal, the employer still has to reinstate and pay the decision on July 2000.
wages of the dismissed employee during the period of appeal until On October 2000, the LA issued a writ of execution for the reinstatement
reversal by the higher court. AND if the employee has been reinstated aspect of the decision (which it held to be immediately executory, if you
during the appeal period and such reinstatement order is reversed with recall).
finality, the employee is not required to reimburse whatever salary he o PAL moved to quash the writ of execution & filed a petition for
received for he is entitled to such, more so if he actually rendered services injunction as regards the writ of execution before the NLRC.
during the period.” The NLRC, however, affirmed the validity of the writ of execution, but
View #2 from the Genuino case holds that “If the decision of the LA is later suspended and referred the action to the Rehabilitation Receiver for
reversed on appeal upon the finding that the ground for dismissal is valid, appropriate action.
then the employer has the right to require the dismissed employee on CA issued a Resolution nullifying the NLRC Resolutions on two grounds,
payroll reinstatement to refund the salaries he received while the case essentially espousing that: (1) A subsequent finding of a valid dismissal
was pending appeal.” removes the basis for implementing the reinstatement aspect of a LA’s
In the end, SC held View #1 is better and more in line with the concept of social decision (the first ground), and (2) the impossibility to comply with the
justice. HENCE, there will be no need for an employee to refund salaries paid to reinstatement order due to corporate rehabilitation provides a reasonable
him pending appeal, despite a reversal of the finding of illegal dismissal.
justification for the failure to exercise the options under Article 223 of the has the right to require the dismissed employee on payroll
Labor Code. reinstatement to refund the salaries he received while the case was
SC eventually suspended the proceedings in this first case pending the pending appeal, or it can be deducted from the accrued benefits that the
rehabilitation of PAL. Now, however, PAL is solvent and has exited dismissed employee was entitled to receive from his/her employer under
rehabilitation stage, giving SC the opportunity to determine if the CA’s existing laws, collective bargaining agreement provisions, and company
nullification on the above two grounds are correct. practices. However, if the employee was reinstated to work during the
pendency of the appeal, then the employee is entitled to the compensation
Issues: received for actual services rendered without need of refund.
1. WON a subsequent finding of a valid dismissal removes the basis for o It has thus been advanced that there is no point in releasing the wages
implementing the reinstatement aspect of a LA’s decision. (NO.) to petitioners since their dismissal was found to be valid, and to do so
2. WON the impossibility of complying with the reinstatement order due to would constitute unjust enrichment.
corporate rehabilitation provides a reasonable justification for the failure to SC sides with View #1, and says: “The social justice principles of labor
exercise the options under Art. 223. (YES.) law outweigh or render inapplicable the civil law doctrine of unjust
enrichment. The constitutional and statutory precepts portray the otherwise
Held: unjust situation as a condition affording full protection to labor.”
SC also opines that the Genuino case which supported View #2 is bad for
1. NO. There have been conflicting decisions concerning reinstatement pending both employer and employee.
appeal and the option of payroll reinstatement. The confusion stems from is the o It’s bad for employees: “Even outside the theoretical trappings of the
application of par. 3 of Art. 223 of the Labor Code, which reads: “In any event, the discussion and into the mundane realities of human experience, the
decision of the LA reinstating a dismissed or separated employee, insofar as the refund doctrine easily demonstrates how a favorable decision by the
reinstatement aspect is concerned, shall immediately be executory, pending LA could harm, more than help, a dismissed employee. The employee,
appeal. The employee shall either be admitted back to work under the same terms to make both ends meet, would necessarily have to use up the
and conditions prevailing prior to his dismissal or separation or, at the option of the salaries received during the pendency of the appeal, only to end up
employer, merely reinstated in the payroll. The posting of a bond by the employer having to refund the sum in case of a final unfavorable decision. It is
shall not stay the execution for reinstatement provided herein.” mirage of a stop-gap leading the employee to a risky cliff of
View 1: Even if the order of reinstatement of the LA is reversed on insolvency.”
appeal, it is obligatory on the part of the employer to reinstate and pay o Its bad for employers because the salaries dispensed pendente lite
the wages of the dismissed employee during the period of appeal until merely serve as a bond posted in installment by the employer. For in
reversal by the higher court. On the other hand, if the employee has been the event of a reversal of the LA’s decision ordering reinstatement, the
reinstated during the appeal period and such reinstatement order is reversed employer gets back the same amount without having to spend
with finality, the employee is not required to reimburse whatever salary he ordinarily for bond premiums. This circumvents, if not directly
received for he is entitled to such, more so if he actually rendered services contradicts, the proscription that the posting of a bond (even a cash)
during the period. bond by the employer shall not stay the execution for reinstatement.
o In other words, a dismissed employee whose case was favorably SC also held that View #1 applies REGARDLESS of whether the writ of
decided by the LA is entitled to receive wages pending appeal upon execution was issued before or after the reversal of the LA’s decision by
reinstatement, which is immediately executory. Unless there is a appellate tribunals. To make the reinstatement a race against time would be
restraining order, it is ministerial upon the LA to implement the order of to render nugatory the fact that, in the first place, the Labor Code explicitly
reinstatement and it is mandatory on the employer to comply therewith. states that the LA’s decision on reinstatement is immediately executory.
View 2 (Genuino case): If the decision of the LA is later reversed on appeal IN CONCLUSION: Even if the order of reinstatement of the LA is reversed
upon the finding that the ground for dismissal is valid, then the employer 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 during the pendency of petitioners’ complaint before the LA, the SEC placed
reversal by the higher court. The LA’s order of reinstatement is immediately respondent under a Rehabilitation Receiver.
executory and the employer has to either re-admit them to work under the o SC held that the injunction or suspension required for corporate
same terms and conditions prevailing prior to their dismissal, or to reinstate rehabilitation cases constitutes a legal justification for non-compliance
them in the payroll, and that failing to exercise the options in the alternative, with the reinstatement order. PAL’s failure to exercise the alternative
employer must pay the employees salaries. options of actual reinstatement and payroll reinstatement was thus
justified.
2. YES. SC sustained the CA’s finding that the peculiar predicament of a corporate o Such being the case, PAL’s obligation to pay the salaries pending
rehabilitation rendered it impossible for PAL to exercise its option under the appeal, as the normal effect of the non-exercise of the options, did not
circumstances. attach.
The spirit of the rule on reinstatement pending appeal is founded on the idea While reinstatement pending appeal aims to avert the continuing danger to
that an employer should not be allowed to attempt to evade or delay the the survival or life of the dismissed employee and his family, it does not
execution of the LA’s decision requiring reinstatement. contemplate the period when the employer-corporation itself is similarly in a
BUT: After the LA’s decision is reversed by a higher tribunal, the judicially monitored state of being resuscitated in order to survive.
employee may be barred from collecting the accrued wages, if it is There are legal effects arising from a judicial order placing a corporation
shown that the delay in enforcing the reinstatement pending appeal under rehabilitation. PAL was, during the period material to the case,
was without fault on the part of the employer. effectively deprived of the alternative choices under Art. 223, not only by
The test is two-fold: (1) there must be actual delay or the fact that the order virtue of the statutory injunction but also in view of the interim relinquishment
of reinstatement pending appeal was not executed prior to its reversal; and of management control to give way to the full exercise of the powers of the
(2) the delay must not be due to the employer’s unjustified act or omission. If rehabilitation receiver. Had there been no need to rehabilitate, PAL may
the delay is due to the employer’s unjustified refusal, the employer may still have opted for actual physical reinstatement pending appeal to optimize the
be required to pay the salaries notwithstanding the reversal of the LA’s utilization of resources. Then again, though the management may think this
decision. wise, the rehabilitation receiver may decide otherwise, not to mention the
The new NLRC Rules of Procedure, which took effect on January 7, 2006, subsistence of the injunction on claims.
now require the employer to submit a report of compliance within 10
calendar days from receipt of the LA’s decision, disobedience to which
clearly denotes a refusal to reinstate. The employee need not file a motion 84. PAL v. Paz, November 26, 2014
for the issuance of the writ of execution since the Labor Arbiter shall Doctrine:
thereafter motu proprio issue the writ. With the new rules in place, there is 1. The rule is that the employee is entitled to reinstatement salaries
hardly any difficulty in determining the employer’s intransigence in notwithstanding the reversal of the LA decision granting him said relief. It is
immediately complying with the order. obligatory on the part of the employer to reinstate and pay the wages of the
In this case, petitioners exerted efforts to execute the Labor Arbiters order of
dismissed employee during the period of appeal until reversal by the higher court.
reinstatement until they were able to secure a writ of execution, albeit it was
issued after the NLRC reversed the LA’s decision. Technically, there was After the labor arbiter’s decision is reversed by a higher tribunal, the employee
still actual delay which brings to the question of whether the delay was due may be barred from collecting the accrued wages, if it is shown that the delay in
to respondents unjustified act or omission. enforcing the reinstatement pending appeal was without fault on the part of the
It is settled that upon appointment by the SEC of a rehabilitation employer.
receiver, all actions for claims before any court, tribunal or board 2. The test is two-fold: (1) there must be actual delay or the fact that the order of
against the corporation shall ipso jure be suspended. As stated early on, reinstatement pending appeal was not executed prior to its reversal; and (2) the
delay must not be due to the employer’s unjustified act or omission. If the delay is
due to the employer’s unjustified refusal, the employer may still be required to pay - Paz was a former commercial pilot of PAL and a member of the Airlines Pilots
the salaries notwithstanding the reversal of the LaborArbiter’s decision. Association of the Philippines (ALPAP), the sole and exclusive bargaining
3. This injunction or suspension of claims (corporate rehabilitation sanctioned by representative of all the pilots in PAL.
the SEC) by legislative fiat partakes of the nature of a restraining order that - ALPAP filed a notice of strike with the NCMB. Thereafter, the DOLE Secretary
constitutes a legal justification for respondent's non-compliance with the assumed jurisdiction over the labor disputes, enjoining the parties from further
reinstatement order. exacerbating the situation.
- Despite the SOLE’s directive, the ALPAP officers and members staged a strike
Recit Ready: and picketed at PAL’s premises. The SOLE issued a return to work order, which
Paz was a pilot working for PAL. Sometime in the 90s, the PAL pilot’s union went the SOLE himself served upon the officers of ALPAP on June 8, 1998. The striking
on strike. The continued to strike despite assumption of jurisdiction by the SOLE members of ALPAP still did not return to work.
and the return to work order issued by him. Because of this, the strike was illegal - On June 25, 1998, ALPAP’s counsel informed the members of the union that she
and the strikers were deemed terminated. Sometime when all this was happening, had just received a copy of the return to work order and that they only had until the
PAL was placed under corporate rehabilitation by the SEC. Paz, in filing an illegal following day to comply. The striking members returned to work the next day but
dismissal case against PAL, contends that he never participated in the strike and the security guards at PAL denied them entry.
was just on leave when the strike was ongoing. When he returned from his leave, - On June 13, 1998, DOLE issued a resolution both parties sought reconsideration
he wasn’t let into the premises. PAL denied this all and contends that Paz was a from. Pending resolutions of the MRs, PAL filed a petition for approval of
striker. LA called it illegal dismissal and ordered his reinstatement. Paz moved for rehabilitation plan and for appointment of a rehabilitation receiver with the
the execution of his reinstatement, since the law says they are immediately Securities and Exchange Commission (SEC), claiming serious financial distress
executory. PAL never reinstated Paz, instead they appealed the LA decision. brought about by the strike. Subsequently, on June 23, 1998, the SEC appointed a
NLRC reversed the LA, saying that there was no illegal dismissal. rehabilitation receiver for PAL and declared the suspension of all claims against it.
The issue is W/N Paz is entitled to the immediate execution of the LA decision for - On June 1, 1999, the DOLE declared the strike staged by ALPAP illegal and the
reinstatement, though the decision was reversed by the NLRC. participants thereof to have lost their employment.
Held: NO! - Thereafter, Paz filed a complaint for illegal dismissal against PAL, claiming non-
Ratio: Generally, LA decisions for reinstatement are immediately executory, and participation in the illegal strike. He claims that when ALPAP strikes, he was off-
that the employee is still entitled to its execution notwithstanding reversal by the duty from work. When he reported back after a week-long break, he was no longer
NLRC. The exception is where, before the decision is reversed, there is no actual allowed in PAL’s premises.
reinstatement by the employer for reasons not due to the fault of the employer. - PAL contends that Paz was one of the strikers who did not heed the return to
Here, PAL was under the strain of corporate rehabilitation, which enjoins claims work order. PAL also contends that ALPAP and its counsel unjustifiably refused to
against it. This, by legislative fiat, partakes of the nature of a restraining order that receive the copy of the order and was therefore deemed served.
constitutes a legal justification for respondent's non-compliance with the - LA: in favour of Paz, ordered for his reinstatement plus back wages.
reinstatement order. - PAL appealed to the NLRC. Pending appeal, Paz moved for the partial execution
of the reinstatement aspect of the decision.
Facts: - NLRC reversed the LA, finding that Paz’s claims were unsubstantiated by
evidence. - Paz still pursued his move for the issuance of a writ of execution. The
LA granted his motion and issued the writ. He ratiocinated that the order of
reinstatement is immediately executory even pending appeal and that under Article decision to the NLRC. A scrutiny of the circumstances, however, will show that the
223 of the Labor Code, the employer has the option to admit the employee back to delay in reinstating the respondent was not due to the unjustified refusal of PAL to
work or merely reinstate him in the payroll. Considering, however, that there was abide by the order but because of the constraints of corporate rehabilitation. It is
no physical reinstatement, the respondent, as a matter of right, must be reinstated settled that upon appointment by the SEC of a rehabilitation receiver, all actions for
in the payroll. The accrued salaries may now be the subject of execution despite claims before any court, tribunal or board against the corporation shall ipso jure be
the NLRC’s reversal of the decision. suspended. As stated early on, during the pendency of petitioners’ complaint
- PAL appealed the LA’s order to the NLRC. The NLRC sustained the award of before the Labor Arbiter, the SEC placed respondent under an Interim
reinstatement salaries. PAL filed a petition for certiorari with the CA. The CA Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC
affirmed with modification the decision of the NLRC, that PAL be ordered to be replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation
separation pay in lieu of reinstatement pay. Receiver. This injunction or suspension of claims by legislative fiat partakes of the
- PAL filed an MR. The CA amended its decision to state: “Accordingly, compliance nature of a restraining order that constitutes a legal justification for respondent's
with the reinstatement order is not affected by the fact that private respondent’s non-compliance with the reinstatement order. In light of the fact that PAL's failure
previous position had been filled-up. In reinstatement pending appeal, payroll to comply with the reinstatement order was justified by the exigencies of
reinstatement is an alternative to actual reinstatement.“ corporation rehabilitation, the respondent may no longer claim salaries which he
should have received during the period that the LA decision ordering his
Issue: W/N Paz is entitled to the immediate execution of the LA’s reinstatement reinstatement is still pending appeal until it was overturned by the NLRC.
order notwithstanding its reversal by the NLRC.
Held: NO. 85. ISLRIZ TRADING/VICTOR HUGO LU, petitioner, vs. EFREN CAPADA,
LAURO LICUP, NORBERTO NIGOS, RONNIE ABEL, GODOFREDO
MAGNAYE, ARNEL SIBERRE, EDMUNDO CAPADA, NOMERLITO MAGNAYE
Ratio: and ALBERTO DELA VEGA, respondents.
The rule is that the employee is entitled to reinstatement salaries notwithstanding G.R. No. 168501. January 31, 2011.
the reversal of the LA decision granting him said relief. It is obligatory on the part of By: M. Kalaw
the employer to reinstate and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. This is so because the order of DOCTRINE:
reinstatement is immediately executory. After the labor arbiter’s decision is Illegal Dismissals; Reinstatement; Wages; Even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the
reversed by a higher tribunal, the employee may be barred from collecting the
employer to reinstate and pay the wages of the dismissed employee during the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending period of appeal until reversal by the higher court or tribunal. The LA’s order of
appeal was without fault on the part of the employer. The test is two-fold: (1) there reinstatement is immediately executory and the employer has to either re-
must be actual delay or the fact that the order of reinstatement pending appeal admit them to work under the same terms and conditions prevailing prior to
was not executed prior to its reversal; and (2) the delay must not be due to the their dismissal, or to reinstate them in the payroll, and that failing to exercise
employer’s unjustified act or omission. If the delay is due to the employer’s the options in the alternative, employer must pay the employee’s salaries.
unjustified refusal, the employer may still be required to pay the salaries After the Labor Arbiter’s decision is reversed by a higher tribunal, the
employee may be barred from collecting the accrued wages, if it is shown that
notwithstanding the reversal of the Labor Arbiter’s decision. It is clear from the
the delay in enforcing the reinstatement pending appeal was without fault on
records that PAL failed to reinstate the respondent pending appeal of the LA the part of the employer.
The two-fold test in determining whether an employee is barred from Edmundo Capada, Nomerlito Magnaye and Alberto Dela Vega were helpers of
recovering his accrued wages: (1) there must be actual delay or that the order Islriz Trading, a gravel and sand business owned and operated by petitioner
of reinstatement pending appeal was not executed prior to its reversal; and (2) Victor Hugo Lu.
the delay must not be due to the employer’s unjustified act or omission. If the Claiming that they were illegally dismissed, respondents filed a Complaint for
delay is due to the employer’s unjustified refusal, the employer may still be illegal dismissal and non-payment of overtime pay, holiday pay, rest day pay,
required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s allowances and separation pay against petitioner on August 9, 2000 before the
Decision. Labor Arbiter. On his part, petitioner imputed abandonment of work against
respondents.
RECIT READY: Respondent drivers and helpers in the gravel and sand business LA Waldo Emerson Gan said there was illegal dismissal, and ordered
complained that they were illegally dismissed. LA Gan found the employer Islriz reinstatement without loss of seniority, full back wages, and atty. fees. NLRC
Trading guilty, and awarded them back wages, reinstatement and attorneys fees. reversed the LA, stating that respondents’ failure to continue working for
This was immediately executory pending appeal, according to Article 229 petitioner was neither caused by termination nor abandonment of work. It
(then 223) of the Labor Code. Employer refused to implement and appealed. The ordered respondents’ reinstatement but without back wages. MR of workers
NLRC reversed the LA and said there was “neither terminations or abandonment” denied and it became final and executory Dec 2002.
(…side note: So, were they on “vacation”? No further explanation was given as to December 9, 2003, however, respondents filed with the Labor Arbiter an Ex-
what the NLRC meant by this…), plus they were to be reinstated. No reinstatement Parte Motion to Set Case for Conference with Motion. Since the Decision
still occurred. Islriz maintained its position that the NLRC’s decision cancelled of Labor Arbiter Gan ordered their reinstatement, a Writ of Execution dated
the back wages, leaving only reinstatement. The workers petitioned the LA for a April 22, 2002 was already issued for the enforcement of its reinstatement
pre-conference with the employer to execute on the back wages (now at 24.97 aspect as same is immediately executory even pending appeal. But this
months), plus reinstatement; but no agreement. So the LA issued an order for notwithstanding and despite the issuance and subsequent finality of the NLRC
execution on Islriz’s personal properties, which the Sheriff executed via public Resolution which likewise ordered respondents’ reinstatement, petitioner still
auction. However, no delivery or possession was transferred to respondents so LA refused to reinstate them. Thus, respondents prayed that in view of the
issued the requested “break-open” order. CA affirmed NLRC finding. SC modified orders of reinstatement, a computation of the award of back wages be made
and said that LA Gan’s resolution for back wages must be paid. Even if the order and that an Alias Writ of Execution for its enforcement be issued.
of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the Pre-execution conference on January 29, February 24 and March 5, 2004.
part of the employer to reinstate and pay the wages of the dismissed employee Both parties appeared but failed to come to terms on the issue of the monetary
during the period of appeal until reversal by the higher court or tribunal. SC said award. Hence, the office of the Labor Arbiter through Fiscal Examiner II Ma.
computation needs correction, as it should not be 24.97 months. Thus, it Irene T. Trinchera (Fiscal Examiner Trinchera) issued an undated
remanded case to LA for recomputation of respondents’ accrued salaries- which Computation14 of respondents’ accrued salaries from January 1, 2002 to
must cover only the date from Islriz’s receipt of the December 21, 2001 Decision of January 30, 2004 or for a total of 24.97 months in the amount of
the Labor Arbiter up to the issuance of the NLRC Resolution on September 5, P1,110,665.60. Petitioner questioned this computation in his
2002. Respondent workers thus also ordered to make the proper restitution to Motion/Manifestation as without any factual or legal basis. However LA
petitioner for whatever excess amount that may be determined to have been Castillon issued a Writ of Execution and the Sheriff issued a Notice of
received by them based on the correct computation. Sale/Levy on Execution of Personal Property where petitioner’s properties
were levied and set for auction sale on March 29, 2004.
FULL DIGEST: To forestall execution, petitioner filed a Motion to Quash Writ of Execution
with Prayer to Hold in Abeyance of Auction Sale and a Supplemental
FACTS: Motion to Quash/Stop Auction Sale. He also served upon the Sheriff a letter
Respondents Efren Capada, Lauro Licup, Norberto Nigos and Godofredo of protest. All of these proved futile as the Sheriff later submitted his Report
Magnaye were drivers while respondents Ronnie Abel, Arnel Siberre, dated March 30, 2004 informing the Labor Arbiter that he had levied some of
petitioner’s personal properties and sold them in an auction sale where reversal by a higher court or tribunal.
respondents were the only bidders. Although petitioner’s levied properties The core issue to be resolved in this case is similar to the one determined
were already awarded to them, they could not take full control, ownership and in Garcia v. Philippine Airlines Inc. In this case, respondents are entitled to
possession of said properties because petitioner had allegedly padlocked the their accrued salaries from the time petitioner received a copy of the Decision
premises where the properties were situated. They asked LA Castillon to issue of the Labor Arbiter declaring respondents’ termination illegal and ordering
a break-open order. For his part and in a last ditch effort to nullify the writ of their reinstatement up to the date of the NLRC resolution overturning that of
execution, petitioner filed a Motion to Quash Writ of Execution, Notice of the Labor Arbiter. The Court also clarified that the “refund doctrine” stance for
Sale/Levy on Execution of Personal Property and Auction Sale on payroll-reinstated employees pendente lite in Genuino is a stray posture, and it
Additional Grounds. thus realigned the proper course of the prevailing doctrine on reinstatement
Labor Arbiter Castillon that the monetary award subject of the questioned Writ pending appeal vis-à-vis the effect of a reversal on appeal, that is, even if the
of Execution refers to respondents’ accrued salaries by reason of the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
reinstatement order of Labor Arbiter Gan which is self-executory pursuant to obligatory on the part of the employer to reinstate and pay the wages of
Article 223 of the Labor Code, citing Roquero v. Philippine Airlines Inc. where the dismissed employee during the period of appeal until reversal by the
the SC held that employees are still entitled to their accrued salaries even if higher court or tribunal.
the order of reinstatement has been reversed on appeal. As to the application It likewise settled the view that the Labor Arbiter’s order of reinstatement is
for break open order, Labor Arbiter Castillon relied on the Sheriff’s report that immediately executory and the employer has to either re-admit them to
there is imminent danger that petitioner’s properties sold at the public auction work under the same terms and conditions prevailing prior to their
might be transferred or removed, as in fact four of said properties were already dismissal, or to reinstate them in the payroll, and that failing to exercise
transferred. Thus, she deemed it necessary to grant respondents’ request for a the options in the alternative, employer must pay the employee’s
break open order to gain access to petitioner’s premises. salaries. After the Labor Arbiter’s decision is reversed by a higher tribunal, the
CA: Per decision dated March 18, 2005, the CA quoted the June 3, 2004 employee may be barred from collecting the accrued wages, if it is shown that
Order of Labor Arbiter Castillon and agreed with her. The CA also found as the delay in enforcing the reinstatement pending appeal was without fault on
unmeritorious the issues raised by petitioner with regard to the conduct of the the part of the employer.
auction sale. Moreover, it did not give weight to petitioner’s claim of lack of due The two-fold test in determining whether an employee is barred from
process considering that a motion for reconsideration of a Writ of Execution is recovering his accrued wages: (1) there must be actual delay or that the order
not an available remedy. Thus, the CA dismissed the petition. of reinstatement pending appeal was not executed prior to its reversal; and (2)
the delay must not be due to the employer’s unjustified act or omission. If the
ISSUE: delay is due to the employer’s unjustified refusal, the employer may still be
(1) Whether respondents may collect their wages during the period between required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s
the Labor Arbiter’s order of reinstatement pending appeal and the NLRC Decision. In this case:
Resolution overturning that of the Labor Arbiter. (YES, but subject to (1) There was an actual delay in the execution of the reinstatement
recomputation per SC.) aspect of the Decision of Labor Arbiter Gan prior to the issuance of
the NLRC Resolution overturning the same. As can be recalled, Labor
HELD: Arbiter Gan issued his Decision ordering respondents’ reinstatement on
It is well settled that employees are entitled to their accrued salaries during the December 21, 2001, copy of which was allegedly received by petitioner on
period between the Labor Arbiter’s order of reinstatement pending appeal and February 21, 2002. On March 4, 2002, petitioner appealed to the NLRC.
the resolution of the National Labor Relations Commission (NLRC) overturning On March 11, 2002, respondents filed an Ex-Parte Motion for Issuance of
that of the Labor Arbiter. Otherwise stated, even if the order of reinstatement Writ of Execution relative to the implementation of the reinstatement
of the Labor Arbiter is reversed on appeal, the employer is still obliged to aspect. On April 22, 2002, a Writ of Execution was issued by LA Gan.
reinstate and pay the wages of the employee during the period of appeal until However, until the issuance of the September 5, 2002 NLRC Resolution
overturning Labor Arbiter Gan’s Decision, petitioner still failed to reinstate RECIT READY: Amkor received an email detailing allegations that petitioners
respondents or effect payroll reinstatement in accordance with Article 223 were stealing company time thus requiring petitioners to submit their written
of the Labor Code. This was what made respondents file an Ex- explanation. Petitioners admitted their wrongdoing in a handwritten letter. Amkor
Parte Motion to Set Case for Conference with Motion where they also dismissed the petitioners which led them to file a case for illegal dismissal. LA and
prayed for the issuance of a computation of the award of back wages and NLRC ruled that petitioners were dismissed for a valid cause. Petitioner went to
Alias Writ of Execution for its enforcement. CA, while affirming the finding that petitioners were guilty of misconduct and the
(2) The delay in the execution of respondents’ reinstatement was due like, ordered respondent to pay petitioners their corresponding backwages without
to petitioner’s unjustified refusal to effect the same. Unlike in Garcia qualification and deduction for the period covering date of the Arbiters decision
where PAL, as the employer, was undergoing corporate rehabilitation, upto date of the NLRC Decision, citing Article 223 of the Labor Code and Roquero
Islriz Trading was not under any analogous situation that would justify v. Philippine Airlines. SC ruled that Roquero, as well as Article 223 of the Labor
petitioner’s non-exercise of the options provided under Article 223 of the Code do not apply where there is no finding of illegal dismissal. It further ruled that
Labor Code. Lu said he could not immediately effect reinstatement after he petitioners are not entitled to backwages since dismissal was not illegal.
was served the Writ of Execution dated April 22, 2002 because he will first
refer the matter to his counsel for advice. He gave his word that upon FACTS
conferment with his lawyer, he would inform the Office of the Labor Arbiter An anonymous e-mail was sent to GM of Amkor detailing allegations of
of his action on the writ. Without any satisfactory reason, he failed to fulfill malfeasance on the part of petitioners for stealing company time.
this promise; and. respondents remained not reinstated until the NLRC Respondent thus investigated the matter, requiring petitioners to submit
resolved petitioner’s appeal. their written explanation.
On correction of the amount due. The Court also clarified that respondents are In handwritten letters, petitioners admitted their wrongdoing. Respondent
entitled to their accrued salaries only from the time petitioner received a copy thereupon terminated petitioners for extremely serious offenses as defined
of LA Gan’s Decision declaring termination as illegal and ordering their in its Code of Discipline
reinstatement, up to the date of the NLRC Resolution overturning that of the petitioners to file a complaint for illegal dismissal against it.
Labor Arbiter. It is only during this period that respondents were deemed to LA: swiping another employee’s I.D or requesting another employee to
have been illegally dismissed and entitled to reinstatement pursuant to Labor swipe ones I.D. card to gain personal advantage and/or in the interest of
Arbiter Gan’s Decision, which was the one in effect at that time. Beyond that cheating, an offense of dishonesty punishable as a serious form of
period, the NLRC Resolution declaring that there was no illegal dismissal is misconduct and fraud or breach of trust under Article 282 of the Labor
already the one prevailing. From such point, respondents’ salaries did not Code which allows the dismissal of an employee for a valid cause. It
accrue. The SC remanded to case to the LA for proper recomputation. ordered the reinstatement of petitioners to their former positions without
backwages as a measure of equitable and compassionate relief owing
mainly to petitioners prior unblemished employment records, show of
86. Lansangan v. Amkor Technology Philippines, January 30, 2009 remorse, harshness of the penalty and defective attendance monitoring
system of respondent.
DOCTRINE: Amkor assailed the reinstatement aspect of the Arbiters order before
Article 223 concerns itself with an interim relief, granted to a dismissed or NLRC
separated employee while the case for illegal dismissal is pending appeal, In the meantime, petitioners, without appealing the Arbiters finding them
as what happened in Roquero. It does not apply where there is no finding guilty of dishonesty as a form of serious misconduct and fraud or breach of
of illegal dismissal, as in the present case. trust, moved for the issuance of a writ of reinstatement.
payment of backwages and other benefits is justified only if the employee After a series of oppositions, motions and orders, the Arbiter issued an
was unjustly dismissed. alias writ of execution following which respondents bank account at
Equitable-PCI Bank was garnished. Respondent thereupon moved for the
quashal of the alias writ of execution and lifting of the notice of shall not terminate the services of an employee except for a just cause or
garnishment, which the Arbiter denied when authorized by this Title.
NLRC: granted respondents appeals by deleting the reinstatement aspect 4. An employee who is unjustly dismissed from work shall be entitled to
of the Arbiters decision and setting aside the Arbiters Alias Writ of reinstatement without loss of seniority rights and other privileges and to
Execution and Notice of Garnishment. his full backwages, inclusive of allowances, and to his other benefits or
Petitioner went to CA, while affirming the finding that petitioners were their monetary equivalent computed from the time his compensation was
guilty of misconduct and the like, ordered respondent to pay petitioners withheld from him up to the time of his actual reinstatement (Emphasis,
their corresponding backwages without qualification and deduction for the underscoring and italics supplied), petitioners are not entitled to full
period covering date of the Arbiters decision upto date of the NLRC backwages as their dismissal was not found to be illegal. Agabon v. NLRC
Decision, citing Article 223 of the Labor Code and Roquero v. Philippine states payment of backwages and other benefits is justified only if the
Airlines. employee was unjustly dismissed.
ISSUE
1. W/n limiting the payment of backwages from LA decision up NLRC
decision only is contrary to the case of alejandro roquero vs. Philippine 87. Palteng v. UCPB, February 27, 2009
airlines, inc -- NO
2. W/N CA committed grave abuse of discretion in concluding that the Doctrine:
petitioners committed serious misconduct, fraud, dishonesty and breach of Settled is the rule that an employee who is illegally dismissed from work is
trust. But even assuming that the petitioners committed the swiping in of entitled to reinstatement without loss of seniority rights, and other
identification card, the penalty of dismissal is too severe, harsh and privileges as well as to full backwages, inclusive of allowances, and to
contrary to article 282 of the labor code of the philippines and existing other benefits or their monetary equivalent computed from the time his
jurisprudence -- NO compensation was withheld from him up to the time of his actual
HELD reinstatement. However, in the event that reinstatement is no longer
1. The decision of the Arbiter finding that petitioners committed dishonesty as possible, the employee may be given separation pay instead.
a form of serious misconduct and fraud, or breach of trust had become Notably, reinstatement and payment of backwages are distinct and
final, petitioners not having appealed the same before the NLRC as in fact separate reliefs given to alleviate the economic setback brought about by
they even moved for the execution of the reinstatement aspect of the the employee’s dismissal. The award of one does not bar the other.
decision. It bears recalling that it was only respondent which assailed the Backwages may be awarded without reinstatement, and reinstatement
Arbiters decision to the NLRC to solely question the propriety of the order may be ordered without awarding backwages.
for reinstatement, and it succeeded. In a number of cases, the Court, despite ordering reinstatement or
2. Roquero, as well as Article 223 of the Labor Code on which the appellate payment of separation pay in lieu of reinstatement, has not awarded
court also relied, finds no application in the present case. Article 223 backwages as penalty for the misconduct or infraction committed by the
concerns itself with an interim relief, granted to a dismissed or separated employee.
employee while the case for illegal dismissal is pending appeal, as what
happened in Roquero. It does not apply where there is no finding of illegal Recit- Ready: After conducting a diligence audit, the division reported to the Audit
dismissal, as in the present case. and Examination Committee that Palteng committed several offenses under the
Employee Discipline Code in connection with Mercado’s Past Due Domestic BP.
3. The Arbiter found petitioners dismissal to be valid. Such finding had, as Palteng was required to explain why no disciplinary action should be taken against
stated earlier, become final, petitioners not having appealed it. Following her in connection with the following alleged offenses: 1.Gross negligence and
Article 279 which provides: In cases of regular employment, the employer dereliction of duties in the implementation of company policies or valid orders from
Management authorities and; 2. Abuse of discretion. She said she did not know of
the changes in the Omnibus Line and sub- limits. She accepted full responsibility a. You granted BP accommodations to the client in excess of the
for granting the BP accommodation against Mercado’s personal checks beyond ₱5 million sublimit under her Omnibus Line. In spite of the fact
and outside her authority. While she admitted committing a major offense that may that you did not have the approving authority, you did not
cause her dismissal, she claimed that it was an honest mistake. Issue: WON the elevate the client’s availment to the proper authority for
award of backwages should be awarded. Held: NO. In the case at bar, petitioner approval.
admitted that she granted the BP accommodation against Mercado’s personal b. You approved the MCs issued to the client beyond your
checks beyond and outside her authority. The Labor Arbiter, the NLRC and the approving limit of ₱5 million being a Class C signatory.
Court of Appeals all found her to have committed an "error of judgment," "honest Issuance[s] were not confirmed by proper approving body."
mistake," "honest mistake" vis-à-vis a "major offense." Since petitioner was not Palteng explained that at the time the BP accommodation was extended,
faultless in regard to the offenses imputed against her, we hold that the award of Mercado has, as far as she knew, an Omnibus Line of ₱100 Million
separation pay only, without backwages, is proper. secured by a pledge on jewelries. She was not aware that the Omnibus
Line has been reduced to ₱50 Million and that it contained a ₱5 Million
Facts: sublimit on BP. Nevertheless, she accepted full responsibility for granting
Petitioner Palteng was the Senior Assistant Manager/Branch Operations the BP accommodation against Mercado’s personal checks beyond and
Officer of respondent UCPB in its Banaue Branch in Quezon City. outside her authority. While she admitted committing a major offense that
Area Head and VP Rodriguez reported to the bank’s Internal Audit and may cause her dismissal, she claimed that it was an honest mistake.
Credit Review Division that bank client Clariza L. Mercado-The Red Shop After hearing and investigation, the committee recommended Palteng’s
has incurred Past Due Domestic Bills Purchased (BP) of ₱34,260,000. dismissal. On October 25, 1996, Palteng was dismissed with forfeiture of
After conducting a diligence audit, the division reported to the Audit and all benefits.
Examination Committee that Palteng committed several offenses under Palteng filed a complaint for illegal dismissal seeking reinstatement to her
the Employee Discipline Code in connection with Mercado’s Past Due former position without loss of seniority rights with full backwages, or in the
Domestic BP. It also recommended that the matter be referred to the alternative, payment of separation pay with full backwages, and recovery
Committee on Employee Discipline for proper disposition. of her monetary claims with damages.
Palteng was required to explain why no disciplinary action should be taken LA: there was illegal dismissal. UCPB to award her with separation pay in
against her in connection with the following alleged offenses: lieu of reinstatement computed at the rate of one (1) month pay for every
1. Gross negligence and dereliction of duties in the implementation of year of service from the time of her employment up to the time of
company policies or valid orders from Management authorities, when: termination, Full backwages plus increments or adjustment if any from the
a. You granted BP against personal checks. Per bank policy, time of her dismissal until finality of judgment. Moral, Exemplary damages
checks eligible for BP accommodation are trade checks and and attorney’s fees.
granting of BP against personal checks is strictly prohibited. NLRC affirmed. CA modified backwages making it correspond to the
b. You granted accommodations based on client’s statement that period from the date of her dismissal up to the promulgation of the labor
a loan will be released. You failed to confirm this with AO arbiter’s decision.
Pearl Urbano before effecting the accommodations. You
likewise failed to report to AO Urbano the excess availments Issues:
on the OL of the client. Per bank policy on CSBD/CCD clients WON the award of backwages should be awarded.= NO
with established lines, the servicing unit/branches shall
coordinate all BP/DAUD availments with the account officer for Held:
proper monitoring and control. Petitioner contends that the Labor Arbiter, the NLRC and the Court of
2. Abuse of discretion when: Appeals unanimously found her dismissal illegal. Thus, she is entitled to
the twin reliefs of reinstatement (or payment of separation pay if
reinstatement is no longer possible) and payment of backwages. She adds under the law and to instead take recourse to voluntary arbitration in settling their
that the backwages should be computed from the time she was illegally disputes.
dismissed on October 25, 1996, until the finality of the decision.
UCPB counters that petitioner is not entitled to the payment of backwages Recit-ready: The Company and the Nagkahiusang Mamumuo sa Alsons-SPFL
since she is not entirely faultless or fully innocent of the offenses imputed (the Union) entered into a CBA that bound them to hold no strike and no lockout in
against her. the course of its life. The parties began negotiating the economic provisions of
Settled is the rule that an employee who is illegally dismissed from work is their CBA but this ended in a deadlock, prompting the Union to file a notice of
entitled to reinstatement without loss of seniority rights, and other strike. After efforts at conciliation by the DOLE failed, the Union conducted a
privileges as well as to full backwages, inclusive of allowances, and to strike vote that resulted in an overwhelming majority of its members favoring it.
other benefits or their monetary equivalent computed from the time his The Union reported the strike vote to the DOLE and, after the observance of the
compensation was withheld from him up to the time of his actual mandatory cooling-off period, went on strike. During the strike, the Company
reinstatement. However, in the event that reinstatement is no longer filed a petition for the issuance of a writ of preliminary injunction (WPI) with
possible, the employee may be given separation pay instead. prayer for the issuance of a TRO Ex Parte with the NLRC to enjoin the strikers
Notably, reinstatement and payment of backwages are distinct and from intimidating, threatening, molesting, and impeding by barricade the
separate reliefs given to alleviate the economic setback brought about by entry of non-striking employees at the Company’s premises. The LA: (1)
the employee’s dismissal. The award of one does not bar the other. declared the Union’s strike as illegal for violating the CBA’s no strike, no lockout
Backwages may be awarded without reinstatement, and reinstatement provision, (2) held that the Union officers should be deemed to have forfeited their
may be ordered without awarding backwages. employment with the Company and that they should pay actual damages, and (3)
In a number of cases, the Court, despite ordering reinstatement or held that the striking Union members should be reinstated as the LA cannot find
payment of separation pay in lieu of reinstatement, has not awarded proof that the members actually committed illegal acts during the strike. NLRC
backwages as penalty for the misconduct or infraction committed by the affirmed, except as to reinstatement of Union members. CA reinstated LA decision
employee. in full. SC agreed with the NLRC and held that despite complying with the strict
In the case at bar, petitioner admitted that she granted the BP requirements of the law for staging a strike, the Union’s strike is illegal for
accommodation against Mercado’s personal checks beyond and outside violating the CBA’s no strike, no lockout provision. The SC further held that the
her authority. The Labor Arbiter, the NLRC and the Court of Appeals all Union members should be terminated as well on the ground of their illegal acts
found her to have committed an "error of judgment," "honest mistake," of (1) threatening, coercing, and intimidating non-strikers, (2) obstructing the free
"honest mistake" vis-à-vis a "major offense." ingress and egress from the company premises, and (3) defying the
Since petitioner was not faultless in regard to the offenses imputed against implementation of the WPI issued against the strikers. The SC also held that they
her, we hold that the award of separation pay only, without backwages, is are entitled to backwages and separation pay. (Check Held part for this, cause he
proper. might focus on this.)
Facts:
88. C. Alcantara & Sons, Inc. v. CA C. Alcantara & Sons, Inc., (the Company) is a domestic corporation
Doctrine: A strike may be regarded as invalid although the labor union has engaged in the manufacture and processing of plywood. Nagkahiusang
complied with the strict requirements for staging one as provided in Article 263 of Mamumuo sa Alsons-SPFL (the Union) is the exclusive bargaining agent
the Labor Code when the same is held contrary to an existing agreement, such as of the Company’s rank and file employees.
a no strike clause or conclusive arbitration clause. Here, the CBA between the The Company and the Union entered into a CBA that bound them to hold
parties contained a no strike, no lockout provision that enjoined both the Union and no strike and no lockout in the course of its life.
the Company from resorting to the use of economic weapons available to them The parties began negotiating the economic provisions of their CBA but
this ended in a deadlock, prompting the Union to file a notice of strike.
After efforts at conciliation by the DOLE failed, the Union conducted a 2. W/N the union members should also be terminated (YES)
strike vote that resulted in an overwhelming majority of its members 3. W/N the terminated Union members are entitled to the payment of
favoring it. The Union reported the strike vote to the DOLE and, after the backwages on account of the Company’s refusal to reinstate them,
observance of the mandatory cooling-off period, went on strike. pending appeal by the parties, from the Labor Arbiters decision of June 29,
During the strike, the Company filed a petition for the issuance of a writ of 1999 (YES)
preliminary injunction (WPI) with prayer for the issuance of a TRO Ex 4. W/N the terminated Union members are entitled to accrued backwages
Parte with the NLRC to enjoin the strikers from intimidating, threatening, and separation pay (YES)
molesting, and impeding by barricade the entry of non-striking employees
at the Company’s premises. Held:
The NLRC first issued a 20-day TRO and, after hearing, a WPI, enjoining 1. YES.
the Union and its officers and members from performing the acts A strike may be regarded as invalid although the labor union has complied
complained of. with the strict requirements for staging one as provided in Article 263 of
But several attempts to implement the writ failed. Only the intervention of the Labor Code when the same is held contrary to an existing agreement,
law enforcement units made such implementation possible. such as a no strike clause or conclusive arbitration clause. Here, the CBA
The Union filed a petition with the CA questioning the WPI issued. This between the parties contained a no strike, no lockout provision that
was dismissed. enjoined both the Union and the Company from resorting to the use of
The Company, on the other hand, filed a petition with the Regional economic weapons available to them under the law and to instead take
Arbitration Board to declare the Unions strike illegal, citing its violation of recourse to voluntary arbitration in settling their disputes.
the no strike, no lockout, provision of their CBA. No law or public policy prohibits the Union and the Company from mutually
o Subsequently, the Company amended its petition to implead the waiving the strike and lockout maces available to them to give way to
named Union members who allegedly committed prohibited acts voluntary arbitration.
during the strike.
o For their part, the Union, its officers, and its affected members 2. YES.
filed against the Company a counterclaim for unfair labor As regards the rank and file Union members, Article 264 of the Labor
practices, illegal dismissal, and damages. Code provides that termination from employment is not warranted by the
The LA (June 29, 1999): (1) declared the Union’s strike as illegal for mere fact that a union member has taken part in an illegal strike. It must
violating the CBA’s no strike, no lockout provision, (2) held that the Union be shown that such a union member, clearly identified, performed an
officers should be deemed to have forfeited their employment with the illegal act or acts during the strike.
Company and that they should pay actual damages, and (3) held that the After the injunction hearing, the NLRC found that the impleaded Union
striking Union members should be reinstated as the LA cannot find proof members committed acts for which they had been criminally charged
that the members actually committed illegal acts during the strike. before various courts and the prosecutor’s office in Davao City.
NLRC affirmed, except as to reinstatement of Union members. It ruled The striking Union members committed the following prohibited acts: (1)
that the Union members involved, who were identified in the proceedings they threatened, coerced, and intimidated non-striking employees,
held in the case, should also be terminated for having committed officers, suppliers and customers; (2) they obstructed the free
prohibited and illegal acts. ingress to and egress from the company premises; and; (3) they
CA reinstated LA decision in full. Hence, this petition. resisted and defied the implementation of the WPI issued against the
strikers.
Issues: Proof of the above findings (might be important):
1. W/N the strike conducted is illegal notwithstanding compliance with 1. Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the
procedural requirements under the Labor Code (YES) above prohibited acts in their affidavits and testimonies.
2. The Sheriff of the NLRC said in his Report that, in the course of his 4. YES.
implementation of the WPI, he observed that the striking employees While it is true that generally the grant of separation pay is not available to
blocked the exit lane of the Alson drive with their tent. employees who are validly dismissed, there are, in furtherance of the laws
3. Tungapalan, a non-striking employee, identified the Union members who policy of compassionate justice, certain circumstances that warrant the
threatened and coerced him. Indeed, he filed criminal actions against grant of some relief in favor of the terminated Union members based on
them. equity.
4. Lastly, the photos taken of the strike show the strikers, properly identified, The striking employees’ breach of certain restrictions imposed on their
committing the acts complained of. concerted actions at their employer’s doorsteps cannot be regarded as so
These constitute substantial evidence in support of the termination of the inherently wicked that the employer can totally disregard their long years
subject Union members. of service prior to such breach.
The mere fact that the criminal complaints against the terminated Union The records also fail to disclose any past infractions committed by the
members were subsequently dismissed for one reason or another does dismissed Union members.
not extinguish their liability under the Labor Code. Nor does such dismissal Taking these circumstances in consideration, the Court regards the award
bar the admission of the affidavits, documents, and photos presented to of financial assistance to these Union members in the form of one-half
establish their identity and guilt during the hearing of the petition to declare month salary for every year of service to the company up to the date of
the strike illegal. their termination as equitable and reasonable.
BONUS: As to the Union officers (in case sir asks): Since the Unions strike has NOTE: In the 2012 MR by the petitioners, the SC deleted the grant of separation
been declared illegal, the Union officers can, in accordance with law be terminated pay, to wit: “… not only did the Court declare the strike illegal, rather, it also found
from employment for their actions. This includes the shop stewards. They cannot the Union officers to have knowingly participated in the illegal strike. Worse, the
be shielded from the coverage of Art. 264 of the Labor Code since Union members committed prohibited acts during the strike. Thus, the awards of
the Union appointed them as such and placed them in positions of leadership and separation pay as a form of financial assistance is deleted.”
power over the men in their respective work units.
3. YES. 89. Aboc v. Metrobank, December 13, 2010

Art. 217, which defines the powers of Labor Arbiters, vests in the latter Doctrine: In termination cases, the burden of proof rests on the employer to show
jurisdiction over all termination cases, whatever be the grounds given for that the dismissal was for a just cause or authorized cause. An employee's
the termination of employment. dismissal due to serious misconduct and loss of trust and confidence must be
Consequently, Art. 223, which provides that the decision of the Labor
supported by substantial evidence.
Arbiter reinstating a dismissed employee shall immediately be
executory pending appeal, cannot but apply to all terminations
irrespective of the grounds on which they are based. The essence of due process is an opportunity to be heard or, as applied to
Here, although the LA failed to act on the terminated Union members’ administrative proceedings, an opportunity to explain one's side. A formal or trial-
motion for reinstatement pending appeal, the Company had the duty under type hearing is not essential.
Art. 223 to immediately reinstate the affected employees even if it intended
to appeal from the decision ordaining such reinstatement. Facts:
The Company’s failure to do so makes it liable for accrued backwages
Aboc, the Regional Operations Coordinator of Metrobank in Cebu City with
until the eventual reversal of the order of reinstatement by the NLRC on a monthly salary ofP11,980.00, alleged that on August 29, 1988, he
November 8, 1999, a period of four months and nine days. started working as a loans clerk. He was given merit increases and
awarded promotions during his employment because of his highly
satisfactory performance. For nine years, he maintained an unblemished registration. Again, Aboc chose not to inform his employer about this and,
employment record until he received an inter-office letter on January 29, instead, participated in the operations of the subject credit unions.
1998, requiring him to explain in writing the charges that he had actively The evidence shows that he was afforded due process. The essence of
participated in the lending activities of his immediate supervisor, Wynster due process is an opportunity to be heard or, as applied to administrative
Y. Chua (Chua),the Branch Manager of Metrobank where he was proceedings, an opportunity to explain one's side. A formal or trial-type
assigned. hearing is not essential.
Aboc wrote a letter to Metrobank explaining that he had no interest
whatsoever in the lending business of Chua because it was solely owned
by the latter. He admitted, however, that he did some acts for Chua in 90. Prince Transport v. Garcia, January 12, 2011
connection with his lending activity. He did so because he could not say no G.R. No. 167291, January 12, 2011
to Chua because of the latters influence and ascendancy over him.
Metrobank dismissed him for serious misconduct and breach of trust and Note: some parts lifted over the old digest since we took up this case already!
confidence for establishing a credit union known as Cebu North Road
Investment, to the prejudice of its banking business. Recit Ready: Prince Transport, Inc. (PTI), is a company engaged in the business
Aboc filed a case for illegal dismissal with the LA. The LA found that he
of transporting passengers by land; respondents were hired either as drivers,
was indeed illegally dismissed and that Metrobank failed to comply with
due process requirements. However, this was reversed by the NLRC and conductors, mechanics or inspectors, except for respondent Diosdado Garcia
affirmed by the CA. (Garcia), who was assigned as Operations Manager. Sometime in October 2007
the commissions received by the respondents were reduced to 7 to 9% from 8 to
Issue: Whether or not petitioner was illegally dismissed. 10%. This led respondents and other employees of PTI to hold a series of
meetings to discuss the protection of their interests as employees. Ranato Claros,
Held/Ratio: Yes, petitioner was validly dismissed. president of PTI, made known to Garcia his objections to the formation of a union
In termination cases, the burden of proof rests on the employer to show and in order to block the continued formation of the union, PTI caused the transfer
that the dismissal was for a just cause or authorized cause. An employee's of all union members and sympathizers to one of its sub-companies, Lubas
dismissal due to serious misconduct and loss of trust and confidence must Transport (Lubas). The business of Lubas deteriorated because of the refusal of
be supported by substantial evidence. Substantial evidence is that amount PTI to maintain and repair the units being used therein, which resulted in the virtual
of relevant evidence as a reasonable mind might accept as adequate to
stoppage of its operations and respondents’ loss of employment. Hence, the
support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise. respondent-employees filed complaints against PTI for illegal dismissal and unfair
Indeed, Abocs participation in the lending and investment activities of labor practice. PTI contended that it has nothing to do with the management and
CNRI and FFA was highly irregular and clearly in conflict with Metrobanks operations of Lubas as well as the control and supervision of the latter’s
business. The irregularity of his act was evident from the fact that he employees.
deliberately failed to inform Metrobank about the existence of CNRI and ISSUE: W/N Prince Transport is liable for ULP? W/N there was an illegal dismissal
FFA. and reinstatement is proper?
Moreover, Aboc knew about the subject credit unions non-registration with
HELD: YES. Indeed, evidence of petitioners' unfair labor practice is shown by the
the Central Bank or any proper government institution. Being an
experienced banker, he should have known that the lending activities of established fact that, after respondents' transfer to Lubas, petitioners left them high
the subject credit unions were questionable, if not, illegal, due to its non- and dry insofar as the operations of Lubas was concerned. The Court finds no
error in the findings and conclusion of the CA that petitioners withheld the
necessary financial and logistic support such as spare parts, and repair and o Why was there no ULP according to the LA? Lack of evidence to
maintenance of the transferred buses until only two units remained in running show they violated right to self-organization.
condition. This left respondents virtually jobless and constitutes illegal dismissal. o Who was the employer according to LA? Lubas Transport
o Who was liable for illegal dismissal? Lubas Transport.
Partial appeal by respondents with NLRC – to hold Prince Transport
Facts:
equally liable.
Respondents filed several complaints against Prince Transport alleging NLRC: modified only as to the increase refund of an employee for his
illegal dismissal, ULP, illegal deductions, asking for holiday pay, rest day, boundary-hulog and added 2 other employees.
13th month pay, and damages. They alleged that: M/R – denied by NLRC.
o Respondents are employees of Prince Transport hired as drivers, Rule 65 for certiorari with CA
conductors, mechanics, or inspectors (note: except Garcia who
CA: granted respondent’s petition saying Lubas was an agent conduit of
was an Operations Manager). They received regular monthly
Prince Transport and Prince Transport is guilty of ULP. The act of
income and commissions amounting to 8 to 10% of their wages
transferring respondents to Lubas was to prevent the formation of a union.
but this was reduced to 7 to 9% in October 1997.
Prince Transport filed M/R – denied by CA.
o Respondents then held a series of meetings to discuss how they
can protect their interests which led to the President of Prince Rule 45 to SC
Transport to suspect that the Respondents were about to form a
union so he told Garcia that he was opposed to the formation of a Issue: W/N Prince Transport is liable for ULP? W/N there was an illegal dismissal
union. and reinstatement is proper?
o Respondents requested for a cash advance from management but Held and Ratio: YES.
was denied which resulted to their demoralization. Eventually, Under Article 248 (a) and (e) of the Labor Code, an employer is guilty of
some of the employees got their cash advance. unfair labor practice if it interferes with, restrains or coerces its employees
o So the employees formed a union for their mutual aid and in the exercise of their right to self-organization or if it discriminates in
protection but PTI caused the transfer of all union members regard to wages, hours of work and other terms and conditions of
and sympathizers to its sub-company Lubas Transport but the employment in order to encourage or discourage membership in any labor
salaries, schedule, i.d’s were all given by Prince Transport (not organization.
Lubas). Eventually, Lubas Transport deteriorated since PTI didn’t Indeed, evidence of petitioners' unfair labor practice is shown by the
repair the transportation units there so the workers didn’t have established fact that, after respondents' transfer to Lubas, petitioners left
jobs anymore. them high and dry insofar as the operations of Lubas was concerned. The
Prince Transport denied all the allegations saying that the Respondents Court finds no error in the findings and conclusion of the CA that
are not their employees anymore since they requested for the transfer and petitioners withheld the necessary financial and logistic support such as
they’re separate from Lubas Transport so they don’t have control over spare parts, and repair and maintenance of the transferred buses until only
their operations. They only knew of the union when they were served with two units remained in running condition. This left respondents virtually
summons for the petition for certification election. The real reason jobless.
(according to Prince) why the respondents filed the complaint was Other issues and ratio:
because Prince wanted them to vacate a bunkhouse that the respondents o Does the CA have the power to review NLRC decisions via Rule
were staying in. 65? Yes. Even if factual findings by labor officials are deemed to
Complaints were consolidated. be final when supported by substantial evidence, CA can grant
LA: dismissed the complaints except for illegal dismissal so it ordered petition for certiorari if not supported by substantial evidence.
payment of backwages and separation pay instead of reinstatement. Here, the factual findings were reexamined and reversed by the
appellate court for not being in accord with the evidence
presented. Based on the facts, Robinsons failed to accord Ranchez substantive and
o Does the verification and CNFS have to be signed by all procedural due process. The investigation was left to the determination of the
respondents or just Garcia as in this case? An exception is when police authorities and the prosecutor’s office. Administrative investigation was not
all petitioners share a common interest and invoke a common conducted by Robinsons. Ranchez was constructively dismissed. It was
cause or defense. There is substantial compliance in this case unreasonable for her to be charged with abandonment for not reporting for work
with only Garcia signing since they have common interests. upon her release in jail. Work had been rendered unreasonable, unlikely, and
o Is it proper to pierce the corporate veil of Lubas to make Prince impossible, considering the treatment accorded her by Robinsons.
Transport liable? Here, in a memorandum issued by Prince Facts:
Transport, it admitted that Lubas is a sub-company. Ranchez was a probationary employee of Robinsons for a period of 5 months. She
underwent 6 weeks of training as a cashier before she was hired.
91. Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January 2 weeks after she was hired, she reported to her supervisor the loss of cash
19, 2011 amounting to P20,299 which she had placed inside the company locker. Manuel,
G.R. No. 177937 the operations manager, ordered that she be strip-searched by the company
19 January 2011 guards. However, the search on her and her personal belongings yielded nothing.
Nachura She acknowledged her responsibility and requested that she be allowed to settle
and pay the lost amount. However, Manuel did not heed her request and instead
Doctrine: reported the matter to the police and requested for an inquest. An information for
Due process requirements under the Labor Code are mandatory and may not be qualified theft was filed and Ranchez was constrained to spend 2 weeks in jail for
supplanted by police investigations or court proceedings. Employers should not failure to post bail.
rely solely on the findings of the Prosecutor’s Office. They are mandated to
conduct their own separate investigation, and to accord the employee every Ranchez filed a complaint for illegal dismissal and damages. Thereafter,
opportunity to defend himself. Robinsons sent to her by mail a notice of termination and/or notice of expiration of
probationary employment. LA dismissed the illegal dismissal complaint for lack of
An illegally dismissed or constructively dismissed employee is entitled to: 1) merit. NLRC reversed LA: Ranchez was denied due process. Strip-searching and
reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and sending her to jail for 2 weeks amounted to constructive dismissal because
2) backwages. These 2 reliefs are separate and distinct from each other and are continued employment had been rendered impossible, unreasonable, and unlikely.
awarded conjunctively. The subsequent lapse of her probationary contract did not have the effect of validly
terminating here because construtctive dismissal had already been effected
Recit-Ready Digest: earlier. CA affirmed NLRC.
Ranchez was a probationary employee of Robinsons which was eventually hired
as a cashier. She reported loss of cash amounting to P20,299 to her supervisor. A Issue/s: WON Ranchez was illegally terminated. (YES)
strip-search as done which yielded nothing. The operations manager then reported
the matter to the police and requested for an inquest. An information for Qualified Held/Ratio:
Theft was filed which resulted to her imprisonment for 2 weeks. Thereafter, A probationary employee enjoys security of tenure. Its services may be terminated
Robinsons sent to her by mail a notice of termination and/or notice of expiration of for any of the following: 1) just or 2) authorized cause, and 3) when he fails to
probationary employment qualify as a regular employee in accordance with reasonable standards prescribed
by the employer.
WON Ranchez was illegally dismissed by Robinsons. (YES)
Art. 283 provides that the employer shall furnish the worker, whose employment is circumstances. The backwages that should be awarded to respondent shall be
sought to be terminated, a written notice containing a statement of the cause of reckoned from the time of her constructive dismissal until the date of the
termination, and shall afford the latter ample opportunity to be heard and defend termination of her employment.
himself with the assistance of representative if he so desires.
Based on the facts, Robinsons failed to accord Ranchez substantive and 92. Pfizer v. Velasco, March 9, 2011
procedural due process. The investigation was left to the determination of the Doctrine:
police authorities and the prosecutor’s office. Administrative investigation was not An award or order of reinstatement is immediately self-executory without the need
conducted by Robinsons. On the same day that the missing money was reported for the issuance of a writ of execution in accordance with the third paragraph of
by respondent to her immediate superior, the company already pre-judged her guilt Article 223 of the Labor Code. The provision of Article 223 is clear that an award
without proper investigation, and instantly reported her to the police which resulted [by the Labor Arbiter] for reinstatement shall be immediately executory even
to her imprisonment for 2 weeks. pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement.
Due process requirements under the Labor Code are mandatory and may not be
supplanted by police investigations or court proceedings. Employers should not FACTS:
rely solely on the findings of the Prosecutor’s Office. They are mandated to Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional
conduct their own separate investigation, and to accord the employee every Health Care Representative since 1 August 1992. Sometime in April 2003, Velasco
opportunity to defend himself. had a medical check-up for her high-risk pregnancy and was subsequently advised
bed rest which resulted in her extending her leave of absence. Velasco filed her
Ranchez was constructively dismissed. It was unreasonable for her to be charged sick leave for the period from 26 March to 18 June 2003, her vacation leave from
with abandonment for not reporting for work upon her release in jail. Work had 19 June to 20 June 2003, and leave without pay from 23 June to 14 July 2003.
been rendered unreasonable, unlikely, and impossible, considering the treatment
accorded her by Robinsons. While Velasco was still on leave, PFIZER through its Area Sales Manager,
Ferdinand Cortez, personally served Velasco a "Show-cause Notice" dated 25
Art. 279 provides that an employee who is unjustly dismissed from work shall be June 2003. Aside from mentioning an investigation on her possible violations of
entitled to reinstatement without loss of seniority rights and other privileges, to full company rules regarding "unauthorized deals and/or discounts in money or
backwages, inclusive of allowances, and to other benefits or their monetary samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her
equivalent computed from the time his compensation as withheld from him up to to submit her explanation on the matter within 48 hours from receipt of the same,
the time of his actual reinstatement. However, due to the strained relations of the the notice also advised her that she was being placed under "preventive
parties, the payment of separation pay has been considered acceptable alternative suspension" for 30 days or from that day to 6 August 2003 and consequently
to reinstatement, when the latter is no longer desirable or viable. ordered to surrender some of the accounts from her employer.
An illegally dismissed or constructively dismissed employee is entitled to: 1) Velasco sent a letter denying the charges claiming that the transaction with
reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and Mercury Drug, Magsaysay Branch covered by her check (no. 1072) in the amount
2) backwages. These 2 reliefs are separate and distinct from each other and are of P23,980.00 was merely to accommodate two undisclosed patients of a certain
awarded conjunctively. Dr. Renato Manalo.
In this case, since respondent was a probationary employee at the time she was Velasco received a "Second Show-cause Notice" informing her of additional
constructively dismissed by petitioners, she is entitled to separation pay and developments in their investigation. According to the notice, a certain Carlito
backwages. Reinstatement of respondent is no longer viable considering the
Jomen executed an affidavit pointing to Velasco as the one who transacted with a
printing shop to print PFIZER discount coupons. It should no longer be required to pay wages considering that (1) it had already
previously paid an enormous sum to respondent under the writ of execution issued
Jomen also presented text messages originating from Velasco’s company issued by the Labor Arbiter; (2) it was allegedly ready to reinstate respondent as of July 1,
cellphone referring to the printing of the said coupons. Again, Velasco was given 2005 but it was respondent who unjustifiably refused to report for work; (3) it would
48 hours to submit her written explanation on the matter. On 16 July 2003, Velasco purportedly be tantamount to allowing respondent to choose "payroll
sent a letter to PFIZER via Aboitiz courier service asking for additional time to reinstatement" when by law it was the employer which had the right to choose
answer the second Show-cause Notice. between actual and payroll reinstatement; (4) respondent should be deemed to
have "resigned" and therefore not entitled to additional backwages or separation
Velasco filed a complaint for illegal suspension with money claims before the pay
Regional Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a
letter inviting her to a disciplinary hearing to be held on 22 July 2003. HELD: NO.
PFIZER’s previous payment to respondent of the amount of P1,963,855.00
Velasco received it under protest and informed PFIZER via the receiving copy of (representing her wages from December 5, 2003, or the date of the Labor Arbiter
the said letter that she had lodged a complaint against the latter and that the decision, until May 5, 2005) that was successfully garnished under the Labor
issues that may be raised in the July 22 hearing "can be tackled during the hearing Arbiter’s Writ of Execution dated May 26, 2005 cannot be considered in its favor.
of her case" or at the preliminary conference set for 5 and 8 of August 2003. Not only was this sum legally due to respondent under prevailing jurisprudence but
also this circumstance highlighted PFIZER’s unreasonable delay in complying with
She likewise opted to withhold answering the Second Show-cause Notice. On 25 the reinstatement order of the Labor Arbiter. A perusal of the records, including
July 2003, Velasco received a "Third Show-cause Notice," together with copies of PFIZER’s own submissions, confirmed that it only required respondent to report for
the affidavits of two Branch Managers of Mercury Drug, asking her for her work on July 1, 2005, as shown by its Letter dated June 27, 2005, which is almost
comment within 48 hours. Finally, on 29 July 2003, PFIZER informed Velasco of its two years from the time the order of reinstatement was handed down in the Labor
"Management Decision" terminating her employment. Arbiter’s Decision dated December 5, 2003.
LA: The dismissal of Velasco is illegal. Reinstatement was ordered with An award or order of reinstatement is immediately self-executory without the need
backwages and further awarding moral and exemplary damages with attorney’s for the issuance of a writ of execution in accordance with the third paragraph of
fees. Article 223 of the Labor Code. The provision of Article 223 is clear that an award
[by the Labor Arbiter] for reinstatement shall be immediately executory even
NLRC: Upheld the ruling of LA pending appeal and the posting of a bond by the employer shall not stay the
CA: Reversed the ruling of LA and NLRC. Having found the termination of execution for reinstatement. If the requirements of Article 224 [including the
Geraldine L. Velasco’s employment in accordance with the two-notice rule issuance of a writ of execution] were to govern, then the executory nature of a
pursuant to the due process requirement and with just cause, her complaint for reinstatement order or award contemplated by Article 223 will be unduly
illegal dismissal was dismissed. circumscribed and rendered ineffectual.
ISSUE: Whether or not the CA committed a serious but reversible error when it In the case at bar, PFIZER did not immediately admit respondent back to work
ordered Pfizer to pay Velasco wages from the date of the Labor Arbiter’s decision which, according to the law, should have been done as soon as an order or award
ordering her reinstatement until November 23, 2005, when the Court of Appeals of reinstatement is handed down by the Labor Arbiter without need for the
rendered its decision declaring Velasco’s dismissal valid issuance of a writ of execution. Thus, respondent was entitled to the wages paid to
her under the aforementioned writ of execution.
Pfizer’s Contention:
At most, PFIZER’s payment of the same can only be deemed partial the employee decides not be reinstated, the employer shall pay him separation
compliance/execution of the Court of Appeals Resolution dated October 23, 2006 pay in lieu of reinstatement. Such a rule is likewise observed in the case of a
and would not bar respondent from being paid her wages from May 6, 2005 to strained employer-employee relationship or when the work or position formerly
November 23, 2005. It would also seem that PFIZER waited for the resolution of its held by the dismissed employee no longer exists. In sum, an illegally dismissed
appeal to the NLRC and, only after it was ordered by the Labor Arbiter to pay the employee is entitled to: (1) either reinstatement if viable or separation pay if
amount of P1,963,855.00 representing respondent’s full backwages from reinstatement is no longer viable, and (2) backwages.
December 5, 2003 up to May 5, 2005, did PFIZER decide to require respondent to
report back to work via the Letter dated June 27, 2005. In sum, the Court reiterates the principle that reinstatement pending appeal
necessitates that it must be immediately self-executory without need for a writ of
Under Article 223 of the Labor Code, an employee entitled to reinstatement "shall execution during the pendency of the appeal, if the law is to serve its noble
either be admitted back to work under the same terms and conditions prevailing purpose, and any attempt on the part of the employer to evade or delay its
prior to his dismissal or separation or, at the option of the employer, merely execution should not be allowed. Furthermore, we likewise restate our ruling that
reinstated in the payroll." an order for reinstatement entitles an employee to receive his accrued backwages
from the moment the reinstatement order was issued up to the date when the
It is established in jurisprudence that reinstatement means restoration to a state or same was reversed by a higher court without fear of refunding what he had
condition from which one had been removed or separated. The person reinstated received. It cannot be denied that, under our statutory and jurisprudential
assumes the position he had occupied prior to his dismissal. Reinstatement framework, respondent is entitled to payment of her wages for the period after
presupposes that the previous position from which one had been removed still December 5, 2003 until the Court of Appeals Decision dated November 23, 2005,
exists, or that there is an unfilled position which is substantially equivalent or of notwithstanding the finding therein that her dismissal was legal and for just cause.
similar nature as the one previously occupied by the employee. Thus, the payment of such wages cannot be deemed as unjust enrichment on
respondent’s part.
it cannot be said that with PFIZER’s June 27, 2005 Letter, in belated fulfillment of
the Labor Arbiter’s reinstatement order, it had shown a clear intent to reinstate
respondent to her former position under the same terms and conditions nor to a 93. Luna v. Allado Construction
substantially equivalent position. To begin with, the return-to-work order PFIZER GR. No. 175251
sent respondent is silent with regard to the position or the exact nature of May 30, 2011
employment that it wanted respondent to take up as of July 1, 2005. Even if we
assume that the job awaiting respondent in the new location is of the same Doctrine:
designation and pay category as what she had before, it is plain from the text of When petitioner limited the issue on appeal, necessarily the NLRC may review
PFIZER’s June 27, 2005 letter that such reinstatement was not "under the same only that issue raised. All other matters, including the issue of the validity of private
terms and conditions" as her previous employment, considering that PFIZER respondent's dismissal, are final. If private respondent wanted to challenge the
ordered respondent to report to its main office in Makati City while knowing fully finding of a valid dismissal, he should have appealed his case seasonably to the
well that respondent’s previous job had her stationed in Baguio City (respondent’s NLRC.
place of residence) and it was still necessary for respondent to be briefed Financial assistance may be allowed as a measure of social justice and
regarding her work assignments and responsibilities, including her relocation exceptional circumstances, and as an equitable concession. The instant case
benefits. equally calls for balancing the interests of the employer with those of the worker, if
only to approximate what Justice Laurel calls justice in its secular sense.
It is well-settled that when a person is illegally dismissed, he is entitled to
reinstatement without loss of seniority rights and other privileges and to his full Recit-ready:
backwages. In the event, however, that reinstatement is no longer feasible, or if
Petitioner was an employee of Respondent Construction company. Petitioner Petitioner now appealing before the SC, main issue is NLRC’s power to
alleged that he was part of the work pool. He was ordered to report to the main rule on issues not raised on appeal.
office for reassignment, and when he refused to sign “Contracts of Project
Employment”, he was not given any work. Respondent alleged that Petitioner went Issues:
on leave and never returned. In both versions, Petitioner filed for illegal dismissal. 1. W/N the NLRC may entertain issues not raised on appeal
LA ruled against Petitioner but awarded financial assistance. Respondent 2. W/N awarding of financial assistance is proper
appealed on the sole issue of the propriety of the grant of financial assistance
(Petitioner on the other hand did not appeal). NLRC reversed the whole ruling Held:
altogether, finding illegal dismissal. CA reversed NLRC saying it was wrong to rule Petitioner cites a string of cases which in sum upheld NLRC’s power to
on issues not raised on appeal. SC ultimately held that the NLRC Rules of rule on issues not raised on appeal, mostly on the basis of Article 218(c) of
Procedure limit appeal matters only to those issues raised. While there was the Labor Code which grants the NLRC the authority to "correct, amend or
jurisprudence which allowed the NLRC to rule on issues not raised, these were waive any error, defect or irregularity whether in substance or in form" in
factually dissimilar to the case at bar. Here, on the NLRC level, Petitioner did not the exercise of its appellate jurisdiction.
appeal, thus NLRC should have ruled only on the issue raised by Respondent However, SC said that the jurisprudence cited varied factually. The Rules
(Financial Assistance). However, in the spirit of social justice, the SC held that of Procedure of the NLRC has provided that: “Subject to the provisions of
financial assistance may be granted, considering Petitioner served Respondent for Article 218, once the appeal is perfected in accordance with these Rules,
a long time without any serious infractions. the Commission shall limit itself to reviewing and deciding specific
issues that were elevated on appeal”
Facts: It is already settled in jurisprudence that the NLRC may not rely on Article
Respondent Allado Construction is a juridical entity engaged in 218(c) of the Labor Code as basis for its act of reviewing an entire case
construction while Petitioner Luna was an employee. above and beyond the sole legal question raised. SC held that the NLRC
Petitioner alleges that he was part Respondent’s pool of personnel cannot, under the pretext of correcting serious errors of the Labor Arbiter
continuously serving as warehouseman and timekeeper in projects. in the interest of justice, expand its power of review beyond the issues
Petitioner alleged that he was ordered to show up in the main office of elevated by an appellant.
Respondent for reassignment. When he refused to sign sets of “Contract When petitioner limited the issue on appeal, necessarily the NLRC
of Project Employment”, he was not given any reassignment or work. may review only that issue raised. All other matters, including the
On the other hand Respondent alleged that Petitioner went on a leave of issue of the validity of private respondent's dismissal, are final. If
absence and refused to report to work upon its expiration. private respondent wanted to challenge the finding of a valid
Petitioner filed for illegal dismissal. dismissal, he should have appealed his case seasonably to the
LA ruled in favor of Respondent, dismissing the complaint but awarding NLRC. By raising new issues in the reply to appeal, private respondent is
18k in financial assistance. in effect appealing his case although he has, in fact, allowed his case to
Respondent appealed with the sole issue being the propriety of the become final by not appealing within the reglementary period. A
financial assistance awarded. Petitioner at this level did not appeal. reply/opposition to appeal cannot take the place of an appeal. Therefore,
NLRC reversed the LA and held that there was illegal dismissal, awarding in this case, the dismissal of the complaint for illegal dismissal and the
backwages and separation pay to Petitioner. denial of the prayer for reinstatement, having become final, can no longer
Before the CA, Respondent raised the issue of NLRC’s power to rule on be reviewed.
issues not raised on appeal (In this case, ruling on the whole illegal On the factual inferences made by the NLRC, the SC said that it was
dismissal case when only the financial assistance issue was raised). On incorrect for the NLRC to conclude that doubt exists between the evidence
this level, Petitioner actively opposed. CA ruled in favor of Respondent. of both parties, thus, necessitating a ruling in favor of petitioner, because a
careful examination of the records of this case would reveal that there was
no adequate evidentiary support for petitioner's purported cause of action - An employee who voluntarily resigns from employment is not
- actual illegal dismissal. entitled to separation pay, except when it is stipulated in the employment
NLRC relied on a handwritten note saying “Who will replace him?”. LA contract or CBA, or it is sanctioned by established employer practice or
treated the issue as a question as to who will replace him during his leave policy.
of absence. NLRC treated it as a permanent replacement, solely on the
basis of the words “in the meantime” were lacking. Such contention cannot RECIT READY:
be credibly construed as substantial proof of petitioner’s alleged dismissal. Petitioner Villaruel was employed as a machine operator by a company owned by
However, the SC did rule that financial assistance may still be granted. Yeo Han Guan. Employee got sick and was confined in the hospital (case did not
Financial assistance may be allowed as a measure of social justice say why), and alleges that he was no longer allowed to go back to work. The
and exceptional circumstances, and as an equitable concession. The employer argues that he was never terminated, that he was directed to report back
instant case equally calls for balancing the interests of the employer to work after recovering from the illness but the petitioner just did not show up, and
with those of the worker, if only to approximate what Justice Laurel the complaint for payment of separation pay (filed by petitioner) caught the
calls justice in its secular sense. employer by surprise.
There appears to be no reason why petitioner, who has served respondent Issue: whether or not he is entitled to separation pay (NO)
corporation for more than eight years without committing any infraction, Ratio: It was the employee who severed the employment ties, so separation pay
cannot be extended the reasonable financial assistance of P18,000.00 as inapplicable. He never asked for reinstatement, he never reported back for work,
awarded by the Labor Arbiter on equity considerations. he even rejected employer’s offer for him to return to work, which is tantamount to
WHEREFORE, petition PARTIALLY GRANTED. Award of financial a resignation. Furthermore, an employee who voluntarily resigns is not entitled to
assistance REINSTATED. separation pay (with exceptions, such as if it is stipulated in the contract, CBA, or
established company practice or policy). None of the exceptions are present in this
case. He is not entitled to separation pay.
94. Villaruel v. Yeo Han Guan, June 1, 2011
FACTS:
DOCTRINES: Petitioner alleged that in June 1963, he was employed as a machine
The provision on separation pay in the Labor Code7 presupposes that it is operator by Ribonette Manufacturing Company, an enterprise engaged in
the employer who terminates the services of the employee found to be the business of manufacturing and selling PVC pipes and is owned and
suffering from any disease and whose continued employment is prohibited managed by herein respondent Yeo Han Guan.
by law or is prejudicial to his health as well as to the health of his co- Over a period of almost twenty (20) years, the company changed its name
employees. It does not contemplate a situation where it is the four times.
employee who severs his or her employment ties. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999,
the company was operating under the name of Yuhans Enterprises.
Despite the changes in the company's name, petitioner remained in the
employ of respondent.
7 An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or is
Petitioner Villaruel (employee)’s version:
o On October 5, 1998, he got sick and was confined in a hospital; on
prejudicial to his health as well as to the health of his co-employees: Provided, That he is
December 12, 1998, he reported for work but was no longer
paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month
permitted to go back because of his illness.
salary for every year of service whichever is greater, a fraction of at least six months being
o He asked that allow him to continue working but be assigned a
considered as one (1) whole year.
lighter kind of work but his request was denied
o He asked that respondent allow him to continue working but be o In this case, petitioner was the one who initiated the severance of
assigned a lighter kind of work but his request was denied. his employment relations with respondent. It is evident from the
o He was offered a sum of P15,000.00 as his separation pay but various pleadings filed by petitioner that he never intended to
said amount corresponds only to the period between 1993 and return to his employment with respondent on the ground that his
1999. He wants separation pay computed from his first day of health is failing.
employment in June 1963. Company doesn’t want. o Petitioner did not ask for reinstatement. In fact, he rejected
Respondent Yeo Han Guan (company)’s version: respondent's offer for him to return to work. This is tantamount to
o Petitioner was hired in 1993 as machine operator, he stopped resignation.
working due to illness, but after recovering he just never showed o Resignation = defined as the voluntary act of an employee who
up even when directed to report for work. finds himself in a situation where he believes that personal
o Respondent was caught by surprise when petitioner filed this case reasons cannot be sacrificed in favor of the exigency of the
for recovery of separation pay; his services were never service and he has no other choice but to disassociate himself
terminated. During mandatory conference he was even told that from his employment.
he can go back to work anytime, but it was petitioner who was no There is no provision in the Labor Code which grants separation pay to
longer interested. voluntarily resigning employees. In fact, the rule is that an employee who
LA: ordered payment of separation benefits of ½ of monthly salary per voluntarily resigns from employment is not entitled to separation pay,
year, plus service incentive leave. except when it is stipulated in the employment contract or CBA, or it is
NLRC: affirmed LA. sanctioned by established employer practice or policy.
CA: deleted the award of separation pay, but still allowed award of service o In this case, petitioner was not dismissed from his employment
incentive leave. and there is no evidence to show that payment of separation pay
is stipulated in his employment contract or sanctioned by
ISSUE: W/N petitioner is entitled to separation pay (NO) established practice or policy of herein respondent, his employer.
C
RATIO: o However, he is awarded P50,000 as financial assistance since it
The provision on separation pay in the Labor Code8 presupposes that it is is equitable circumstances. He has been employed for 35 years
the employer who terminates the services of the employee found to be (since the company is not distinct from its predecessors, despite
suffering from any disease and whose continued employment is prohibited change of company names/ same owners and same business
by law or is prejudicial to his health as well as to the health of his co- venture), petitioner does not have derogatory record from long
employees. It does not contemplate a situation where it is the years in service, his severance from employment was not due to
employee who severs his or her employment ties. any infraction but from a failing physical condition, and the
company is willing to give financial assistance.
8 An employer may terminate the services of an employee who has been found to be 95. DARIO NACAR vs. GALLERY FRAMES AND/OR FELIPE BORDEY, JR.
suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: Provided, That he is DOCTRINE: A recomputation (or an original computation, if no previous
paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month computation has been made) is a part of the law – specifically, Article 279 of the
salary for every year of service whichever is greater, a fraction of at least six months being Labor Code and the established jurisprudence on this provision – that is read into
considered as one (1) whole year. the decision. By the nature of an illegal dismissal case, the reliefs continue to add
up until full satisfaction, as expressed under Article 279 of the Labor Code. The
recomputation of the consequences of illegal dismissal upon execution of the reinstatement to his former position, considering the strained relationship
decision does not constitute an alteration or amendment of the final decision being between the parties, and his apparent reluctance to be reinstated,
implemented. The illegal dismissal ruling stands; only the computation of monetary computed only up to promulgation of this decision”
consequences of this dismissal is affected, and this is not a violation of the Respondents appealed to NLRC but to no avail. MR was also denied. Pet
principle of immutability of final judgments. rev to CA but also denied. Then to the SC but the SC still denied.
An Entry of Judgment was later issued certifying that the resolution
RECIT READY: The LA found that Nacar was dismissed from employment without became final and executory. The case was, thereafter, referred back to
a valid or just cause. Thus, petitioner was awarded backwages and separation pay the Labor Arbiter. A pre-execution conference was consequently
in lieu of reinstatement. It stated “…separation pay…computed only up to scheduled, but respondents failed to appear.
promulgation of this decision” The case brought to NLRC, CA. then SC, but the SC Nacar filed a Motion for Correct Computation, praying that his backwages
eventually ruled in favor of petitioner. An Entry of Judgment was later issued be computed from the date of his dismissal on January 24, 1997 up to the
certifying that the resolution became final and executory. The case was, thereafter, finality of the Resolution of the Supreme Court. Upon recomputation, the
referred back to the Labor Arbiter. A pre-execution conference was consequently Computation and Examination Unit of the NLRC arrived at an updated
scheduled, but respondents failed to appear. Nacar filed a Motion for Correct amount in the sum of ₱471,320.31.
Computation, praying that his backwages be computed from the date of his a Writ of Execution was issued by the LA ordering the Sheriff to collect
dismissal up to the finality of the Resolution of the Supreme Court. that from respondents the total amount of ₱471,320.31. Respondents filed a
notwithstanding the fact that there was a computation of backwages in the Labor Motion to Quash Writ of Execution, arguing that since the LA awarded
Arbiter’s decision, the same is not final until reinstatement is made or until finality separation pay of ₱62,986.56 and limited backwages of ₱95,933.36, no
of the decision, in case of an award of separation pay. The reckoning point for the more recomputation is required to be made of the said awards. They
computation of the backwages and separation pay should be the date when juSC claimed that after the decision becomes final and executory, the same
resolution was entered in the book of entries, not when LA rendered its decision. cannot be altered or amended anymore, which was denied.
Respondents insist that since the decision clearly stated that the separation pay Respondents again appealed before the NLRC, issued a
and backwages are "computed only up to [the] promulgation of this decision," and Resolution granting the appeal in favor of the respondents and ordered
considering that petitioner no longer appealed the decision, petitioner is only the recomputation of the judgment award.
entitled to the award as computed by the Labor Arbiter. SC ruled that by the nature an Entry of Judgment was issued declaring the Resolution of the NLRC to
of an illegal dismissal case, the reliefs continue to add up until full satisfaction, as be final and executory. Consequently, another pre-execution conference
expressed under Article 279 of the Labor Code. The recomputation of the was held, but respondents failed to appear on time. Meanwhile, petitioner
consequences of illegal dismissal upon execution of the decision does not moved that an Alias Writ of Execution be issued to enforce the earlier
constitute an alteration or amendment of the final decision being implemented. The recomputed judgment award in the sum of ₱471,320.31.
illegal dismissal ruling stands; only the computation of monetary consequences of The records of the case were again forwarded to the Computation and
this dismissal is affected, and this is not a violation of the principle of immutability Examination Unit for recomputation, where the judgment award of
of final judgments. petitioner was reassessed to be in the total amount of only ₱147,560.19.
Petitioner then moved that a writ of execution be issued ordering
FACTS
respondents to pay him the original amount as determined by the LA,
Nacar filed a complaint for constructive dismissal before the Arbitration pending the final computation of his backwages and separation pay.
Branch of NLRC
the LA issued an Alias Writ of Execution to satisfy the judgment award
LA: Nacar was dismissed from employment without a valid or just cause. that was due to petitioner in the amount of ₱147,560.19, which petitioner
Thus, petitioner was awarded backwages and separation pay in lieu of eventually received
reinstatement. It stated “As such, we are perforce constrained to grant
Petitioner then filed a Manifestation and Motion praying for the re-
complainant’s prayer for the payments of separation pay in lieu of
computation of the monetary award to include the appropriate interests
LA: ince the decision states that the separation pay and backwages are A recomputation (or an original computation, if no previous computation
computed only up to the promulgation of the said decision, it is the has been made) is a part of the law – specifically, Article 279 of the Labor
amount of ₱158,919.92 that should be executed. Thus, since petitioner Code and the established jurisprudence on this provision – that is read into
already received ₱147,560.19, he is only entitled to the balance of the decision. By the nature of an illegal dismissal case, the reliefs continue
₱11,459.73. to add up until full satisfaction, as expressed under Article 279 of the Labor
Petitioner argues that notwithstanding the fact that there was a Code. The recomputation of the consequences of illegal dismissal upon
computation of backwages in the Labor Arbiter’s decision, the same is not execution of the decision does not constitute an alteration or amendment
final until reinstatement is made or until finality of the decision, in case of of the final decision being implemented. The illegal dismissal ruling stands;
an award of separation pay. The reckoning point for the computation of only the computation of monetary consequences of this dismissal is
the backwages and separation pay should be the date when juSC affected, and this is not a violation of the principle of immutability of final
resolution was entered in the book of entries, not when LA rendered its judgments.
decision. He is also entitled to the payment of interest from the finality of That the amount respondents shall now pay has greatly increased is a
the decision until full payment by the respondents. consequence that it cannot avoid as it is the risk that it ran when it
Respondents insist that since the decision clearly stated that the continued to seek recourses against the Labor Arbiter's decision. Article
separation pay and backwages are "computed only up to [the] 279 provides for the consequences of illegal dismissal in no uncertain
promulgation of this decision," and considering that petitioner no longer terms, qualified only by jurisprudence in its interpretation of when
appealed the decision, petitioner is only entitled to the award as separation pay in lieu of reinstatement is allowed. When that happens, the
computed by the Labor Arbiter in the total amount of ₱158,919.92. finality of the illegal dismissal decision becomes the reckoning point
Respondents added that it was only during the execution proceedings instead of the reinstatement that the law decrees. In allowing separation
that the petitioner questioned the award, long after the decision had pay, the final decision effectively declares that the employment
become final and executory relationship ended so that separation pay and backwages are to be
computed up to that point.
ISSUE: whether a re-computation in the course of execution of the labor arbiter's
original computation of the awards made, pegged as of the time the decision was
rendered and confirmed with modification by a final CA decision, is legally 96. Integrated Microelectronics Inc. v. Pionilla
proper. – YES G.R. No. 200222. August 28, 2013.
HELD: DOCTRINE: As a general rule, an illegally dismissed employee is entitled to

A source of misunderstanding in implementing the final decision in this reinstatement AND payment of full backwages. In certain cases, however, the
case proceeds from the way the original labor arbiter framed his decision. Court has carved out an exception to the foregoing rule and thereby ordered the
The decision consists essentially of two parts. reinstatement of the employee without backwages on account of the following: (a)
The first is that part of the decision that cannot now be disputed because it the fact that dismissal of the employee would be too harsh of a penalty; and (b)
has been confirmed with finality. This is the finding of the illegality of the that the employer was in good faith in terminating the employee.
dismissal and the awards of separation pay in lieu of reinstatement,
backwages, attorney's fees, and legal interests. RECIT-READY DIGEST: Pionilla lent his other ID to his relative who was not an
The second part is the computation of the awards made. On its face, the employee of IMI to board the company’s shuttle. He was terminated for violating
computation the labor arbiter made shows that it was time-bound as can company rules prohibiting the lending of his employee’s ID as breach of security
be seen from the figures used in the computation. This part, being merely rules. He filed for illegal dismissal. While the Court upheld the illegality of his
a computation of what the first part of the decision established and dismissal, it did not allow reinstatement WITH backwages. The Court ruled that: (a)
declared, can, by its nature, be re-computed. the penalty of dismissal was too harsh of a penalty to be imposed against Pionilla
for his infractions; and (b) IMI was in good faith when it dismissed Pionilla as his derogatory record and even observed that his performance rating had
dereliction of its policy on ID usage was honestly perceived to be a threat to the always been outstanding.
company’s security. The Court finds it proper to accord the same disposition and
consequently directs the deletion of the award of backwages in favor of Pionilla, ISSUE: Whether or not Pionilla should be reinstated WITH backwages – NO.
notwithstanding the illegality of his dismissal.
HELD/RATIO:
FACTS: - As a general rule, an illegally dismissed employee is entitled to
- Pionilla was an employee of IMI for almost 9 years. In 2005, he received a reinstatement (or separation pay, if reinstatement is not viable) AND
notice from IMI requiring him to explain the incident which occurred the payment of full backwages. In certain cases, however, the Court has
day before where he was seen escorting a lady to board the company carved out an exception to the foregoing rule and thereby ordered the
shuttle bus at the Alabang Terminal. reinstatement of the employee without backwages on account of the
- The lady was wearing a company identification card (ID) ― which serves following: (a) the fact that dismissal of the employee would be too harsh of
as a free pass for shuttle bus passengers ― even if she was just a job a penalty; and (b) that the employer was in good faith in terminating the
applicant at IMI. employee.
- Pionilla admitted that he lent his ID to the lady who turned out to be his - Citing previous jurisprudence, the Court ruled that although the guilt of the
relative and apologized for his actions. employee was substantially established, nevertheless, the order of
- When an investigation was conducted on the incident, Pionilla admitted reinstating petitioner without backwages is proper instead of dismissal
that at the time of the incident, he had two IDs in his name as he lost his which may be too drastic. Denial of backwages would sufficiently
original ID in November 2004 but was able to secure a temporary ID later. penalize him for his infractions. The good faith of the employer, when
As Pionilla and his relative were about to board the shuttle bus, they were clear under the circumstances, may preclude or diminish recovery of
both holding separate IDs, both in his name. backwages.
- IMI found Pionilla guilty of violating Article 6.12 of the Company Rules and - In this case, the Court observes that: (a) the penalty of dismissal was too
Regulations (CRR) which prohibits the lending of one’s ID since the same harsh of a penalty to be imposed against Pionilla for his infractions; and (b)
is considered a breach of its security rules and carries the penalty of IMI was in good faith when it dismissed Pionilla as his dereliction of its
dismissal. He was subsequently dismissed so he filed a case for illegal policy on ID usage was honestly perceived to be a threat to the company’s
dismissal. security. The Court finds it proper to accord the same disposition and
- LA: Illegally dismissed. Pionilla was harshly penalized, since he did not consequently directs the deletion of the award of backwages in favor of
breach the security of the company premises since his companion was not Pionilla, notwithstanding the illegality of his dismissal.
able to enter the said premises nor board the shuttle bus. No dishonesty
can be attributed to Pionilla’s act of keeping his old ID as this appeared to
be a new charge, or at the very least, was merely incidental to the first 97. United Tourist Promotion V. Kemplin
offense of lending a company ID to another.
- NLRC: Pionilla’s act of lending his temporary ID was willful and intentional. Doctrine: In dismissing an employee, the twin notice rule must be followed. (See
His attitude was perverse as bolstered by his failure to surrender his below for the detailed explanation.)
temporary ID despite locating the original one.
- CA: Illegally dismissed. IMI’s regulations on company IDs were Recit Ready Digest: A fixed term contract for Kemplin to be President is entered
reasonable, the penalty of dismissal was too harsh and not commensurate into expiring 2007. Even after the expiry, Kemplin still continued to serve as
to the misdeed committed. While the right of the employer to discipline is President. In 2009, Kemplin was informed that his contract will no longer be
beyond question, it, nevertheless, remains subject to reasonable renewed. Issue: Is there a valid dismissal. Held: NO, There is no twin notice rule
regulation. Pionilla worked with IMI for a period of nine years without any and the act of Kemplin signing advertisement contracts 2 years after the supposed
expiration validated the claim that Kemplin still continued to serve as President to enable the employees to intelligently prepare their explanation
after the expiration of the fixed-term contract. and defenses, the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for the charge
Facts: against the employees. A general description of the charge will not
In 1995, Jersey, with the help of two American expatriates, Kemplin and suffice. Lastly, the notice should specifically mention which
the late Mike Dunne, formed UTP. In 2002, UTP employed Kemplin to be company rules, if any, are violated and/or which among the
its President for a period of five years, to commence on March 1, 2002 and grounds under Art. 282 is being charged against the employees.
to end on March 1, 2007, “renewable for the same period, subject to new o After serving the first notice, the employers should schedule and
terms and conditions”. Kemplin continued to render his services to UTP conduct a hearing or conference wherein the employees will be
even after his fixed term contract of employment expired. Records show given the opportunity to: (1) explain and clarify their defenses to
that on May 12, 2009, Kemplin, signing as President of UTP, entered into the charge against them; (2) present evidence in support of their
advertisement agreements with Pizza Hut and M. Lhuillier. On July 30, defenses; and (3) rebut the evidence presented against them by
2009, UTP’s legal counsel sent Kemplin a letter, which states: the management. During the hearing or conference, the
o We would like to inform you that your Employment Contract had employees are given the chance to defend themselves personally,
been expired since March 1, 2007 and never been renewed. But with the assistance of a representative or counsel of their choice.
because of your inhuman treatment x x x [of] the rank and file Moreover, this conference or hearing could be used by the parties
employees [,] which caused great damage and prejudices to the as an opportunity to come to an amicable settlement.
company as evidenced [by] those cases filed against you[,] o After determining that termination of employment is justified, the
specifically[:] xxx employers shall serve the employees a written notice of
A case for illegal dismissal was filed. Kemplin claimed that even after the termination indicating that: (1) all circumstances involving the
expiration of his employment contract on March 1, 2007, he rendered his charge against the employees have been considered; and (2)
services as President and General Manager of UTP. grounds have been established to justify the severance of their
employment. (Underlining ours)
Issue: WoN the dismissal is valid. NO UTP’s letter sent to Kemplin on July 30, 2009 is a lame attempt to comply
with the twin notice requirement provided for in Section 2, Rule XXIII, Book
Held: V of the Rules Implementing the Labor Code.
The Court laid down in detail the steps on how to comply with procedural In addition to the defect in the twin notice rule, the advertisement entered
due process in terminating an employee: into by Kemplin, who signed the documents as President of UTP on May
o The first written notice to be served on the employees should 12, 2009, or more than two years after the supposed expiration of his
contain the specific causes or grounds for termination against employment contract. They validate Kemplin’s claim that he, indeed,
them, and a directive that the employees are given the opportunity continued to render his services as President of UTP well beyond March 2,
to submit their written explanation within a reasonable period. 2007.
“Reasonable opportunity” under the Omnibus Rules means every Kemplin should have been promptly apprised of the issue of loss of trust
kind of assistance that management must accord to the and confidence in him before and not after he was already dismissed. It
employees to enable them to prepare adequately for their cannot be first raised on appeal.
defense. This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union 98. UNIVERSITY OF PANGASINAN, INC v. FERNANDEZ
official or lawyer, gather data and evidence, and decide on the G.R. No. 211228
defenses they will raise against the complaint. Moreover, in order November 12, 2014
Subsequently, Florentino and Nilda moved for a re-computation of their
DOCTRINE: A re-computation (or an original computation, if no previous award to include their backwages and other benefits from the date of the
computation has been made) is a part of the law—specifically, Article 279 of the decision of LA Gambito] up to the finality of the decision on July 11, 2005.
Labor Code and the established jurisprudence on this provision—that is read into They likewise moved for the issuance of a writ of execution. During the
the decision. By the nature of an illegal dismissal case, the reliefs continue to add pre-execution conference, UPI questioned the recomputation of
on until full satisfaction, as expressed under Article 279 of the Labor Code. Florentino and Nilda’s backwages and awards. LA Flores issued an order
finding a need to update and upgrade the computation of money claims
RECIT READY: Florentino and Nilda won an illegal dismissal case against UPI and separation pay which has amounted now to ₱2,165,467.02.
before the LA. The case eventually reached the SC, where the LA decision was UPI interposed an appeal to the NLRC questioning the LA Flores’s orders
upheld. Florentino and Nilda moved for a recomputation of the initial LA award for basically alleging that Florentino and Nilda are only entitled to the amount
backwages, allowances, and benefits to reflect the time between the initial LA of ₱756,502.47 awarded by LA Gambito in the Decision dated November
award and the finality of the judgement before the SC. The LA approved and made 6, 2000, and not the recomputed amount of ₱2,165,467.02. The NLRC
a new computation. UPI questioned the propriety of the computation, the granted the appeal.
imposition of benefits not exclusively provided for in the dispositive portion, and The respondents filed before the CA a Petition for Certiorari primarily
legal interest. The SC ruled that no essential change is made by a re-computation anchored on the issue of what the proper basis was for the computation of
as this step is a necessary consequence that flows from the nature of the illegality backwages and benefits to be paid to an employee. They claimed that the
of dismissal declared in that decision. A re-computation (or an original reckoning period should be from the time of illegal dismissal on May 9,
computation, if no previous computation has been made) is a part of the law— 2000 up to the finality of the decision to be executed on July 11, 2005 as
specifically, Article 279 of the Labor Code and the established jurisprudence on stated in the Entry of Judgment. Further, an interest of 12% per annum
this provision—that is read into the decision. By the nature of an illegal dismissal should be imposed upon the total adjudged award. The CA granted the
case, the reliefs continue to add on until full satisfaction, as expressed under petition.
Article 279 of the Labor Code. Article 279 of the Labor Code in part provides that
an illegally-dismissed employee shall be entitled to full backwages, inclusive of ISSUE: Whether or not the re-computation is proper. – YES.
allowances, and other benefits or their monetary equivalent computed from the
time compensation was withheld up to the time of actual reinstatement. legal HELD:
interest is imposable upon the "total unpaid judgment amount, from the time the Updating the computation of awards to include as well backwages and separation
decision (on the merits in the original case) became final. pay corresponding to the period after the rendition of LA Gambito’s decision on
November 6, 2000 up to its finality on July 11, 2005 is not violative of the principle
FACTS: of immutability of a final and executory judgment.
This case arose from a complaint for illegal dismissal filed by Florentino In Session Delights and reiterated in several cases including Nacarand
and Nilda on May 18, 2000 against University of Pangasinan, Inc. (UPI). In Gonzales v. Solid Cement Corporation, the Court was emphatic that: No
a Decision dated November 6, 2000, LA Gambito ruled that Florentino and essential change is made by a re-computation as this step is a necessary
Nilda were illegally dismissed by UPI and ordered the university to pay consequence that flows from the nature of the illegality of dismissal
backwages, allowances and other benefits computed from the date of their declared in that decision. A re-computation (or an original computation, if
dismissal on May 9, 2000 up to November 6, 2000, date of promulgation of no previous computation has been made) is a part of the law—specifically,
decision. UPI appealed to the NLRC. The appeal was initially denied, but Article 279 of the Labor Code and the established jurisprudence on this
the NLRC changed its mind upon the filing of an MR by UPI. Florentino provision—that is read into the decision. By the nature of an illegal
and Nilda elevated the case to the CA. The appellate court reversed the dismissal case, the reliefs continue to add on until full satisfaction, as
NLRC and reinstated the LA’s decision. The SC affirmed the CA decision, expressed under Article 279 of the Labor Code. The re-computation of the
and the SC ruling became final and executory. consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being In computing the backwages and benefits awarded to the respondents, the
implemented. The illegal dismissal ruling stands; only the computation of reckoning period is not interrupted by the NLRC’s reversal of LA Gambito’s finding
monetary consequences of this dismissal is affected and this is not a of illegal dismissal.
violation of the principle of immutability of final judgments. That the amount In Gonzales, the Court stated that the increase in the amount that the
the petitioner shall now pay has greatly increased is a consequence that it corporation had to pay "is a consequence that it cannot avoid as it is the
cannot avoid as it is the risk that it ran when it continued to seek recourses risk that it ran when it continued to seek recourses against the [LA’s]
against the labor arbiter’s decision. Article 279 provides for the decision."
consequences of illegal dismissal in no uncertain terms, qualified only by Further, in Reyes v. NLRC, et al., the Court declared that: One of the
jurisprudence in its interpretation of when separation pay in lieu of natural consequences of a finding that an employee has been illegally
reinstatement is allowed. When that happens, the finality of the illegal dismissed is the payment of backwages corresponding to the period from
dismissal decision becomes the reckoning point instead of the his dismissal up to actual reinstatement. The statutory intent of this matter
reinstatement that the law decrees. In allowing separation pay, the final is clearly discernible. The payment of backwages allows the employee to
decision effectively declares that the employment relationship ended so recover from the employer that which he has lost by way of wages as a
that separation pay and backwages are to be computed up to that point. x result of his dismissal. Logically, it must be computed from the date of
x x. petitioner’s illegal dismissal up to the time of actual reinstatement. There
Prescinding from the above, the Court finds no reversible error committed can be no gap or interruption, lest we defeat the very reason of the law in
by the CA when it affirmed LA Flores’ Order dated August 22, 2006, which granting the same. x x x.
allowed the updating beyond November 6, 2000 of the computation of
backwages and separation pay awarded to the respondents. The CA The CA properly imposed a legal interest upon the total monetary award reckoned
correctly ruled that the backwages should be computed from May 9, 2000, from the Entry of Judgment on July 11, 2005 until full satisfaction thereof, but the
the date of illegal dismissal, up to July 11, 2005, the date of the Entry of Court modifies the rate indicated in the assailed decision to conform to the doctrine
Judgment, while separation pay should be reckoned from the respective in Nacar.
first days of employment of Florentino and Nilda up to July 11, 2005 as In Gonzales, the Court stated that when there is a finding of illegal
well. dismissal and an award of backwages and separation pay, "the decision
also becomes a judgment for money from which another consequence
While the dispositive portion of the herein assailed CA decision did not explicitly flows—the payment of interest in case of delay.”  Again in Gonzales, the
refer to the 13th month pay, its inclusion in the computation approved by LA Flores Court instructed that legal interest is imposable upon the "total unpaid
is proper. judgment amount, from the time the decision (on the merits in the original
P.D. No. 851 is the law directing the 13th month payment. On the other case) became final.”
hand, Article 279 of the Labor Code in part provides that an illegally- In the case at bar, the CA’s imposition of the legal interest upon the total
dismissed employee shall be entitled to full backwages, inclusive of monetary award even if none was explicitly included in the fine print of LA
allowances, and other benefits or their monetary equivalent computed Gambito’s decision and LA Flores’ order. The imposition of legal interest is
from the time compensation was withheld up to the time of actual not to be considered as an alteration of the final judgment to be executed.
reinstatement. The legal interest is already deemed read into the decision.
The Court finds that despite the non-explicit reference to the 13th month In the absence of an express stipulation as to the rate of interest that
pay, following the doctrine in Gonzales, its inclusion in the computation is would govern the parties, the rate of legal interest for loans or forbearance
proper. Entitlement to it is a right granted by P.D. No. 851. Besides, the of any money, goods or credits and the rate allowed in judgments shall no
computation of award for backwages and other benefits is a mere legal longer be twelve percent (12%) per annum before its amendment by BSP-
consequence of the finding that there was illegal dismissal. MB Circular No. 799 – but will now be six percent (6%) per annum
effective July 1, 2013. It should be noted, nonetheless, that the new rate
could only be applied prospectively and not retroactively. Nonetheless,
with regard to those judgments that have become final and executory prior 99. Wenphil Corporation v Abing
to July 1, 2013, said judgments shall not be disturbed and shall continue to G.R. No. 207983
be implemented applying the rate of interest fixed therein. April 7, 2014
In Nacar, during the execution proceedings, the LA, NLRC and the CA did
not impose a legal interestupon the total adjudged award. Thereafter, this DOCTRINE
Court granted the petition filed before it by the dismissed employee Reinstatement and backwages are separate reliefs given when there is illegal
pleading for the imposition upon the monetary award of the legal interest, dismissal. One does not preclude the giving of the other and neither does the non-
which the Court declared to be 12% per annum from the date of the Entry grant of one preclude the grant of the other.
of Judgment on May 27, 2002 to June 30, 2013, and 6% per annum from
July 1, 2013 until their full satisfaction. RECIT READY
In the case before this Court now, the judgment finding that the employees Abing and Tuazon filed a case of illegal dismissal against Wenphil. LA said there
were illegally dismissed became final and executory before July 1, 2013. was illegal dismissal and ordered reinstatement. Pening appeal to the NLRC, the
The Nacar doctrine is applicable and consequently, the Court imposed parties entered into a compromise agreement providing for payroll reinstatement
upon the total adjudged award an interest of 12% interest per annum with a proviso that Wenphil would stop paying their salaries if the LA’s decision
reckoned from July 11, 2005 until June 30, 2013. The interest of 6% per would be modified, amended or reversed. The NLRC affirmed the LA’s decision
annum is imposed from July 1, 2013 until full satisfaction of the judgment but said that instead of reinstatement, they would be paid separation pay. The CA
award. however reversed, holding that the two were legally dismissed. SC affirmed and
the decision became final and executory. The two then went to the LA and filed a
The computation of backwages and separation pay due to Florentino and Nilda motion for execution stating that though the SC ruled against them they were
properly includes the period from 2002 to 2005. entitled to backwages from the time of their separation up to the time that the
The petitioners point out that Florentino and Nilda turned 60 on December NLRC’s decision was reversed with finality. Issue in this case was whether the
11, 2002 and April 30, 2002, respectively. Thus, backwages and NLRC’s decision providing for payment of separation pay instead of reinstatement
separation pay could only be computed up to those dates since under both could be considered a modification under the compromise agreement. The Court
UPI’s retirement plan and Article 287 ofthe Labor Code, 60 is the optional held that only a finding by the NLRC that there was valid dismissal could be
retirement age. Further, on July 18, 2005, Florentino and Nilda filed considered a modification and so the two were entitled to backwages from the time
separate claims for retirement benefits, hence, effectively admitting that 60 that Wenphil stopped paying these up to the time that the CA reversed the
and not 65 is the retirement age for UPI’s faculty members. decision.
In 2002, both had turned 60 and can opt to retire. The Court cannot,
however, agree that this is the cut-off date for the computation of FACTS:
backwages and separation pay due to them because of the reasons Abing and Tuazon filed an illegal dismissal case against Wenphil. The LA found
discussed below. that the serious misconduct charge against them had no factual and legal basis,
First, 60 is merely an optional but not the mandatory retirement age. and ordered their reinstatement, plus the payment of backwages. This was
Second, the evidence submitted do not show at whose option it is to retire appealed to the NLRC, in the meantime Abing and Tuazon moved for immediate
the faculty members before the age of 65. Third, there is no proof execution. They were reinstated in the payroll, pending Wenphil’s appeal as per a
whatsoever that the faculty members of UPI indeed retire at 60 years of compromise agreement that provided further that Wenphil’s obligation to pay the
age. Fourth, Florentino and Nilda filed claims for retirement pay in 2005 wages due to the respondents would cease if the decision of the LA would be
when they were both 63, hence, their acts did not necessarily constitute an "modified, amended or reversed" by the NLRC. NLRC affirmed the decision on
admission that 60 is the retirement age for UPI’s faculty members. illegal dismissal but instead of ordering reinstatement, it directed Wenphil to pay
separation pay at 1 month per year of service. NLRC also found that there was no
illegal suspension. Thus the period of the two’s preventive suspension could not be It was grievous error amounting to grave abuse of discretion on the part of the
computed in their backwages. The CA however reversed and said that there was NLRC to have considered an award of separation pay as equivalent to the
enough evidence to show that the respondents had been guilty of serious aggregate relief constituted by reinstatement plus payment of backwages under
misconduct; thus, their dismissal was for a valid cause. SC affirmed this and the Article 280 of the Labor Code. The grant of separation pay was a proper substitute
decision became final and executory. only for reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages. In effect, the NLRC in its assailed decision failed
However, the two went to the LA and moved for execution saying that although the to give to petitioner the full relief to which she was entitled under the statute.
SC ruled against them in the case of illegal dismissal, they were still entitled to
backwages from the time of their dismissal until the NLRC’s finding them to be Apparently, when the NLRC changed the LA’s decision (specifically, the order to
illegally dismissed was reversed with finality. The LA granted the motion and award separation pay in lieu of reinstatement), Wenphil read this to mean to be the
directed Wenphil to pay their salaries on reinstatement from the time that Wenphil "modification" envisioned in the compromise agreement, Wenphil likewise
last paid their salaries up to the time that NLRC’s decision had become final. effectively concluded that separation pay and backwages are the same or are
interchangeable reliefs. This conclusion can be deduced from Wenphil’s insistence
Wenphil claims that when the NLRC modified it’s decision stating that instead of not to pay the respondent’s remaining backwages under its erroneous reasoning
reinstatement, the two be paid separation pay then because of the compromise that this was the effect of the NLRC’s order to Wenphil to pay separation pay in
agreement, the obligation to pay salaries to the two ceased. lieu of reinstatement.
Had Wenphil really wanted to put a stop to the running of the period for the
ISSUES: payment of the respondents’ backwages, then it should have immediately
1. Whether the NLRC’s decision modifying the award to payment of separation pay complied with the NLRC’s order to award the employees their separation pay in
instead of reinstatement was a “modification” under the compromise agreement lieu of reinstatement. This action would have immediately severed the employer-
and entitled Wenphil to stop paying backwages. employee relationship. However, the records are bereft of any evidence that
Wenphil actually paid the respondents’ separation pay. Thus, the employer-
2. The computation of time of payment of the backwages. employee relationship between Wenphil and the respondents never ceased and
the employment status remained pending and uncertain until the CA actually
HELD rendered its decision that the respondents had not been illegally dismissed. In the
1. No. context of the parties’ agreement, it was only at this point that the payment of
The reinstatement salaries due to the respondents were, by their nature, payment backwages should have stopped.
of unworked backwages. These were salaries due to the respondents because
they had been prevented from working despite the LA and the NLRC findings that And in any way the “modification” in the NLRC’s decision cannot constitute a
they had been illegally dismissed. modification as per the compromise agreement. The modification under the
compromise agreement should only be taken to mean a reversal of the NLRC of
Reinstatement and backwages are two separate reliefs available to an illegally the decision of the LA.
dismissed employee. The normal consequences of a finding that an employee has
been illegally dismissed are: first, that the employee becomes entitled to 2. The period for computing the backwages due to the respondents during the
reinstatement to his former position without loss of seniority rights; and second, the period of appeal should end on the date that a higher court reversed the labor
payment of backwages covers the period running from his illegal dismissal up to arbitration ruling of illegal dismissal. In this case, the higher court which first
his actual reinstatement. These two reliefs are not inconsistent with one another reversed the NLRC’s ruling was not the SC but rather the CA.
and the labor arbiter can award both simultaneously.
Appeal Bond decision to the NLRC. To require the full amount of the bond within the 10-day
100. McBurnie v. Ganzon, EGI-Managers, Inc., October 17, 2013 reglementary period would only render nugatory the legal provisions which allow
Doctrine: an appellant to seek a reduction of the bond.
The filing of a motion to reduce bond, coupled with compliance with the two (2) Can the bond be reduced? YES. The bond requirement in appeals
conditions: (1) a meritorious ground, and (2) posting of a bond in a reasonable involving monetary awards has been and may be relaxed in meritorious cases,
amount, shall suffice to suspend the running of the period to perfect an appeal including instances in which (1) there was substantial compliance with the Rules,
from the labor arbiter decision to the NLRC. To require the full amount of the bond (2) surrounding facts and circumstances constitute meritorious grounds to reduce
within the 10-day reglementary period would only render nugatory the legal the bond, (3) a liberal interpretation of the requirement of an appeal bond would
provisions which allow an appellant to seek a reduction of the bond. serve the desired objective of resolving controversies on the merits, or (4) the
appellants, at the very least, exhibited their willingness and/or good faith by posting
The bond requirement in appeals involving monetary awards has been and may be a partial bond during the reglementary period. All motions to reduce bond that
relaxed in meritorious cases, including instances in which (1) there was substantial are to be filed with the NLRC shall be accompanied by the posting of a cash
compliance with the Rules, (2) surrounding facts and circumstances constitute or surety bond equivalent to 10% of the monetary award that is subject of the
meritorious grounds to reduce the bond, (3) a liberal interpretation of the appeal, which shall provisionally be deemed the reasonable amount of the
requirement of an appeal bond would serve the desired objective of resolving bond in the meantime that an appellant motion is pending resolution by the
controversies on the merits, or (4) the appellants, at the very least, exhibited their Commission.
willingness and/or good faith by posting a partial bond during the reglementary (3) Was he illegaly dismissed? NO. He was an investor not an employee.
period. All motions to reduce bond that are to be filed with the NLRC shall be
accompanied by the posting of a cash or surety bond equivalent to 10% of Facts:
the monetary award that is subject of the appeal, which shall provisionally Andrew James McBurnie (McBurnie), an Australian national, instituted a complaint
be deemed the reasonable amount of the bond in the meantime that an for illegal dismissal and other monetary claims against respondents. McBurnie
appellant motion is pending resolution by the Commission. claimed that he signed a 5-year employment agreement with the company EGI as
an Executive Vice-President who shall oversee the management of the company
Recit-ready: hotels and resorts within the Philippines. He performed work for the company until
McBurnie filed an illegal complaint case against Ganzon and his company. He he figured in an accident that compelled him to go back to Australia. While in
says he was their Exec VP until he figured into an accident and was fired. Ganzon Australia, he was informed by respondent Ganzon that his services were no longer
claims he was NOT an employee and was actually a business investor as needed because their intended project would no longer push through.
evidenced by his lack of an alien working permit (he was Australian). Labor Arbiter
ruled for McBurnie. Ganzon appealed this but refused to pay the 60 million bond The respondents contend that their agreement with McBurnie was to jointly invest
(equal to the supposed monetary award) so he filed a Motion to Reduce Bond and in and establish a company for the management of the hotels. They did not intend
gave P100,000 as a “reasonable amount”. The present rule on the matter is to create an EE-ER relationship, and the execution of the employment contract
Section 6, Rule VI of the 2011 NLRC Rules of Procedure: No motion to reduce that was being invoked by McBurnie was solely for the purpose of allowing
bond shall be entertained except on meritorious grounds and upon the posting of a McBurnie to obtain an alien work permit in the Philippines, and that McBurnie had
bond in a reasonable amount in relation to the monetary award. So the lower not obtained a work permit.
tribunals were saying that because Ganzon did not pay the 60 million, the appeal
period WAS NOT tolled. LA: Declared McBurnie as having been illegally dismissed from employment. The
Issue/Held: (1) Was the appeal period tolled? YES. The filing of a motion to respondents filed their Memorandum of Appeal and Motion to Reduce Bond, and
reduce bond, coupled with compliance with the two conditions: (1) a meritorious posted an appeal bond in the amount of P100,000.00. They claimed that an award
ground, and (2) posting of a bond in a reasonable amount, shall suffice to of more than P60 Million Pesos to a single foreigner who had no work permit and
suspend the running of the period to perfect an appeal from the labor arbiter
who left the country for good one month after the purported commencement of his Reconsideration where he invoked that the Court September 18, 2009 decision
employment was a patent nullity. had become final and executor.
NLRC: Denied the motion to reduce bond explaining that in cases involving Issue:
monetary award, an employer seeking to appeal the LA decision to the (1) Whether the reduction of the appeal bond was allowed?
Commission is unconditionally required by Art. 223, Labor Code to post bond (2) Whether McBurnie was illegally dismissed?
equivalent to the monetary award.
Held/Ratio:
The NLRC dismissed their appeal due to respondent's failure to post the required (0) This wasn’t an issue until the DECISION. Whether or not the filing of a
additional bond. This prompted respondents to filed with the CA the Petition for motion to reduce bond WITHOUT payment of the full amount of the bond will stop
Certiorari with a writ of preliminary injunction. the running of the appeal period? YES. APPEAL PERIOD MAY BE SUSPENDED
EVEN IF FULL AMOUNT IS NOT PAID.
The CA granted the respondent's application for a writ of preliminary injunction on
and directed the NLRC, McBurnie, and all persons acting for and under their The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of
authority to refrain from causing the execution and enforcement of the LA decision Procedure, which was substantially the same provision in effect at the time of the
in favor of McBurnie, conditioned upon the respondents posting of a bond in the respondents appeal to the NLRC, and which reads: No motion to reduce bond
amount of P10,000,000.00. shall be entertained except on meritorious grounds and upon the posting of a bond
in a reasonable amount in relation to the monetary award.
The CA then rendered a decision allowing the respondent's motion to reduce
appeal bond and directing the NLRC to give due course to their appeal. The CA While the CA, in this case, allowed an appeal bond in the reduced amount of
also ruled that the NLRC committed grave abuse of discretion in immediately P10,000,000.00 and then ordered the case remand to the NLRC, this Court
denying the motion without fixing an appeal bond in an amount that was Decision dated September 18, 2009 provides otherwise, as it reads in part: While
reasonable, as it denied the respondents of their right to appeal from the decision the bond may be reduced upon motion by the employer, this is subject to the
of the LA. McBurnie raised the bond issue to the SC. conditions that (1) the motion to reduce the bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to the monetary award is posted
ILLEGAL DISMISSAL WITH THE NLRC: by the appellant, otherwise the filing of the motion to reduce bond shall not stop
The NLRC, acting on the CA order of remand, accepted the appeal from the LA the running of the period to perfect an appeal. The qualification effectively requires
decision and reversed and set aside the decision of the LA, and entered a new on that unless the NLRC grants the reduction of the cash bond within the 10-day
dismissing McBurnie complaint. reglementary period, the employer is still expected to post the cash or surety bond
securing the full amount within the said 10-day period. THIS SHOULD NOT BE
BOND ISSUE WITH THE SC: THE CASE.
The SC rendered its decision granting respondents motion to reduce appeal
bond. The aforementioned decision became final and executor on March 14, To clarify, the prevailing jurisprudence on the matter provides that the filing of a
2012. motion to reduce bond, coupled with compliance with the two conditions
emphasized in Garcia v. KJ Commercial for the grant of such motion, namely, (1) a
The respondents filed a Motion for Leave to File Attached Third Motion for meritorious ground, and (2) posting of a bond in a reasonable amount, shall
Reconsideration, with an attached Motion for Reconsideration with Motion to Refer suffice to suspend the running of the period to perfect an appeal from the labor
These Cases to the Honorable Court En Banc. The Court En Banc accepted the arbiter decision to the NLRC. To require the full amount of the bond within the 10-
case from the third division and issued a temporary restraining order (TRO) day reglementary period would only render nugatory the legal provisions which
enjoining the implementation of the LA Decision. McBurnie filed a Motion for allow an appellant to seek a reduction of the bond.
in accordance with the standards of meritorious grounds and reasonable amount
The rule that the filing of a motion to reduce bond shall not stop the running Should the NLRC, after considering the motion merit, determine that a greater
of the period to perfect an appeal is not absolute. The Court may relax the rule. amount or the full amount of the bond needs to be posted by the appellant, then
the party shall comply accordingly. The appellant shall be given a period of 10
(1) YES. BOND REDUCTION MAY BE ALLOWED. days from notice of the NLRC order within which to perfect the appeal by posting
the required appeal bond.
Although the general rule provides that an appeal in labor cases from a decision
involving a monetary award may be perfected only upon the posting of a cash or (2) NOT ILLEGALY DISMISSED. NO ER-EE RELATIONSHIP.
surety bond, the Court has relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits. These McBurnie failed to present any employment permit which would have authorized
circumstances include: (1) the fundamental consideration of substantial justice; (2) him to obtain employment in the Philippines.This circumstance negates McBurnie
the prevention of miscarriage of justice or of unjust enrichment; and (3) special claim that he had been performing work for the respondents by virtue of an
circumstances of the case combined with its legal merits, and the amount and the employer-employee relationship.The absence of the employment permit instead
issue involved. Guidelines that are applicable in the reduction of appeal bonds bolsters the claim that the supposed employment of McBurnie was merely
were also explained in Nicol v. Footjoy Industrial Corporation. The bond simulated, or did not ensue due to the non-fulfillment of the conditions that were
requirement in appeals involving monetary awards has been and may be relaxed set forth in the letter of May 11, 1999.
in meritorious cases, including instances in which (1) there was substantial
compliance with the Rules, (2) surrounding facts and circumstances constitute
meritorious grounds to reduce the bond, (3) a liberal interpretation of the 101. Sara Lee v. Macatlang
requirement of an appeal bond would serve the desired objective of resolving (Sorry, long case, long discussion and lots of issues raised but the most important
controversies on the merits, or (4) the appellants, at the very least, exhibited their one is the last one)
willingness and/or good faith by posting a partial bond during the reglementary
period. Doctrine: The New NLRC Rules only allow the filing of a motion to reduce bond
on two (2) conditions: (1) that there is meritorious ground and (2) a bond in a
It is in this light that the Court finds it necessary to set a parameter for the litigants reasonable amount is posted. Compliance with the two conditions stops the
and the NLRC guidance on the amount of bond that shall hereafter be filed with a running of the period to perfect an appeal provided that they are complied within
motion for a bond reduction. All motions to reduce bond that are to be filed the 10-day reglementary period. The grounds to be cited in the motion to reduce
with the NLRC shall be accompanied by the posting of a cash or surety bond must be valid and acceptable.
equivalent to 10% of the monetary award that is subject of the appeal, which
shall provisionally be deemed the reasonable amount of the bond in the The NLRC Interim Rules on Appeals under Republic Act No. 6715 specifically
meantime that an appellant motion is pending resolution by the Commission. provides that damages shall be excluded in the determination of the appeal bond.
In conformity with the NLRC Rules, the monetary award, for the purpose of Thus, under the applicable rules, damages and attorney’s fees are excluded from
computing the necessary appeal bond, shall exclude damages and attorney fees. the computation of the monetary award to determine the amount of the appeal
Only after the posting of a bond in the required percentage shall an appellant bond.
period to perfect an appeal under the NLRC Rules be deemed suspended.
Recit-ready:
The foregoing shall not be misconstrued to unduly hinder the NLRC exercise of its The respondents were employees of one of the petitioners herein, Aris
discretion, given that the percentage of bond that is set by this guideline shall be Philippines, Inc. The said company decided to permanently cease its operations
merely provisional. The NLRC retains its authority and duty to resolve the motion and for this purpose it complied with the notices to DOLE and its employees as
and determine the final amount of bond that shall be posted by the appellant, still required under the law. The employees staged a strike alleging that the company
was committing ULP. After conciliation, the parties arrived at a settlement for which The New NLRC Rules only allow the filing of a motion to reduce bond on two (2)
the employees were paid P419 million and an additional P15 million Benevolent conditions: (1) that there is meritorious ground and (2) a bond in a reasonable
Fund to the union. amount is posted. Compliance with the two conditions stops the running of the
Less than a month after Aris’ closure, Fashion Accessories Philippines, Inc. (also a period to perfect an appeal provided that they are complied within the 10-day
respondent) was incorporated. When this came to the knowledge of the reglementary period. The NLRC Interim Rules on Appeals under Republic Act No.
employees, they filed a claim for illegal dismissal. They alleged that FAPI 6715 specifically provides that damages shall be excluded in the determination of
essentially continued the business operations of Aris and was intended to violate the appeal bond. As a matter of fact, in Erectors, Inc. v. NLRC, it was concluded
their right to security of tenure. Aris and FAPI are both subsidiaries of Sara Lee that no bond is required if an appeal raises no question other than as regards the
Corporation. award of moral and/or exemplary damages.
The LA ruled that there was illegal dismissal on the part of the petitioners and The judgment award in the instant case amounted to an immense ₱3.45
ordered the payment of a staggering P3.45 billion as separation pay and other Billion. The award is broken down as follows: backwages, separation pay, moral
monetary benefits. The petitioner then appealed the case to the NLRC, but in view and exemplary damages. The Court of Appeals was correct in so far as it
of the huge monetary award of the LA, it prayed that the appeal bond be reduced increased the amount of the required appeal bond. But it is deemed reasonable to
(the Labor Code requires that the appeal bond should be equivalent to the reduce the amount of the appeal bond to ₱725 Million. This directive already
monetary award made by the LA) as no insurance company would be able to considers that the award if not illegal, is extraordinarily huge and that no insurance
cover it and they would be effectively denied their right to appeal. At the same company would be willing to issue a bond for such big money. The amount of
time, they posted a bond in the amount of P4.5 million. The NLRC granted prayer ₱725 Million is approximately 25% of the basis above calculated.
for reduction of the appeal bond and ordered them to post an additional P4.5 By reducing the amount of the appeal bond in this case, the employees
million appeal bond to make it P9 million. The respondents filed a petition for would still be assured of at least substantial compensation, in case a judgment
certiorari before the CA questioning the NLRC’s decision to allow Aris to post a award is affirmed. On the other hand, management will not be effectively denied of
reduced appeal bond. its statutory privilege of appeal.
While the petition was pending with the CA, the NLRC rendered a decision
setting aside the LA’s decision and remanding the case for further proceedings. Facts:
The CA eventually rendered a decision allowing the reduction of the appeal bond These are 6 consolidated petitions for review on certiorari pertaining to the
but ordering the companies to pay an additional P1 billion. appeal bond required under Article 233 of the Labor Code which should be
The issue now is whether the appeal bond may be reduced in view of equivalent to the monetary award adjudged by the LA. The petitioners are
Article 233 of the Labor Code (all other issues excluded here, pls refer to long Sara Lee Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara Lee
digest). The Court ruled in the affirmative. The requisites for perfection of appeal Corporation (SLC), Atty. Cesar Cruz (Cruz), and Fashion Accessories
as embodied in Article 223, as amended, are: 1) payment of appeal fees; 2) filing Philippines, Inc. (FAPI). SLC, a corporation duly organized and existing
of the memorandum of appeal; and 3) payment of the required cash or surety under the laws of the United States of America, is a stockholder of Aris. It
bond. Based on a long line of cases, the NLRC may dispense of the posting of the exercised control over Aris, FAPI, and SLPI which were all its subsidiaries
bond when the judgment award is: (1) not stated or (2) based on a patently or affiliates. Cruz was the external counsel of Aris at the time of its closure.
erroneous computation. Sans these two (2) instances, the appellant is generally When Aris filed for its dissolution, Cruz became the Vice-President and
required to post a bond to perfect his appeal. The requirement that the employer Director of Aris.
post a cash or surety bond to perfect its/his appeal is apparently intended to This controversy stemmed from a Notice of Permanent Closure filed by
assure the workers that if they prevail in the case, they will receive the money Aris with the Department of Labor and Employment stating that it will
judgment in their favor upon the dismissal of the employer's appeal. It was permanently cease its operations. All employees of Aris were duly
intended to discourage employers from using an appeal to delay, or even evade, informed. Aris Philippines Workers Confederation of Filipino Workers
their obligation to satisfy their employees' just and lawful claims. (Union), which represents 5,984 rank-and-file employees of Aris, staged a
strike for violation of duty to bargain collectively, union busting and illegal
closure. After conciliation, the parties entered into an agreement whereby praying that the petition be dismissed for being moot and academic. The
Aris undertook to pay its employees the benefits which accrued by virtue CA reversed and set aside the ruling of the NLRC and ordered the
of the company’s closure, which settlement amounted to ₱419 Million and companies to post an additional P1 billion appeal bond.
an additional ₱15 Million Benevolent Fund to the Union.
Less than a month after Aris’s dissolution, FAPI was incorporated. When Issue:
said incorporation came to the knowledge of the affected employees, they (1) W/N the filing of 2 separate petitions (the Macatlang petition and the
all filed 63 separate complaints against Aris for illegal dismissal. The Abelardo petition) for certiorari constitutes forum shopping
complaints were consolidated before the labor arbiter. Later amendments (2) W/N Macatlang was authorized to sign the verification and CNFS for the
to the complaint included as respondents SLC, SLP, FAPI and Cruz, and Macatlang petition
Emilinda D. Macatlang, et al.,is captioned as the complainant, represented (3) W/N the petition should be dismissed for failure to state the material dates
in the suit by Emilinda D. Macatlang. Essentially, the complainants insisted (4) W/N there was proper service of summons by publication on SLC
that FAPI was organized by the management of Aris to continue the same (5) W/N the petition became moot and academic because of the NLRC’s
business of Aris, thereby intending to defeat their right to security of decision setting aside that of the LA’s
tenure. They likewise impleaded in their subsequent pleadings that SLC (6) W/N the appeal bond may be reduced
and SLP are the major stockholders of FAPI, and Cruz as Vice-President
and Director of Aris. Held/Ratio:
The Labor Arbiter rendered judgment finding the dismissal of 5,984 (1) YES and NO. The Abelardo petition was filed only 10 days after the Macatlang
complainants as illegal and awarding them separation pay and other petition. The Macatlang petition consists of 5,984 dismissed employees of Aris
monetary benefits amounting to ₱3,453,664,710.86. Upon receipt of a while the Abelardo petition has 411 dismissed employees, all of which were
copy of the aforesaid decision, the Corporations filed their Notice of already included as petitioners in the Macatlang petition. With respect to these 411
Appeal with Motion to Reduce Appeal Bond and To Admit Reduced petitioners, they could be declared guilty of forum shopping when they filed the
Amount with the National Labor Relations Commission (NLRC). They Abelardo petition despite the pendency of the Macatlang petition. Now, should the
asked the NLRC to reduce the appeal bond to ₱1 Million each on the act of these 411 employees prejudice the rights of the 5,573 other complainants in
grounds that it is impossible for any insurance company to cover such the Macatlang petition? The answer is no. We do not agree that the 411 petitioners
huge amount and that, in requiring them to post in full the appeal bond of the Abelardo petition are representative of the interest of all petitioners in
would be tantamount to denying them their right to appeal. The Macatlang petition. In the absence of substantial similarity between the parties in
Corporations posted a total of ₱4.5 Million. Macatlang, et al., opposed the Macatlang and Abelardo petitions, we find that the petitioners in Macatlang petition
motion by asserting that failure to comply with the bond requirement is a did not commit forum shopping.
jurisdictional defect since an appeal may only be perfected upon posting of
a cash bond equivalent to the monetary award provided by Article 223 of (2) YES. Macatlang was assigned by the complainants as their attorney-in-fact to
the Labor Code. The NLRC granted the reduction of the appeal bond. It perform the following acts: 1) to represent them in the case/cases filed against
directed the Corporations to post an additional ₱4.5 Million bond, bringing Aris, FAPI, SLC, and SLPI; sign any complaint, pleadings, or any other documents
the total posted bond to ₱9 Million. pertinent or related to the instant case brought before the NLRC, Court of Appeals,
Macatlang, et al., filed a petition for certiorari before the Court of Appeals and Supreme Court; 2) to enter into any compromise agreement or settlement; and
to which the companies filed an MTD on the grounds of forum shopping, 3) to receive the full payment as a consequence of any settlement. The first act
absence of authorization for Macatlang to file the petition, and failure to necessarily encompasses the authority to sign any document related to NLRC
state the material dates. While the petition was pending, the NLRC NCR No. 00-04-03677-98. The petition for review on certiorari is one of these
rendered a decision setting aside the ruling of the LA on the illegal documents.
dismissal case and remanding it to the LA for further proceedings. The
Companies filed a manifestation with the CA in view of this development,
(3) NO. In the instant case, the Corporations alleged in their petition before the would serve the desired objective of resolving controversies on the merits, or (4)
Court of Appeals the date when they received the Resolution of the NLRC. The the appellants, at the very least, exhibited their willingness and/or good faith by
appeal was in fact filed within the 60-day reglementary period. posting a partial bond during the reglementary period.
The New NLRC Rules only allow the filing of a motion to reduce bond on two (2)
(4) Weirdly, this was not answered by the Court. conditions: (1) that there is meritorious ground and (2) a bond in a reasonable
amount is posted. Compliance with the two conditions stops the running of the
(5) NO. When the NLRC granted the motion to reduce the appeal bond and the period to perfect an appeal provided that they are complied within the 10-day
Corporations posted the required additional bond, the appeal was deemed to have reglementary period. The grounds to be cited in the motion to reduce must be valid
been perfected. Prudence however dictates that the NLRC should not have and acceptable.
decided the case on its merits during the pendency of the instant petition. The very Since the intention is merely to give the NLRC an idea of the justification
issue raised in the petitions determines whether or not the appeal by the for the reduced bond, the evidence for the purpose would necessarily be less than
Corporations has been perfected. Until its resolution, the NLRC should have held the evidence required for a ruling on the merits. In the recent case of McBurnie v.
in abeyance the resolution of the case to prevent the case from being mooted. The Ganzon, it was held that merit may "pertain to an appellant’s lack of financial
NLRC decision was issued prematurely. capability to pay the full amount of the bond, the merits of the main appeal such as
when there is a valid claim that there was no illegal dismissal to justify the award,
(6) YES. Article 223, under Presidential Decree No. 442, was amended by the absence of an employer-employee relationship, prescription of claims, and
Republic Act No. 6715 to include the provision on the posting of a cash or surety other similarly valid issues that are raised in the appeal. For the purpose of
bond as a precondition to the perfection of appeal. The requisites for perfection of determining a ‘meritorious ground,’ the NLRC is not precluded from receiving
appeal as embodied in Article 223, as amended, are: 1) payment of appeal fees; 2) evidence, or from making a preliminary determination of the merits of the
filing of the memorandum of appeal; and 3) payment of the required cash or surety appellant’s contentions."
bond. In order to toll the running of the period to appeal once the motion for
It is presumed that an appeal bond is only necessary in cases where the reduction is filed, McBurnie has set a parameter on what amount is reasonable for
labor arbiter’s decision or order contains a monetary award. Conversely, when the such purpose:
labor arbiter does not state the judgment award, posting of bond may be excused. To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of
Based on a long line of cases, the NLRC may dispense of the posting of the bond Procedure that give parties the chance to seek a reduction of the appeal
when the judgment award is: (1) not stated or (2) based on a patently erroneous bond are effectively carried out, without however defeating the benefits of
computation. Sans these two (2) instances, the appellant is generally required to the bond requirement in favor of a winning litigant, all motions to reduce
post a bond to perfect his appeal. bond that are to be filed with the NLRC shall be accompanied by the
By explicit provision of law, an appeal is perfected only upon the posting of posting of a cash or surety bond equivalent to 10% of the monetary award
a cash or surety bond. The posting of the appeal bond within the period provided that is subject of the appeal, which shall provisionally be deemed the
by law is not merely mandatory but jurisdictional. The requirement that the reasonable amount of the bond in the meantime that an appellant’s motion
employer post a cash or surety bond to perfect its/his appeal is apparently is pending resolution by the Commission. In conformity with the NLRC
intended to assure the workers that if they prevail in the case, they will receive the Rules, the monetary award, for the purpose of computing the necessary
money judgment in their favor upon the dismissal of the employer's appeal. It was appeal bond, shall exclude damages and attorney’s fees. Only after the
intended to discourage employers from using an appeal to delay, or even evade, posting of a bond in the required percentage shall an appellant’s period to
their obligation to satisfy their employees' just and lawful claims. perfect an appeal under the NLRC Rules be deemed suspended.
However, the Court did relax the rule respecting the bond requirement to
perfect appeal in cases where: (1) there was substantial compliance with the While McBurnie has effectively addressed the preliminary amount of the
Rules, (2) surrounding facts and circumstances constitute meritorious grounds to bond to be posted in order to toll the running of the period to appeal, there is no
reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond
hard and fast rule in determining whether the additional bond to be posted is All motions to reduce bond that are to be filed with the NLRC shall be
reasonable in relation to the judgment award. accompanied by the posting of a cash or surety bond equivalent to 10% of the
In the case at bar, the motion to reduce bond filed by the Corporations was monetary award that is subject of the appeal, which shall provisionally be deemed
resolved by the NLRC in the affirmative when it found that there are meritorious the reasonable amount of the bond in the meantime that an appellant’s motion is
grounds in reducing the bond such as the huge amount of the award and pending resolution by the Commission. This shall be sufficient to perfect an
impossibility of proceeding against the Corporations’ properties which correspond appeal.
to a lower valuation. Also, the NLRC took into consideration the fact of partial
payment of ₱419 Million. The NLRC found the ₱4.5 Million bond posted by the Recit-ready Digest
Corporations as insufficient, hence ordering them to post an additional ₱4.5 Petitioners were dismissed for violation of various company policies. They filed an
Million. illegal dismissal complaint before the Labor Arbiter, who ruled in their favor. The
The NLRC Interim Rules on Appeals under Republic Act No. 6715 employer, SS Ventures, filed a Notice of Apeal and paid the appeal fee, but
specifically provides that damages shall be excluded in the determination of the instead of paying the full amount (P490,308.00), they filed a Motion to Reduce the
appeal bond. Thus, under the applicable rules, damages and attorney’s fees are Appeal Bond to P100,000.00 and appended a manager’s check bearing the said
excluded from the computation of the monetary award to determine the amount of amount. Respondents cited financial difficulty as justification for their inability to
the appeal bond. These exclusions shall be referred to as "discretionaries," as post the appeal bond in full owing to the partial shutdown of respondent company’s
distinguished from the "mandatories" or those amounts fixed in the decision to operations.
which the employee is entitled upon application of the law on wages. These
mandatories include awards for backwages, holiday pay, overtime pay, separation The NLRC dismissed the appeal for non-perfection. The CA reversed, saying there
pay and 13th month pay. As a matter of fact, in Erectors, Inc. v. NLRC, it was was substantial compliance. The SC affirmed the CA, ruling that the amount was
concluded that no bond is required if an appeal raises no question other than as sufficient to perfect an appeal. To ensure that the provisions of Section 6, Rule VI
regards the award of moral and/or exemplary damages. of the NLRC Rules of Procedure that give parties the chance to seek a reduction of
The judgment award in the instant case amounted to an immense ₱3.45 the appeal bond are effectively carried out, without however defeating the benefits
Billion. The award is broken down as follows: backwages, separation pay, moral of the bond requirement in favor of a winning litigant, all motions to reduce bond
and exemplary damages. The mandatories comprise the backwages and that are to be filed with the NLRC shall be accompanied by the posting of a cash or
separation pay. The Court of Appeals was correct in so far as it increased the surety bond equivalent to 10% of the monetary award that is subject of the appeal,
amount of the required appeal bond. But it is deemed reasonable to reduce the which shall provisionally be deemed the reasonable amount of the bond in the
amount of the appeal bond to ₱725 Million. This directive already considers that meantime that an appellant’s motion is pending resolution by the Commission.
the award if not illegal, is extraordinarily huge and that no insurance company This shall exclude damages and attorney’s fees. However, the amount of 10% is
would be willing to issue a bond for such big money. The amount of ₱725 Million is not a permissible bond but is only such amount that shall be deemed reasonable in
approximately 25% of the basis above calculated. the meantime that the appellant’s motion is pending resolution. The actual
By reducing the amount of the appeal bond in this case, the employees reasonable amount yet to be determined is necessarily a bigger amount.
would still be assured of at least substantial compensation, in case a judgment
award is affirmed. On the other hand, management will not be effectively denied of
its statutory privilege of appeal. FACTS:
Respondent SS Ventures International, Inc. is a domestic corporation duly

102. BALITE V. SS VENTURES, FEB. 2015 engaged in the business of manufacturing footwear products for local
G.R. No. 195109, February 04, 2015 sales and export abroad. Petitioners Balite et. al were regular employees
who were dismissed for violation of various company policies.
Doctrine:
For his part, Balite was issued a Show Cause Memorandum by the Petitioners, in assailing the appellate court’s decision, argue that posting of
respondent company on 4 August 2005 charging him with the following an appeal bond in full is not only mandatory but a jurisdictional
infractions: (1) making false reports, malicious and fraudulent statements requirement that must be complied with in order to confer jurisdiction upon
and rumor-mongering against the company; (2) threatening and the NLRC. Respondents, on the other hand, urge a relaxation of the rules
intimidating co-workers; (3) refusing to cooperate in the conduct of due to good faith and dire financial condition.
investigation; and (4) gross negligence in the care and use of the company
property resulting in the damage of the finished products. After respondent ISSUE:
found Balite’s explanation insufficient, he was dismissed from W/N posting an appeal bond in full is a mandatory and jurisdictional requirement
employment, through a Notice of Termination.
Bihasa, on the other hand, was charged with absence without leave on HELD:
two occasions and with improper behavior, stubbornness, arrogance and
uncooperative attitude towards superiors and employees. Bihasa was Article 223, and implemented by Rule VI of the 2011 Rules of Procedure of
likewise terminated from the service on 5 May 2006 after her explanation the NLRC provide that an appeal from the Labor Arbiter to the NLRC must
in an administrative investigation was found unsatisfactory by the be perfected within ten calendar days from receipt of such decisions,
respondent company. awards or orders of the Labor Arbiter. In a judgment involving a
Anzaldo was also dismissed from employment after purportedly giving him monetary award, the appeal shall be perfected only upon (1) proof of
due process. payment of the required appeal fee; (2) posting of a cash or surety bond
The three employees charged respondents with illegal dismissal and issued by a reputable bonding company; and (3) filing of a
recovery of backwages, 13th month pay and attorney’s fees before the memorandum of appeal. However, in McBurnie v. Ganzon, the court
Labor Arbiter. The Labor Arbiter ruled that the dismissal was illegal for deemed the posting of a bond equivalent to 10% of the monetary award
failing to comply with the procedural and substantive requirements in already sufficient to perfect the appeal.
terminating employment. The employees were ordered reinstated with To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of
backwages, which was deemed immediately executory. Procedure that give parties the chance to seek a reduction of the appeal
Respondents filed a Notice of Appeal and paying the corresponding bond are effectively carried out, without however defeating the benefits of
appeal fee. However, instead of filing the required appeal bond equivalent the bond requirement in favor of a winning litigant, all motions to reduce
to the total amount of the monetary award which is P490,308.00, bond that are to be filed with the NLRC shall be accompanied by the
respondents filed a Motion to Reduce the Appeal Bond to P100,000.00 posting of a cash or surety bond equivalent to 10% of the monetary
and appended a manager’s check bearing the said amount. Respondents award that is subject of the appeal, which shall provisionally be
cited financial difficulty as justification for their inability to post the appeal deemed the reasonable amount of the bond in the meantime that an
bond in full owing to the partial shutdown of respondent company’s appellant’s motion is pending resolution by the Commission.
operations. The monetary award, for the purpose of computing the necessary appeal
The NLRC dismissed the appeal for non-perfection. It rules that the bond, shall exclude damages and attorney’s fees. Only after the posting of
posting of the bond was indispensable for the perfection of an appeal a bond in the required percentage shall an appellant’s period to perfect an
bond, and reduction was not warranted. The MR was likewise denied. appeal under the NLRC Rules be deemed suspended.
On certiorari, the Court of Appeals reversed the NLRC Decision. There The amount of 10% of the award is not a permissible bond but is only such
was substantial compliance with the rules for the perfection of an appeal, amount that shall be deemed reasonable in the meantime that the
as respondents were able to prove their incapability to post the full amount appellant’s motion is pending resolution by the Commission. The actual
required. MR was denied. reasonable amount yet to be determined is necessarily a bigger amount.
By reducing the amount of the appeal bond in this case, the employees
would still be assured of at least substantial compensation, in case a
judgment award is affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.
The appeal bond posted by the respondent in the amount of P100,000.00
(equivalent to around 20% of the total amount of monetary bond) is
sufficient to perfect an appeal. With the employer’s demonstrated good
faith in filing the motion to reduce the bond on demonstrable grounds
coupled with the posting of the appeal bond in the requested amount, as
well as the filing of the memorandum of appeal, the right of the employer
to appeal must be upheld.
PETITION DENIED.

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LABOR LAW REVIEW DIGESTS – FLJ The CA also justified his dismissal on the ground of willful breach of trust,

Misconduct is defined as improper or wrong conduct. It is the transgression of Awards

Recit-Ready Digest FACTS:

However, separation pay is made an alternative relief in lieu of reinstatement in DOCTRINE

47. PT & T v. NLRC, April 15, 2005 Facts:

Constructive dismissal occurs when there is cessation of work because

An illegally dismissed or constructively dismissed employee is entitled to: 1) Facts

Recit Ready Digest: Serreno is a “close-in” security personnel of JG Summit. Held:

3. YES. 89. Aboc v. Metrobank, December 13, 2010

HELD: DOCTRINE: As a general rule, an illegally dismissed employee is entitled to

Respondent SS Ventures International, Inc. is a domestic corporation duly

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