Labor Law 1
OTHER CAUSES, BUSINESS RELATED
CAUSES
RECOGNITION OF RIGHT – BUSINESS-
RELATED CAUSES/[PROTECTION
AGABON V NLRC
[PAGE 35]
UICHICO V NLRC
273 SCRA 35
HERMOSISIMA JR; June 2, 1997
NATURE
Special civil action for certiorari
FACTS
- Private respondents were employed by Crispa, Inc. for many
years in the latter's garments factory. Their services were
terminated on the ground of retrenchment due to alleged
serious business losses suffered by Crispa, Inc. in the years
immediately preceding 1990.
- Three (3) separate complaints for illegal dismissal and
diminution of compensation against Crispa, Inc., Valeriano Floro
(a major stockholder and director), and the petitioners (high-
ranking officers and directors).
- Labor Arbiter rendered a decision dismissing the complaints
for illegal dismissal but at the same time ordering Crispa, Inc.,
Floro and the petitioners to pay respondent employees
separation pays equivalent to seventeen (17) days for every
year of service
- The NLRC found Crispa, Inc., Valeriano Floro, together with the
petitioners liable for illegal dismissal and modified the award of
separation pay in the amount of one (1) month for every year of
service instead of seventeen (17) days.
- Private respondents sought a clarification of public respondent
NLRC's Resolution dated September 30, 1993 insofar as the
computation of separation pay by the Examination and
computation division was concerned as well as the failure of the
Resolution to award them full backwages despite the finding of
illegal dismissal.
- On April 21, 1995, the NLRC, treating the Motion to Clarity
Judgment as an Appeal, granted the same in this wise: …hereby
directed to include in the computation, six months backwages.
- Petitioners filed a Motion for Reconsideration of the April 21,
1995 Resolution, which was denied. Hence, this petition
ISSUES
1. WON Respondents were illegally dismissed (i.e. there was no
valid retrenchment)
2. WON petitioners may be held solidarily liable with the
company
HELD
1. YES
Reasoning
- Article 2831 of the Labor Code covers retrenchment.
1 domestic corporation engaged in the construction business.
Art. 283. Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the worker and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
labor saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year."
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Retrenchment, or "lay-off" in layman's parlance, is the
termination of employment initiated by the employer
through no fault of the employee's and without prejudice to
the latter, resorted to by the management during periods of
business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders,
shortage of materials, conversion of a plant for a new
production program or the introduction of new methods or
more efficient machinery, or of automation.
Simply put, it is an act of employer of dismissing employees
because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business, a
right consistently recognized and affirmed by this court.
- Any claim of actual or potential business losses must satisfy
certain established standards before any reduction of personnel
becomes legal, viz:
1. The losses expected and sought to be avoided must
be substantial and not merely de minimis in extent;
2. The substantial losses apprehended must be
reasonably imminent, as such imminence can be
perceived objectively and in good faith by the employer;
3. The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses.
4. The alleged losses. If already realized, and the
expected imminent losses sought to be forestalled, must
be proved by sufficient and convincing evidence
- The Statement of Profit and Losses submitted by Crispa, Inc. to
prove its alleged losses, without the accompanying signature of
a certified public accountant or audited by an independent
auditor, are nothing but self-serving documents which ought to
be treated as a mere scrap of paper devoid of any probative
value.
2. YES
Reasoning
- The general rule is that obligations incurred by the
corporation, acting through its directors, officers and
employees, are its sole liabilities. There are times, however,
when solidary liabilities may be incurred but only when
exceptional circumstances warrant such as in the following
cases:
1. When directors and trustees or, in appropriate cases, the
officers of a corporation: (a) vote for or assent to patently
unlawful acts of the corporation; (b) act in bad faith or with
gross negligence in directing the corporate affairs; (c) are
guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other persons
- In labor cases, particularly, corporate directors and officers are
solidarily liable with the corporation for the termination of
employment of corporate employees done with malice or in bad
faith. In this case, it is undisputed that petitioners have a direct
hand in the illegal dismissal of respondent employees.
Disposition Petition is DISMISSED.
FILIPINAS V GATLABAYAN
487 SCRA 673
CALLEJO; April 19, 2006
NATURE
Petition for Review on Certiorari of the decision of the CA
FACTS
- Filipinas Systems “FILSYSTEMS,” Inc. (Filsystems) is a
Filsystems employed complainants as grillers, carpenters and
laborers on various dates from 1992 to July 24, 1999. Their
average length of service with Filsystems ranged from two to
nine years. Their latest and last assignment was in Meralco, in
Antipolo, after which they reported back to the main plant.
Complainants narrated that they were verbally informed that
their services were no longer needed on July 24, 1999
(considering that they were only project employees and the
project to which they were last assigned had already been
Labor Law 1
completed). The said employees filed their respective
complaints for illegal dismissal against Filsystems.
- Filsystems, on the other hand, averred that the complainants
were employed merely as project employees.
ISSUE
WON the employees were legally dismissed by reason of
retrenchment
HELD
NO
- Petitioners’ claim that respondents were retrenched must be
rejected. Indeed, petitioners even failed to adduce in evidence
any notes addressed to respondents notifying them that their
employment was terminated on the ground of retrenchment. In
Sebuguero v. National Labor Relations Commission, this Court
said:
The requirement of notice to both the employees concerned
and the Department of Labor and Employment (DOLE) is
mandatory and must be written and given at least one month
before the intended date of retrenchment. In this case, it is
undisputed that the petitioners were given notice of the
temporary lay-off. There is, however, no evidence that any
written notice to permanently retrench them was given at
least one month prior to the date of the intended
retrenchment. ..But what the law requires is a written notice
to the employees concerned and that requirement is
mandatory. The notice must also be given at least one
month in advance of the intended date of retrenchment to
enable the employees to look for other means of employment
and therefore to ease the impact of the loss of their jobs and
the corresponding income. That they were already on
temporary lay-off at the time notice should have been given
to them is not an excuse to forego the one-month written
notice because by this time, their lay-off is to become
permanent and they were definitely losing their employment.
- Moreover, the minutes of the meeting on August 22, 2000
(supposedly between the management of petitioner
corporation, and rank and file and supervisory employees),
show that only 13 rank and file employees attended. There is no
evidence on record that respondents attended the meeting.
There is likewise no evidence on record that petitioners
complied with the requirements of Article 283 of the Labor Code
of the Philippines, which reads:
Article 283. Closure of establishment and reduction of
personnel – The employer may also terminate the
employment of any employee due to the installment of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least one
(1) month pay or to at least one (1) month pay for every year
of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or reverses, the separation pay shall be
equivalent to one (1) month pay or at least one half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
- The general standards in retrenchment are: firstly, the losses
expected should be substantial and not merely de minimis in
extent. If the loss purportedly sought to be forestalled by
retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of the
retrenchment would appear to be seriously in question.
Secondly, the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and
in good faith by the employer. There should, in other words, be
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a certain degree of urgency for the retrenchment, which is after
all a drastic recourse with serious consequences for the
livelihood of the employees retired or otherwise laid-off.
Because of the consequential nature of retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken
other measures prior or parallel to retrenchment to forestall
losses, i.e., cut other costs than labor costs. An employer who,
for instance, lays off substantial numbers of workers while
continuing to dispense fat executive bonuses and perquisites or
so-called “golden parachutes,” can scarcely claim to be
retrenching in good faith to avoid losses. The employer’s
prerogative to bring down labor costs by retrenching after less
drastic means – e.g., reduction of both management and rank-
and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and
advertising costs, etc. – have been tried and found wanting.
- Alleged losses if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient
and convincing evidence. The reason for requiring this quantum
of proof is readily apparent: any less exacting standard of proof
would render too easy the abuse of this ground for termination
of services of employees. Thus, petitioner failed to adduce a
morsel of evidence to prove the factual basis for a valid
retrenchment.
Disposition Petition denied
BUSINESS SERVICES OF THE FUTURE TODAY INC V
CA
480 SCRA 571
QUISUMBING; January 30, 2006
NATURE
Petition for review on certiorari the decision of the Court of
Appeals declaring the dismissal of the private respondents
illegal and awarding to them separation pay, backwages, and
13th month pay, and attorney’s fees.
FACTS
- Mailboxes, Etc. (Davao) is the local franchisee of Mailboxes,
Etc. (MBE), a US-based corporation operating business support
and communication service centers worldwide. It is operated
locally by petitioner Business Services of the Future Today, Inc.
(BSFTI), whose stockholders are petitioner Ramon Allado and
his nominees.
- On January 8, 1996, Allado hired private respondents, spouses
Gilbert and Ma. Celestina Veruasa, as manager and assistant
manager, respectively, of Mailboxes, Etc. (Davao). During the
course of their employment the spouses’ advances exceeded
their unpaid salaries by P43,402.54.
- On January 8, 1998, Allado personally gave notices of
termination effective immediately to the spouses. They gave as
reason, the negative cashflow and BSFTI’s failure to infuse
additional capital to the business. No written notice of closure of
business was given to the Department of Labor and
Employment (DOLE). Allado then padlocked the offices of
Mailboxes, Etc. (Davao), confiscated all its business records,
and appropriated for himself all the transferable rights and
equipment of the office.
- Despite repeated demands, the petitioners did not pay the
alleged balance of P129,488.93 due to the spouses. Thereafter,
the Veruasa spouses instituted a complaint for illegal dismissal.
ISSUE
WON the dismissal was illegal
HELD
NO
- The BSFTI’s closure was bona fide and under ART. 283. of the
Labor Code closure of establishment is a valid ground for
termination of employment. The records before us revealed that
it suffered losses from 1996 to 1998. The failure of the
petitioners to notify the DOLE through a written notice of the
termination of its corporate life should not nullify the dismissal,
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or render it illegal, or ineffectual. However, the employer should
indemnify the employee, in the form of nominal damages, for
the violation of his right to statutory due process.
Ratio Article 283 of the Labor Code is the applicable law. It
states,
ART. 283. Closure of establishment and reduction of
personnel. – The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the worker and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one
(1) whole year.
- For the cessation of business operations due to serious
business losses or financial reverses to be valid, the employer
must give the employee and the DOLE written notices 30 days
prior to the effectivity of his separation.
- However. in Agabon v. National Labor Relations Commission,
[15] we ruled that where the dismissal is for an authorized
cause, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee, in the form of
nominal damages, for the violation of his right to statutory due
process. The amount of such damages is addressed to the
sound discretion of the Court, taking into account the relevant
circumstances.
Disposition Petition partially granted.
A. INSTALLATION OF LABOR SAVING DEVICES
B. REDUNDANCY
BUSINESS JUDGMENT
WILTSHIRE FILE CO INC V NLRC
193 SCRA 665
FELICIANO; February 7, 1991
NATURE
Petition for review on certiorari
FACTS
- Private respondent Vicente T. Ong was the Sales Manager of
petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March
1981 up to 18 June 1985. On 13 June 1985, upon private
respondent's return from a business and pleasure trip abroad,
he was informed by the President of petitioner Wiltshire that his
services were being terminated. Private respondent maintains
that he tried to get an explanation from management of his
dismissal but to no avail. On 18 June 1985, when private
respondent again tried to speak with the President of Wiltshire,
the company's security guard handed him a letter which
formally informed him that his services were being terminated
upon the ground of redundancy.
- Private respondent filed, on 21 October 1985, a complaint
before the Labor Arbiter for illegal dismissal alleging that his
position could not possibly be redundant because nobody (save
himself) in the company was then performing the same duties.
Private respondent further contended that retrenching him
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could not prevent further losses because it was in fact through
his remarkable performance as Sales Manager that the
Company had an unprecedented increase in domestic market
share the preceding year. For that accomplishment, he
continued, he was promoted to Marketing Manager and was
authorized by the President to hire four (4) Sales Executives five
(5) months prior to his termination.
- In its answer, petitioner company alleged that the termination
of respondent's services was a cost-cutting measure: that in
December 1984, the company had experienced an unusually
low volume of orders: and that it was in fact forced to rotate its
employees in order to save the company. Despite the rotation
of employees, petitioner alleged; it continued to experience
financial losses and private respondent's position, Sales
Manager of the company, became redundant.
- On 2 December 1986, during the proceedings before the Labor
Arbiter, petitioner, in a letter 1 addressed to the Regional
Director of the then Ministry of Labor and Employment, notified
that official that effective 2 January 1987, petitioner would close
its doors permanently due to substantial business losses.
- In a decision dated 11 March 1987, the Labor Arbiter declared
the termination of private respondent's services illegal and
ordered petitioner to pay private respondent backwages,
unpaid salaries in the amount of, accumulated sick and
vacation leaves in the amount of, hospitalization benefit
package in the amount, unpaid commission in the amount of,
moral damages in the amount of and attorney's fees in the
amount of. On appeal by petitioner Wiltshire, the National Labor
Relations Commission ("NLRC") affirmed in toto on 9 February
1988 the decision of the Labor Arbiter.
- In this Petition for Certiorari, it is submitted that private
respondent's dismissal was justified and not illegal. Petitioner
maintains that it had been incurring business losses beginning
1984 and that it was compelled to reduce the size of its
personnel force. Petitioner also contends that redundancy as a
cause for termination does not necessarily mean duplication of
work but a "situation where the services of an employee are in
excess of what is demanded by the needs of an undertaking
ISSUE
WON private respondent’s dismissal was justified on the ground
of retrenchment
HELD
YES
- The Court resolved to grant due course to the Petition for
Certiorari. The Resolutions of the National Labor Relations
Commission dated 9 February 1988 and 7 March 1988 are
hereby SET ASIDE and NULLIFIED. The Temporary Restraining
Order issued by this Court on 21 March 1988 is hereby made
PERMANENT.
Ratio. Having reviewed the record of this case, the Court has
satisfied itself that indeed petitioner had serious financial
difficulties before, during and after the termination of the
services of private respondent. For one thing, the audited
financial statements of the petitioner for its fiscal year ending
on 31 July 1985 prepared by a firm of independent auditors,
showed a net loss in the amount of P4,431,321.00 and a total
deficit or capital impairment at the end of year of
P6,776,493.00. 2 In the preceding fiscal year (1983-1984), while
the company showed a net after tax income of P843,506.00, it
actually suffered a deficit or capital impairment of
P2,345,172.00. Most importantly, petitioner Wiltshire finally
closed its doors and terminated all operations in the Philippines
on January 1987, barely two (2) years after the termination of
private respondent's employment. We consider that finally
shutting down business operations constitutes strong
confirmatory evidence of petitioner's previous financial distress.
The Court finds it very difficult to suppose that petitioner
Wiltshire would take the final and irrevocable step of closing
down its operations in the Philippines simply for the sole
purpose of easing out a particular officer or employee, such as
the private respondent.
Labor Law 1
- Turning to the legality of the termination of private
respondent's employment, we find merit in petitioner's basic
argument. The Court was unable to sustain public respondent
NLRC's holding that private respondent's dismissal was not
justified by redundancy and hence illegal. In the first place,
while the letter informing private respondent of the termination
of his services used the word "redundant", that letter also
referred to the company having "incur[red] financial losses
which [in] fact has compelled [it] to resort to retrenchment to
prevent further losses". 3 Thus, what the letter was in effect
saying was that because of financial losses, retrenchment was
necessary, which retrenchment in turn resulted in the
redundancy of private respondent's position.
- In the second place, the Court does not believe that
redundancy in an employer's personnel force necessarily or
even ordinarily refers to duplication of work. That no other
person was holding the same position that private respondent
held prior to the termination of his services, does not show that
his position had not become redundant. Indeed, in any well-
organized business enterprise, it would be surprising to find
duplication of work and two (2) or more people doing the work
of one person. Redundancy, for purposes of our Labor Code,
exists where the services of an employee are in excess of what
is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise. 4 The employer
has no legal obligation to keep in its payroll more employees
than are necessarily for the operation of its business.
- In the third place, in the case at bar, petitioner Wiltshire, in
view of the contraction of its volume of sales and in order to cut
down its operating expenses, effected some changes in its
organization by abolishing some positions and thereby effecting
a reduction of its personnel. Thus, the position of Sales Manager
was abolished and the duties previously discharged by the
Sales Manager simply added to the duties of the General
Manager, to whom the Sales Manager used to report.
- It is of no legal moment that the financial troubles of the
company were not of private respondent's making. Private
respondent cannot insist on the retention of his position upon
the ground that he had not contributed to the financial
problems of Wiltshire. The characterization of private
respondent's services as no longer necessary or sustainable,
and therefore properly terminable, was an exercise of business
judgment on the part of petitioner company. The wisdom or
soundness of such characterization or decision was not subject
to discretionary review on the part of the Labor Arbiter nor of
the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown. It should also be
noted that the position held by private respondent, Sales
Manager, was clearly managerial in character.
DOLE PHILIPPINES INC V NLRC (BARRANCO)
365 SCRA 124
KAPUNAN; September 13, 2001
NATURE
Certiorari
FACTS
- Dole Philippines, Inc., is a corporation organized and existing
under Philippine laws. It is engaged in the business of growing,
canning, processing and manufacturing pineapples and other
allied products. The other petitioners were Dole corporate
officers at the time the cases were instituted
- Private respondents were Dole’s employees of different ranks
and positions.
- In 1990 and 1991, DOLE carried out a massive manpower
reduction and restructuring program aimed at reducing the
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total workforce and the number of positions in the company’s
table of organization.
- Dole intimates that the 1990-1991 reduction was a
continuation of previous efforts to restructure its organization.
- Previously, in 1982, Dole reduced its manpower by 509
workers but prolonged collective bargaining negotiations, which
ended in 1990, prevented the company from proceeding with
its restructuring
- Among the factors considered by the company in undertaking
the reduction program was the high absenteeism rate, which in
1989 accounted for 16% of total man hours. The high
absenteeism rate translated to higher paid sick leaves, higher
operating costs for medical facilities, and higher transportation
costs due to under-filled and late hauls.
- Dole also cites “the exacerbation of operating cost problems
due to factors beyond [its] control, i.e., the Gulf War, oil price
increases, mandated wage increases, the 9% import levy,
power rate hikes, [and] increased land rentals,” existing at that
time.
- Furthermore, the “bloody December 1989 coup d’etat shook
investor confidence and put in doubt the continued economic
progress of the country.”
- Pursuant to its restructuring efforts, Dole abolished the
positions of foremen, bargaining capataces and foreladies.
Employees occupying these positions were either promoted or
were dismissed on grounds of redundancy.
- To address the surplus of manpower relative to its operations,
Dole also decided to reduce the number of employees
company-wide. In 1990, the company offered a Special
Voluntary Resignation (SVR) program of which many
employees, including a number of private respondents, availed.
- Upon approval of the applications, notices of termination were
sent to the employees who availed of the SVR.
- After receiving the benefits, said employee-applicants
executed a “Release” stating that the employee had no claims
against Dole in connection with his or her employment.
Subsequently, the dismissed employees executed another
“Release of Claim” in favor of Dole.
- A total of 2,357 hourly and monthly salaried employees were
separated from Dole during this period.
- After assessing the outcome of the SVR, Dole found that it
could still do with lesser employees, and proceeded to dismiss
more of them in March 1991.
- Overall, 2,792 employees were separated under the SVR
Program.
- In Oct. 1991, complaints for illegal dismissal were filed against
Dole by De Lara et al.
- LA Solano dismissed the complaints for lack of merit; their
dismissal was valid.
- NLRC reversed the LA and ordered reinstatement. Denied
DOLE’s MR.
ISSUE
WON DOLE’S redundancy program is valid and if so, won the
dismissal of the respondent employees are valid as well
HELD
YES
- Redundancy is one of the authorized causes for the dismissal
of an employee.
- The lack of notice to the DOLE does not render the
redundancy program void.
Reasoning
- Wiltshire File Co. Inc., vs. NLRC: “x x x redundancy in an
employer’s personnel force necessarily or even ordinarily refers
to duplication of work. That no other person was holding the
same position that private respondent held prior to the
termination of his services, does not show that his position had
not become redundant. Indeed, in any well-organized business
enterprise, it would be surprising to find duplication of work and
two (2) or more people doing the work of one person. We
believe that redundancy, for purposes of the Labor Code, exists
where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the
Labor Law 1
enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.”
- The characterization of an employee’s services as no longer
necessary or sustainable, and, therefore, properly terminable, is
an exercise of business judgment on the part of the employer.
The wisdom or soundness of such characterization or decision is
not subject to discretionary review provided, that violation of
law or arbitrary or malicious action is not shown.
- Dole’s redundancy program does not appear to be tainted by
bad faith even if it hired casual employees to replace those
dismissed (as it has always hired casual employees to augment
its manpower in accordance with the demands of the industry.)
- The petition alleges that the redundancy program is part of a
wide-scale restructuring of the company.
- This purported restructuring is supported by the company’s
undisputed history towards these ends, which culminated in the
abolition of certain positions and the Special Voluntary
Resignation program in 1990-1991.
- Among the avowed goals of such restructuring is the reduction
of absenteeism in the company. The harsh economic and
political climate then prevailing in the country also emphasized
the need for cost-saving measures.
- Reorganization as a cost-saving device is acknowledged by
jurisprudence. An employer is not precluded from adopting a
new policy conducive to a more economical and effective
management, and the law does not require that the employer
should be suffering financial losses before he can terminate the
services of the employee on the ground of redundancy.
- The law, however, does not prevent employers from saving on
labor costs.
- International Macleod, Inc. vs. Intermediate Appellate Court:
held that the determination of the need for the phasing out of a
department as a labor and cost saving device because it was no
longer economical to retain said department is a management
prerogative, with which the courts will not interfere.
- De Ocampo vs. NLRC: “[t]he reduction of the number of
workers in a company made necessary by the introduction of
the services of Gemac Machineries in the maintenance and
repair of its industrial machinery is justified. There can be no
question as to the right of the company to contract the services
of Gemac Machineries to replace the services rendered by the
terminated mechanics with a view to effecting more economic
and efficient methods of production.” So long as the
undertaking to save on labor costs is not attended by malice,
arbitrariness, or intent on the part of the employer to
circumvent the law, as in this case, the Court will not interfere
with such endeavor.
Ratio If an employee consented to his retrenchment or
voluntarily applied for retrenchment with the employer due to
the installation of labor-saving devices, redundancy, closure or
cessation of operation or to prevent financial losses to the
business of the employer, the required previous notice to the
DOLE is not necessary as the employee thereby acknowledged
the existence of a valid cause for termination of his
employment (International Harvester, Inc. vs. NLRC).
- Here, most of the private respondents even filled up
application forms to be considered for the redundancy program
and thus acknowledged the existence that their services were
redundant.
- Private respondents executed two releases in favor of
petitioner company.
- Not all quitclaims are per se invalid or against public policy.
But those
(1) where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person or
(2) where the terms of settlement are unconscionable on
their face are invalid. In these cases, the law will step in to
annul the questionable transaction. There is no showing here
that private respondents are unsuspecting or gullible persons.
Neither are the terms of the settlement unconscionable.
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Indeed, private respondents received a generous separation
package, as set out in the narration of facts above.
Disposition Petition is GRANTED and the decision of the NLRC
ANNULLED and SET ASIDE. TRO –LIFTED
ASUFRIN JR V SAN MIGUEL CORP
425 SCRA 270
YNARES-SANTIAGO; March 10, 2004
FACTS
- Coca Cola Plant, then a department of respondent San Miguel
Beer Corporation (SMC), hired petitioner as a
utility/miscellaneous worker.
- He became a regular employee paid on daily basis as a Forklift
Operator. Then became a monthly paid employee promoted as
Stock Clerk.
- The sales office and operations at the Sum-ag, Bacolod City
Sales Office were reorganized. Several positions were
abolished including petitioner’s position as Stock Clerk. After
reviewing petitioner’s qualifications, he was designated
warehouse checker at the Sum-ag Sales Office.
- SMC implemented a new marketing system known as the “pre-
selling scheme” at the Sum-ag Beer Sales Office. As a
consequence, all positions of route sales and warehouse
personnel were declared redundant. Respondent notified the
DOLE Director of Region VI that 22 personnel of the Sales
Department of the Negros Operations Center would be retired.
- SMC thereafter wrote a letter to petitioner informing him that,
owing to the implementation of the “pre-selling operations”
scheme, all positions of route and warehouse personnel will be
declared redundant and the Sum-ag Sales Office will be closed
effective April 30, 1996. Thus, from April 1, 1996 to May 15,
1996, petitioner reported to respondent’s Personnel
Department at the Sta. Fe Brewery, pursuant to a previous
directive.
- Thereafter, the employees of Sum-ag sales force were
informed that they can avail of respondent’s early retirement
package pursuant to the retrenchment program, while those
who will not avail of early retirement would be redeployed or
absorbed at the Brewery or other sales offices.
- Petitioner opted to remain and manifested to Acting Personnel
Manager Salvador Abadesco his willingness to be assigned to
any job, considering that he had three children in college.
- Petitioner was surprised when he was informed by the Acting
Personnel Manager that his name was included in the list of
employees who availed of the early retirement package.
Petitioner’s request that he be given an assignment in the
company was ignored by the Acting Personnel Manager.
- Petitioner thus filed a complaint for illegal dismissal with the
NLRC.
- The Labor Arbiter dismissed the complaint for lack of merit.
- Petitioner appealed to the NLRC which set aside the Labor
Arbiter’s decision and ordered respondent SMC to reinstate
petitioner to his former or equivalent position with full
backwages.
- Respondent filed a petition with the Court of Appeals which
reversed the decision of the NLRC and reinstated the judgment
of the Labor Arbiter dismissing the complaint for illegal
dismissal.
- Petitioner’s motion for reconsideration] was denied.
ISSUE
WON the dismissal of petitioner is based on a just and
authorized cause
HELD
NO
- Dole Philippines, Inc. v. NLRC, citing the leading case of
Wiltshire File Co., Inc. v. NLRC:
… redundancy in an employer’s personnel force necessarily
or even ordinarily refers to duplication of work. That no
other person was holding the same position that private
respondent held prior to the termination of his services,
Labor Law 1
does not show that his position had not become redundant.
Indeed, in any well-organized business enterprise, it would
be surprising to find duplication of work and two (2) or
more people doing the work of one person. We believe that
redundancy, for purposes of the Labor Code, exists where
the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it
is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as
overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
- The determination that employee’s services are no longer
necessary or sustainable and, therefore, properly terminable is
an exercise of business judgment of the employer.
- The wisdom or soundness of this judgment is not subject to
discretionary review of the Labor Arbiter and the NLRC,
provided there is no violation of law and no showing that it was
prompted by an arbitrary or malicious act.
- It is not enough for a company to merely declare that it has
become overmanned. It must produce adequate proof that such
is the actual situation to justify the dismissal of the affected
employees for redundancy.
- Persuasive as the explanation proffered by respondent may be
to justify the dismissal of petitioner, a number of disturbing
circumstances, however, leave the Court unconvinced.
1. Of the 23 SMC employees assigned at the Sum-ag Sales
Office/Warehouse, 9 accepted the offer of SMC to avail of the
early retirement whose separation benefits was computed at
250% of their regular pay. The rest, including petitioner, did
not accept the offer. Out of the remaining fourteen 14, only
petitioner clearly manifested, through several letters, his
desire to be redeployed to the Sta. Fe Brewery or any sales
office – and for any position not necessarily limited to that of
a warehouse checker. In short, he was even willing to accept
a demotion just to continue his employment. Meanwhile,
other employees who did not even write a letter to SMC were
redeployed to the Sta. Fe Brewery or absorbed by other
offices/outlets outside Bacolod City.
2. Petitioner was in the payroll of the Sta. Fe Brewery and
assigned to the Materials Section, Logistics Department,
although he was actually posted at the Sum-ag Warehouse.
Thus, even assuming that his position in the Sum-ag
Warehouse became redundant, he should have been returned
to the Sta. Fe Brewery where he was actually assigned and
where there were vacant positions to accommodate him.
3. It appears that despite respondent’s allegation that it
ceased and closed down its warehousing operations at the
Sum-ag Sales Office, actually it is still used for warehousing
activities and as a transit point where buyers and dealers get
their stocks.
4. In selecting employees to be dismissed, a fair and
reasonable criteria must be used, such as but not limited to
(a) less preferred status, e.g. temporary employee; (b)
efficiency; and (c) seniority. In the case at bar, no criterion
whatsoever was adopted by respondent in dismissing
petitioner. - Furthermore, as correctly observed by the NLRC,
respondent “has not shown how the cessation of operations
of the Sum-ag Sales Office contributed to the ways and
means of improving effectiveness of the organization with the
end in view of efficiency and cutting distribution overhead
and other related costs.
- Respondent, thus, clearly resorted to sweeping
generalization[s] in dismissing complainant.” Indeed,
petitioner’s predicament may have something to do with an
incident where he incurred the ire of an immediate superior in
the Sales Logistics Unit for exposing certain irregularities
committed by the latter.
- Whether it be by redundancy or retrenchment or any of the
other authorized causes, no employee may be dismissed
without observance of the fundamentals of good faith.
- It is not difficult for employers to abolish positions in the guise
of a cost-cutting measure and we should not be easily swayed
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by such schemes which all too often reduce to near nothing
what is left of the rubble of rights of our exploited workers.
- Given the nature of petitioner’s job as a Warehouse Checker, it
is inconceivable that respondent could not accommodate his
services considering that the warehousing operations at Sum-ag
Sales Office has not shut down.
- To sustain the position taken by the appellate court would be
to dilute the workingman’s most important right: his
constitutional right to security of tenure.
- While respondent may have offered a generous compensation
package to those whose services were terminated upon the
implementation of the “pre-selling scheme,” we find such an
offer, in the face of the prevailing facts, anathema to the
underlying principles which give life to our labor statutes
because it would be tantamount to likening an employer-
employee relationship to a salesman and a purchaser of a
commodity.
- To quote what has been aptly stated by former Governor
General Leonard Wood in his inaugural message before the 6th
Philippine Legislature on October 27, 1922 “labor is neither a
chattel nor a commodity, but human and must be dealt with
from the standpoint of human interest.”
- As has been said: “We do not treat our workers as
merchandise and their right to security of tenure cannot be
valued in precise peso-and-centavo terms. It is a right which
cannot be allowed to be devalued by the purchasing power of
employers who are only too willing to bankroll the separation
pay of their illegally dismissed employees to get rid of them.”
- This right will never be respected by the employer if we
merely honor it with a price tag. The policy of “dismiss now and
pay later” favors moneyed employers and is a mockery of the
right of employees to social justice.
Disposition. The petition was granted.
FINANCIAL LOSS
ESCAREAL V NLRC (PHILIPPINE REFINING CO INC)
213 SCRA 472
DAVIDE JR; September 2, 1992
NATURE
Petition for certiorari
FACTS
- Escareal was hired by the PRC for the position of Pollution
Control Manager effective on 16 September 1977 with a
starting monthly pay of P4,230 00; the employment was made
permanent effective on 16 March 1978. The contract of
employment provides, inter alia, that his "retirement date will
be the day you reach your 60th birthday, but there is provision
(sic) for voluntary retirement when you reach your 50th
birthday. Bases for the hiring of Escareal are LOI No. 588
implementing the National Pollution Control Decree, P.D No.
984, and Memorandum Circular No. 02, implementing LOI No.
588, which amended Memorandum Circular No. 007, Series of
1977, issued by the National Pollution Control Commission
(NPCC).
- 1 April 1979: Escareal was also designated as Safety Manager
pursuant to Article 162 of the Labor Code (P.D. 442, as
amended) and the pertinent implementing rule thereon. At the
time of such designation, Escareal was duly accredited as a
Safety Practitioner by the Bureau of Labor Standards,
Department of Labor and Employment (DOLE) and the Safety
Organization of the Philippines.
- In addition, the pertinent rules on Occupational Health and
Safety implementing the Labor Code provide for the designation
of full-time safety men to ensure compliance with the safety
requirements prescribed by the Bureau of Labor Standards.
Consequently, Escareal's designation was changed to Pollution
Control and Safety Manager.
- In the course of his employment, Escareal's salary was
regularly upgraded; the last pay hike was granted on 28 March
Labor Law 1
1988 when he was officially informed that his salary was being
increased to P23,100.00 per month effective 1 April 1988. This
last increase is indisputably a far cry from his starting monthly
salary of P4,230.00.
- Sometime in the first week of November 1987, PRC's
Personnel Administration Manager George B. Ditching informed
Escareal about the company's plan to declare the position of
Pollution Control and Safety Manager redundant. Ditching
attempted to convince Escareal to accept the redundancy offer
or avail of the company's early retirement plan. Escareal
refused and instead insisted on completing his contract as he
still had about three and a half (3 1/2) years left before reaching
the mandatory retirement age of sixty (60).
- 15 June 1988: Escareal's immediate superior, PRC's Engg Dept
Manager Jesus P. Javelona, formally informed Escareal that the
position of "Safety and Pollution Control Manager will be
declared redundant effective at the close of work hours on 15th
July 1988." Escareal was also notified that the functions and
duties of the position to be declared redundant will be absorbed
and integrated with the duties of the Industrial Engineering
Manager; as a result thereof, Escareal "will receive full
separation benefits provided under the PRC Retirement Plan
and additional redundancy payment under the scheme applying
to employees who are 50 years old and above and whose jobs
have been declared redundant by Management."
- Escareal protested his dismissal via his 22 June 1988 letter to
Javelona. This notwithstanding, the PRC unilaterally circulated a
clearance dated 12 July 1988, to take effect on 15 July 1988,
indicating therein that its purpose is for Escareal's "early
retirement" and not redundancy. Escareal confronted Javelona;
the latter, in his letter dated 13 July 1988, advised the former
that the employment would be extended for another month, or
up to 15 August 1988. Escareal responded with a letter dated
25 July 1988 threatening legal action.
- 14 July 1988: PRC's Industrial Relations Manager Bernardo N.
Jambalos III sent a Notice of Termination to the DOLE informing
the latter that Escareal was being terminated on the ground of
redundancy effective 16 August 1988.
- 5 August 1988:Escareal had a meeting with Cesar Bautista
and Dr. Reynaldo Alejandro, PRC's President and Corporate
Affairs Director, respectively. To his plea that he be allowed to
finish his contract of employment as he only had three (3) years
left before reaching the mandatory retirement age, Bautista
retorted that the termination was final.
- 8 August 1988: Escareal presented to Javelona a computation
showing the amount of P2,436,534.50 due him (Escareal) by
way of employee compensation and benefits.
- On the date of the effectivity of his termination, Escareal was
only fifty-seven (57) years of age. He had until 21 July 1991, his
sixtieth (60th) birth anniversary, before he would have been
compulsorily retired. Also, on the date of effectivity of
Escareal's termination, 16 August 1988, (UP Chemical Engg
graduate) Miguelito S. Navarro, PRC's Industrial Engineering
Manager, was designated as the Pollution Control and Safety
Officer.
- In view of all this, Escareal filed a complaint for illegal
dismissal with damages against the private respondent PRC
before the NLRC. Labor Arbiter Manuel P. Asuncion rendered a
decision ordering PRC to pay Escareal his redundancy pay in
accordance with existing company policy on the matter, without
prejudice to the grant of additional benefits offered by PRC
during the negotiation stage of the case, though it never
materialized for failure of the parties to reach an agreement.
- On appeal, NLRC affirmed the Labor Arbiter's decision, with
modification ordering PRC to pay Escareal his retirement pay in
accordance with the company policy and other benefits granted
to him thereunder, less outstanding obligations of the
complainant with the company at the time of his dismissal.
Separate MFRs of PRC and Escareal were both dismissed.
Hence, this petition.
ISSUES
1. WON PRC had valid and acceptable basis to declare the
position of Pollution Control and Safety Manager redundant
A2010 -7- Disini
2. WON Escareal's right to security of tenure was violated by
PRC
3. WON Escareal's employment was for a fixed definite period
to end at his 60th birthday because of the stipulation as to the
retirement age of sixty (60) years
4. WON Escareal is entitled to backwages and retirement
benefits
5. WON Escareal is entitled to damages and attorney's fees
HELD
1. NO
- Wiltshire File Co., Inc. vs. NLRC: Redundancy, for purposes
of the Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual
requirements of the enterprise; a position is redundant when it
is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as 257the overhiring
of workers, a decreased volume of business or the dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.
- Redundancy in an employer's personnel force, however, does
not necessarily or even ordinarily refer to duplication of work.
That no other person was holding the same position which the
dismissed employee held prior to the termination of his services
does not show that his position had not become redundant.
- PRC had no valid and acceptable basis to declare the position
of Pollution Control and Safety Manager redundant as the same
may not be considered as superfluous; said positions are
required by law. Thus, it cannot be gainsaid that the services of
Escareal are in excess of what is reasonably required by the
enterprise. Otherwise, PRC would not have allowed ten (10)
long years to pass before opening its eyes to that fact; neither
would it have increased the Escareal's salary to P23,100.00 a
month effective 1 April 1988. That Escareal's positions were not
duplicitous is best evidenced by PRC's recognition of their
imperative need thereof, this is underscored by the fact that
Miguelito S. Navarro, the company's Industrial Engineering
Manager, was designated as Pollution Control and Safety
Manager on the very same day of Escareal's termination.
- Indeed, the proposition that a department manned by a
number of engineers presumably because of the heavy
workload, could still take on the additional responsibilities which
were originally reposed in an altogether separate section
headed by Escareal, is difficult to accept.
- If PRC felt that either Escareal was incompetent or that the
task could be performed by someone more qualified, then why
is it that the person designated to the position hardly had any
experience in the field concerned? And why reward Escareal,
barely five (5) months before the dismissal, with an increase in
salary?
- If based on the ground of redundancy, such a move would be
invalid as the creation of said position is mandated by the law;
the same cannot therefore be declared redundant.
- If the aim was to generate savings in terms of the salaries that
PRC would not be paying Escareal any more as a result of the
streamlining of operations for improved efficiency, such a move
could hardly be justified in the face of PRC's hiring of ten (10)
fresh graduates for the position of Management Trainee and
advertising for vacant positions in the Engineering/Technical
Division at around the time of the termination.
- There would seem to be no compelling reason to save money
by removing such an important position. As shown by their
recent financial statements, PRC's year-end net profits had
steadily increased from 1987 to 1990.
- While concededly, Article 283 of the Labor Code does not
require that the employer should be suffering financial losses
before he can terminate the services of the employee on the
ground of redundancy, it does not mean either that a company
which is doing well can effect such a dismissal whimsically or
capriciously. The fact that a company is suffering from business
losses merely provides stronger justification for the termination.
2. YES
- It is evident that Escareal's right to security of tenure was
violated by the private respondent PRC. Both the Constitution
Labor Law 1
(Section 3, Article XIII) and the Labor Code (Article 279, P.D.
442, as amended) enunciate this right as available to an
employee.
- Security of tenure is a right which may not be denied on mere
speculation of any unclear and nebulous basis.
- In this regard, it could be concluded that the respondent PRC
was merely in a hurry to terminate the services of Escareal as
soon as possible in view of the latter's impending retirement; it
appears that said company was merely trying to avoid paying
the retirement benefits Escareal stood to receive upon reaching
the age of sixty (60). PRC acted in bad faith.
3. NO
- There is no indication that PRC intended to offer uninterrupted
employment until Escareal reached the mandatory retirement
age, the contract of employement merely informs Escareal of
the compulsory retirement age and the terms pertaining to the
retirement.
- The letter to Escareal confirming his appointment does not
categorically state when the period of employment would end.
It stands to reason then that Escareal's employment was not
one with a specific period.
4. YES
- Article 279, LC: 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 allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement."
- Torillo vs. Leagardo, Jr. / Santos vs. NLRC: "The normal
consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to
reinstatement to his former position without loss of seniority
rights and, secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to actual
reinstatement. xxx Though the grant of reinstatement
commonly carries with it an award of backwages, the
inappropriateness or non-availability of one does not carry with
it the inappropriateness or non-availability of the other. xxx Put
a little differently, payment of backwages is a form of relief that
restores the income that was lost by reason of unlawful
dismissal, separation pay, in contrast, is oriented towards the
immediate future, the transitional period the dismissed
employee must undergo before locating a replacement job."
- Reinstatement of Escareal would have been proper. However,
since he reached the mandatory retirement age on 21 July
1991, reinstatement is no longer feasible. He should thus be
awarded his backwages from 16 August 1988 to 21 July 1991,
inclusive of allowances and the monetary equivalent of the
other benefits due him for that period, plus retirement benefits
under the PRC's compulsory retirement scheme which he would
have been entitled to had he not been illegally dismissed.
5. NO
- In his complaint and the attached Affidavit-Complaint, Escareal
does not mention any claim for damages and attorney s fees;
furthermore, no evidence was offered to prove them. An award
therefor would not be justified.
Disposition Petition granted.
LAW REQUIRED POSITION
ESCAREAL V NLRC
[PAGE 260]
WHEN REDUNDANCY
LOPEZ SUGAR CORP V FRANCO
[PAGE 150]
WILTSHIRE FILE CO INC V NLRC
[PAGE 257]
A2010 -8- Disini
TIERRA INTERNATIONAL CONSTRUCTION CORP V
NLRC (OLIVAR)
211 SCRA 73
PADILLA; July 3, 1992
NATURE
Petition for the annulment of the decision of NLRC.
FACTS
- March 7 1984: private respondent Isidro P. Olivar was hired by
FEBROE, a foreign shipping company, through its local agent
Tierra International Construction Corporation, to work as shift
supervisor in its Base Operating Support (BOS) project for the
U.S. Navy in the British Indian Ocean Territory of Diego Garcia,
for a period of one (1) year with a basic monthly salary of US
$680.00.
- Olivar’s employment contract was renewed in 1985; the last
renewal was on 8 May 1986. But on 1 October 1986, he was
dismissed from employment, and subsequently repatriated to
the Philippines.
- Olivar alleged that he was a victim of improper termination of
employment thru gradual and systematic removal of high
salaried employees.
- FEBROE averred that in July and August 1986, its management
undertook a comprehensive audit and evaluation of its entire
work force to promote economy, efficiency and profitability in
its operations, and to reduce personnel whose positions were
considered redundant or surplusage and/or to re-assign
personnel to other available useful positions. One of the
positions listed for abolition was the position of the olivar as
"13401 — Supervisor, Technical."
- POEA held that the termination was for authorized cause.
POEA then ordered Tierra and FEBROE to pay Olivar his
separation pay.
- Tierra contended that the employment contract does not
provide for separation pay in case of termination based on
redundancy or reduction of force due to a decrease in volume
or scope of work.
- NLRC reversed the decision of POEA and ordered the company
to pay Olivar corresponding to the unexpired portion of his
contract.
ISSUES
1. WON termination of Olivar is illegal
2. WON Olivar is entitled to separation pay
HELD
1. YES, the termination was for a valid cause.
Ratio In redundancy, what is looked into is the position itself,
the nature of the services performed by the employee and the
necessity of such position.
Reasoning
- Termination of an employee's services because of a reduction
of work force due to a decrease in the scope or volume of work
of the employer is synonymous to, or a shade of termination
because of redundancy under Article 283 of the Labor Code.
- Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual
requirements of the enterprise. A position is redundant where it
is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as over-hiring of
workers, decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.
- Olivar received his notice of termination advising him that his
position will be deleted because of a reduction of force due to a
decrease in scope of work assigned. 28 other positions were
also abolished. Olivar was not singled out and that his
termination was not arbitrary or malicious on the part of the
employer.
Labor Law 1
- The law does not make any distinction between a technical
and a non-technical position for purposes of determining the
validity of termination due to redundancy. Neither does the law
nor the stipulations of the employment contract here involved
require that junior employees should first be terminated (in
answer to NLRC’s reasoning that junior employees should be
terminated first before the technical and senior positions).
2. YES, Olivar is entitled to separation pay.
Ratio Not only are existing laws read into contracts in order to
fix the obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into
contracts as a postulate of the legal order.
Reasoning
- There is no mention of an award of separation pay in the
contract between the parties. HOWEVER, Tierra admits that
Article 283 of the Labor Code governs its employer-employee
relationship with the private respondent as the same is deemed
written in the employment contract signed by the parties. Thus,
although a contract is the law between the parties, thereto, this
provisions of law which regulate such contracts are deemed
included and shall limit and govern the relations between the
parties.
Disposition. Decision of the NLRC is reversed and set aside,
and the decision of the POEA is revived. No pronouncements as
to costs.
ESCAREAL V NLRC
[PAGE 260]
EDGE APPAREL INC V NLRC
349 PHIL 972
VITUG; February 12, 1998
NATURE
Petition for certiorari and prohibition assailing the decision of
the NLRC
FACTS
- Pursuing its retrenchment program, petitioner Edge Apparel,
Inc., dismissed private respondents from employment. The
subsequent receipt of their separation pay benefits did not
deter them from going through with their complaint for illegal
dismissal against petitioner. The charge averred that the
retrenchment program was a mere subterfuge used by Edge
Apparel to give a semblance of regularity and validity to the
dismissal.
- Satisfied with the legality of the retrenchment program, the
Labor Arbiter dismissed the complaint of private respondents
against petitioner. The decision was appealed to the NLRC. In
their appeal, private respondents claimed that the documents
submitted to demonstrate the alleged losses had been
"bloated" so as to reflect financial losses. The NLRC held that
there was no basis for the retrenchment of the workers .
- The NLRC found, however, that the workers were terminated
due to redundancy and ordered petitioner to pay private
respondents additional separation pay in accordance with Art.
283. The NLRC noted that the workers were assigned to the
sewing line for simple garments which was phased out due in
fact to the dropping of this particular line of business. It was
held that the dismissal of private respondents could be
considered to have been due to redundancy since it was only
private respondents' line of work which was phased out by
petitioner. Edge Apparel’s MFR was denied, hence this petition.
ISSUE
WON private respondents were dismissed due to redundancy
HELD
NO
Ratio The fact that a mere portion of the business of an
employer is shut down does not necessarily remove that
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measure from the ambit of the term "retrenchment" within the
meaning of Art. 283.
Reasoning
- The Labor Arbiter, affirmed by the NLRC, found petitioner to
have complied with the requirements of the law in effecting a
valid retrenchment. The law acknowledges the right of every
business entity to reduce its work force if it is compelled by
economic factors that would otherwise endanger its stability or
existence. In exercising its right to retrench employees, the firm
may choose to close all, or a part of, its business to avoid
further losses or mitigate expenses.
Obiter
- Redundancy exists where the services of an employee are in
excess of what would reasonably be demanded by the actual
requirements of the enterprise. A position is redundant when it
is superfluous, and superfluity of a position or positions could be
the result of a number of factors, such as the overhiring of
workers, a decrease in the volume of business or the dropping
of a particular line or service previously manufactured or
undertaken by the enterprise. An employer has no legal
obligation to keep on the payroll employees more than the
number needed for the operation of the business.
Retrenchment, in contrast to redundancy, is an economic
ground to reduce the number of employees. A dismissal due to
redundancy entitles the worker to separation pay equivalent to
1 month pay for every year of service. When the termination of
employment is due to retrenchment to prevent losses, the
separation pay is only an equivalent of 1/2 month pay for every
year of service. In the above instances, a fraction of at least 6
months is considered as 1 whole year.
Disposition The appealed decision is MODIFIED by deleting
the additional award of separation pay to private respondents.
CRITERIA-SELECTION OF EMPLOYEE
PANLILIO V NLRC (FINDSTAFF PLACEMENT
SERVICES INC, OMAN SHERATON HOTEL INC)
281 SCRA 53
ROMERO; October 17, 1997
NATURE
Review of the decision of the NLRC
FACTS
- Petitioner Moises B. Panlilio was recruited by private
respondent Findstaff Placement Services (FPS) for employment
in the Sheraton Hotel in Oman as Recreational Manager in
October 1991. The contract was for a period of two years.
However, in March 1992, his services were terminated.
- He filed a complaint for illegal dismissal before the POEA.
POEA rendered a decision in favor of the petitioner on the
ground that the alleged redundancy of his position was not
adequately proven.
- FPS filed an appeal before the NLRC, submitting affidavits from
the officers of the Director of Personnel and Training Division of
Sheraton Hotel by FPS substantiating the redundancy of
petitioner’s position. However, NLRC affirmed the decision of
the POEA. On MFR, NLRC reversed its decision.
ISSUE
WON Panlilio was illegally dismissed
HELD
YES
- The redundancy of his position wasn’t fully substantiated. The
affidavits and documents it submitted are entitled to little
weight, for it does not prove the superfluity of petitioner’s
position. In fact, these documents do not even present the
necessary factors which would confirm that a position is indeed
redundant, such as overhiring of workers, decreased volume of
business or dropping of a product line or service activity.
Labor Law 1
- Undoubtedly, said documents still do not sufficiently explain
the reason why petitioner’s position had become redundant, but
only elucidated the fact that he was not a victim of any
discrimination in effecting the termination.
- We have held that it is important for a company to have fair
and reasonable criteria in implementing its redundancy
program, such as but not limited to, (a) preferred status, (b)
efficiency and (c) seniority. Unfortunately for FPS, such
appraisal was not done in the instant case.
Disposition Decision reversed
GOLDEN THREAD KNITTING INDUSTRIES INC V
NLRC
[PAGE 194]
TANJUAN V PHIL POSTAL SAVINGS BANK
411 SCRA 168
PANGANIBAN; September 16, 2003
NATURE
Petition for Review of a CA ruling
FACTS
- Tanjuan (petitioner) was employed by Philippine Postal
Savings Bank, Inc. (respondent), a government financing
institution and a subsidiary of the Philippine Postal Corporation
(Philpost), as Property Appraisal Specialist and Officer-in-Charge
of its Credit Supervision and Control Department. At the time
material to this case, he was on his fourth year of service.
Torres (respondent Torres), PPSBI’s President and Chief
Executive Officer, issued Memorandum 145-98 addressed to
petitioner and five (5) other employees belonging to its
Accounts Management Department and Credit Supervision and
Control Department charging them with negligence in the
performance of duties and misrepresentation. Petitioner
submitted his written explanation alleging that he merely
reviewed and validated the findings of the Property Appraiser.
- OP Order No. 003-99 was issued by respondent Torres to
petitioner informing him of his preventive suspension for a
period of ninety (90) days in view of the pending administrative
investigation against him, later reduced to 30 days. Petitioner’s
suspension would only be up to February 11, 1999, after which
he could already report back to work.
- Board of Directors of respondent PPSBI issued Board
Resolution No. 99-14 approving the bank’s reorganization via
retrenchment of employees and re-alignment of functions and
positions for the purpose of preventing further serious losses. In
furtherance of the Board’s decision, a letter was released by
respondent Torres addressed to all employees of respondent
PPSBI, informing them of the impending reorganization and
enjoining them to apply for their desired plantilla positions
under the new organizational set-up not later than July 20,
1999, otherwise they shall not be included in the selection
process and shall be deemed to have opted to be separated
instead. Petitioner did not apply for any position in the new
organizational set-up.
- Petitioner received a Notice of Termination dated October 4,
1999 informing him that pursuant to respondent PPSBI’s
adoption of a new organizational structure under Board
Resolution No. 99-14, his employment therewith shall cease [at]
the close of office hours on November 4, 1999 or thirty (30)
calendar days from date of receipt of the notice on the ground
of abolition of position. The Department of Labor and
Employment was likewise seasonably notified prior to the
effectivity date of petitioner’s termination as required by law.
However, the release of his separation pay of one and a half (1
1/2) months salary for every year of service was withheld in
A2010 - 10 - Disini
view of the pendency of a criminal case against him with the
Office of the Ombudsman for alleged irregularities in the
granting of loans for which he could likewise be held pecuniarily
liable.
- Petitioner filed a complaint for illegal dismissal with money
claims.
- Labor Arbiter declared Philippine Postal Savings Bank, Inc.
guilty of illegal dismissal.
Respondents appealed to the NLRC asseverating that they were
denied due process of law when Labor Arbiter allegedly hastily
decided that they did not adduce evidence to support their
claim of business losses to justify retrenchment. In support of
their appeal, respondents submitted in evidence different
documents.
- Petitioner duly opposed the presentation of the aforesaid
documents contending that [these] cannot be presented for the
first time on appeal. Moreover, even if the same can be
admitted on appeal, the aforesaid documents are insufficient to
prove the existence of business losses. Finally, petitioner posits
that if serious losses were in fact incurred by respondent PPSBI,
the same was due to the mismanagement of its officers which
should not be borne by its rank and file employees.
- NLRC issued a Resolution admitting the evidence presented by
respondents on appeal and finding the same adequate to prove
the existence of business losses on the part of respondent
PPSBI. Petitioner elevated the case to the CA which affirmed the
NLRC.
ISSUES
1. WON proof of business losses maybe admitted on appeal
2. WON the CA has a Power to review findings of fact
3. WON the Retrenchment was valid
HELD
1. YES
- It is well-settled that the NLRC is not precluded from receiving
evidence, even for the first time on appeal, because technical
rules of procedure are not binding in labor cases. This rule
applies equally to both the employee and the employer. In the
interest of due process, the Labor Code directs labor officials to
use all reasonable means to ascertain the facts speedily and
objectively, with little regard to technicalities or formalities.
However, delay in the submission of evidence should be clearly
explained and should adequately prove the employer’s
allegation of the cause for termination.
- In the instant case, it is undisputed that the evidence of
business losses for the years 1996 up to 1999 was introduced
before the NLRC only. The CA correctly noted, however, that
respondents reserved the right to introduce the evidence to the
labor arbiter, if and when required to do so. Reasons of
confidentiality and the volatile nature of PPSBI’s business as a
banking institution prompted respondents to limit the
presentation of this evidence at the outset. Indeed, it would
have been foolhardy for the NLRC and the CA to reject the
evidence, just because it had not been presented before the
labor arbiter. Such evidence was absolutely necessary to
resolve the issue of whether petitioner’s employment was
validly terminated. For strictly adhering to technical rules of
procedure at the expense of equity, the Commission has in fact
been chided by the Court in Philippine Telegraph and Telephone
Corporation v. NLRC, from which we quote:
“Thus, even if the evidence was not submitted to the labor
arbiter, the fact that it was duly introduced on appeal to
respondent commission is enough basis for the latter to have
been more judicious in admitting the same, instead of falling
back on the mere technicality that said evidence can no
longer be considered on appeal. Certainly, the first course of
action would be more consistent with equity and the basic
notions of fairness.”
- As to petitioner’s claim that he was denied due process
because of the belated admission of the evidence, suffice it to
say that he was given every opportunity to refute it and to
submit counter-evidence. The essence of due process consists
simply in according parties reasonable opportunity to be heard
Labor Law 1
and to submit any evidence they may have in support of their
defense.
2. YES
- Section 9 of Batas Pambansa Blg. 129, as amended by
Republic Act No. 7902, expanded the jurisdiction of the CA as
follows:
“SEC. 9. Jurisdiction. - The Court of Appeals shall exercise:
“(1) Original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus, and quo warranto, and
auxiliary writs or processes, whether or not in aid of its
appellate jurisdiction;
- The Court of Appeals shall have the power to try cases and
conduct hearings, receive evidence and perform any and all
acts necessary to resolve factual issues raised in cases falling
within its original and appellate jurisdiction, including the power
to grant and conduct new trials or further proceedings. Verily,
the appellate court, pursuant to the exercise of its original
jurisdiction over petitions for certiorari, has the power to review
NLRC cases. Such review extends to the factual findings of the
labor arbiter when, as in this case, these are at variance with
those of the NLRC.
- The CA acted within its power when it disregarded the labor
arbiter’s findings and upheld the contrary ruling of the NLRC. In
turn, the factual findings of the former affirming those of the
latter are generally binding on this Court and will not as a rule
be reviewed on appeal. Petitioner has not shown any reason for
us to depart from this rule.
3. YES
- The Court has consistently recognized and affirmed the
employer’s management right and prerogative to terminate the
services of its employees in order to obviate or minimize
business losses. Retrenchment, one of the authorized causes
for termination under the Labor Code, has been defined as “the
termination of employment initiated by the employer through
no fault of the employees and without prejudice to the latter,
resorted by management during periods of business recession,
industrial depression, or seasonal fluctuations[;] or during lulls
occasioned by lack of orders, shortage of materials, conversion
of the plant for a new production program or the introduction of
new methods or more efficient machinery, or of automation.
- For the exercise of such prerogative, Article 283 of the Labor
Code provides these conditions:
“Art. 283. Closure of establishment and reduction of
personnel. -- The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the worker and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (½)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one
(1) whole year.
-Thus, the requisites for valid retrenchment are the following:
(1) necessity of the retrenchment to prevent losses, and proof
of such losses; (2) written notice to the employees and to the
Department of Labor and Employment (DOLE) at least one
month prior to the intended date of retrenchment; and (3)
payment of separation pay equivalent to one-month pay or at
least one-half month pay for every year of service, whichever is
higher. There is no dispute that respondents have seasonably
complied with the procedural requirement of serving written
notice to petitioner and the DOLE. On the other hand, the
A2010 - 11 - Disini
withholding of separation pay, which has not been raised as an
issue in this Petition, was satisfactorily resolved by the CA.
- The only remaining question is whether respondents have
sufficiently and convincingly established business reverses of
the kind or the amount that would justify the retrenchment. As
this Court has held, before any reduction of personnel becomes
legal, any claim of actual or potential business losses must
satisfy established standards as follows: (1) the losses incurred
are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing the
expected losses; and (4) the alleged losses, if already incurred,
or the expected imminent losses sought to be forestalled are
proven by sufficient and convincing evidence. The employer has
the burden of proving that the losses are serious, actual and
real.
- The Court had previously ruled that financial statements
audited by independent external auditors constituted the
normal method of proof of the profit-and-loss performance of a
company. Audit reports conducted by no less than the
Commission on Audit (COA) showec the losses alleged by
respondents to have been the primary reason for the Board of
Directors’ decision to effect retrenchment and reorganization
were clearly not at all fictitious, imaginary or mere conjectures
as claimed by petitioner. Furthermore, the fact that respondent
PPSBI was being regularly monitored by the Bangko Sentral ng
Pilipinas (BSP) and the Philippine Deposit Insurance Corporation
(PDIC) due to its precarious financial position for several years
positively affirms respondents’ asseveration of continuous
serious business losses. The findings of the CA affirming those
of the NLRC showed real and grave financial reverses, which
made downsizing the only recourse for the bank to follow.
Indeed, the retrenchment of petitioner was the consequence of
the bank’s reorganization and a cost-saving device recognized
by jurisprudence.
Disposition Petition is DENIED, and the assailed Decision and
Resolution AFFIRMED.
LOPEZ SUGAR CORP V FRANCO
[PAGE 150]
EMPLOYMENT OF INDEPENDENT
CONTRACTOR – EFFECT
ASIAN ALCOHOL CORPORATION V NLRC
305 SCRA 416
PUNO; March 25, 1999
NATURE
Petition for Review on certiorari of NLRC decision
FACTS
- In Sept ‘91, the Parsons family, who originally owned the
controlling stocks in Asian Alcohol Corp (AAC), were driven by
mounting business losses to sell their majority rights to Prior
Holdings, Inc. which took over AAC’s management and
operation.
- To prevent further losses, Prior Holding implemented an
organizational plan and other cost-saving measures. Some 117
employees out of a total workforce of 360 were separated. 72 of
them occupied redundant positions that were abolished. Of
these positions, 21 held by union members and 51 by non-union
members.
- The 6 private respondent workers are among those union
members whose positions were abolished due to redundancy. In
Oct, ‘92, they received individual notices of termination
effective Nov 30, ‘92. They were paid the equivalent of 1 month
salary for every year of service as separation pay, the money
value of their unused sick, vacation, emergency and seniority
leave credits, 13th month pay for the year 1992, medicine
allowance, tax refunds, and goodwill cash bonuses for those
Labor Law 1
with at least 10 years of service. All of them executed sworn
releases, waivers and quitclaims. Except for 2, they all signed
sworn statements of conformity to the company retrenchment
program. And except for one, they all tendered letters of
resignation.
- The 6 private respondents filed with the NLRC complaints for
illegal dismissal with a prayer for reinstatement with
backwages, moral damages and atty's fees. They alleged that
AAC used the retrenchment program as a subterfuge for union
busting. They claimed that they were singled out for separation
by reason of their active participation in the union. They also
asseverated that Asian Alcohol was not bankrupt as it has
engaged in an aggressive scheme of contractual hiring.
- LA ruled in favor of AAC saying that retrenchment was valid.
NLRC reversed LA ruling that there was illegal dismissal. It
rejected the evidence by AAC to prove its business reversals. It
ruled that the positions of private respondents were not
redundant for the simple reason that they were replaced by
casuals. Hence, this petition.
ISSUE
WON the positions of the herein private respondent workers are
unnecessary redundant and superfluous, thereby justifying the
termination of their employment
HELD
YES
Ratio Retrenchment and redundancy under A283 of Labor
Code2 are just causes for the employer to terminate the
services of workers to preserve the viability of the business. In
exercising its right, however, management must faithfully
comply with the substantive and procedural requirements laid
down by law and jurisprudence
Reasoning
- On Retrenchment: AAC was able to prove the ff. requirements
for retrenchment to be valid: (1) the retrenchment was
reasonably necessary and likely to prevent business losses,
which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith
by the employer; (2) ER served written notice both to the EEs
and to DOLE at least 1 mo. prior to the intend date of
retrenchment;(3) ER paid the retrenched employees separation
pay equivalent to 1 mo. pay or at least 1/2 month pay for every
year of service, whichever is higher; (4) ER exercised its
prerogative to retrench employees in good faith for the
advancement of its interest of its interest and not to defeat or
circumvent the employees' right to security of tenure; and (5)
ER used fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the EEs, such
as status (i.e., whether they are temporary, casual, regular or
managerial employees), efficiency, seniority, physical fitness,
age, and financial hardship for certain workers.
- On Redundancy: Redundancy exists when the service
capability of the work force is in excess of what is reasonably
needed to meet the demands on the enterprise. A redundant
position is one rendered superfluous by any of these factors:
overhiring of workers, decreased volume of business, dropping
of a particular product line previously manufactured by the
company or phasing out of a service activity priorly undertaken
2
Art. 283. Closure of establishment and reduction of personnel. — The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment, to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
labor saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in case of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay at least one-half (1/2), month pay for
every year of service, whichever is higher. A fraction of at least six (6) month shall be
considered one (1) whole year.
A2010 - 12 - Disini
by the business. Under these conditions, ER has no legal
obligation to keep in its payroll more EEs than are necessary for
the operation of its business.
- Procedure – Requisites for valid implementation of valid
redundancy program: (1) written notice served on both the
employees and the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; (2)
payment of separation pay equivalent to at least one month
pay or at least one month pay for every year of service,
whichever is higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining
what positions are to be declared redundant and accordingly
abolished.
- On Effect of Employment of Independent Contractor: An
employer's good faith in implementing a redundancy program is
not necessarily destroyed by availment of the services of an
independent contractor to replace the services of the
terminated employees. We have previously ruled that the
reduction of the number of workers in a company made
necessary by the introduction of an independent contractor is
justified when the latter is undertaken in order to effectuate
more economic and efficient methods of production. In the case
at bar, private respondents failed to proffer any proof that the
management acted in a malicious or arbitrary manner in
engaging the services of an independent contractor to operate
the Laura wells. Absent such proof, the Court has no basis to
interfere with the bona fide decision of management to effect
more economic and efficient methods of production.
Disposition Petition GRANTED. NLRC decision set aside. LA
ruling reinstated.
PROCEDURE – REQUIREMENT
ASIAN ALCOHOL CORP V NLRC
[PAGE 264]
HEARING
WILTSHIRE FILE CO INC V NLRC
[PAGE 257]
VENUE OF COMPLAINT
WILTSHIRE FILE CO INC V NLRC
[PAGE 257]
C. RETRENCHMENT TO PREVENT LOSSES
DEFINED
FF MARINE CORP V NLRC
455 SCRA 154
TINGA; April 8, 2005
FACTS
- On 26 October 1998, petitioners filed with the Department of
Labor and Employment (DOLE) a notice that petitioner
corporation was undertaking a retrenchment program to curb
the serious business reverses brought about by the Asian
economic crisis. Notices and separation were given to the
affected employees.
Labor Law 1
- 21 employees were retrenched including petitioner Magno
who despite receiving separation pay, filed a case for illegal
dismissal. Magno claimed that he was beguiled into accepting
the separation pay since petitioners terminated his services on
the pretext that the dredging machine where he was assigned
was temporarily stalled in Zambales. Magno eventually learned
that the company had been adducing to others a different
reason for retrenchment, primarily the Asian financial crisis
- Labor Arbiter Salimathar V. Nambi promulgated a Decision
upholding the validity of retrenchment. NLRC reversed decision.
CA affirmed NLRC decision.
- Material to the resolution of the case was the issue of
admissibility and competency as evidence of the 31 December
1997 and 1996 Financial Statements of petitioners. However,
the appellate court ruled that a perusal of the certification
issued by Banaria, Banaria and Company (independent auditor)
regarding the Financial Statements reveals that the same were
executed on 30 March 1998 or nine (9) months prior to the
filing of the complaint for illegal dismissal on 12 January 1999.
Thus, the financial statements could have been offered as
evidence before the Labor Arbiter and the NLRC. Thus, the
Court of Appeals reproached petitioners for having suppressed
material evidence
- Accordingly, the appellate court found that petitioners failed to
substantiate the substantive requirements of a valid
retrenchment
ISSUE
WON retrenchment was valid
HELD
NO
- 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 seasonal
fluctuations or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more
efficient machinery, or of automation
- There are three (3) basic requisites for a valid retrenchment to
exist, to wit: (a) the retrenchment is necessary to prevent
losses and such losses are proven; (b) written notice to the
employees and to the DOLE at least one (1) month prior to the
intended date of retrenchment; and (c) payment of separation
pay equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher
- Also according to jurisprudence: “the employer’s prerogative
to bring down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic
means… alleged losses if already realized, and the expected
imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence”
- The law recognizes this under Article 283 of the Labor Code.
However, the employer bears the burden to prove his allegation
of economic or business reverses.
- petitioners adduced before the Labor Arbiter the 1994 and
1995 Financial Statements. Said Financial Statements, however,
were prepared only by petitioners’ accountant, Rosalie
Bengzon, and approved by the manager Bernadette Rosales.
They were not audited by an independent external auditor. The
financial statements show that in 1994 and 1995, petitioner
corporation earned an income of only P77,609.79 and
P155,339.96, respectively. In contrast, the 1996 and 1997
Financial Statements, however, showed losses of
P18,005,918.08, and P21,316,072.89, respectively. It was only
before the Court of Appeals that the financial statements for the
years 1996 and 1997 as audited by an independent external
auditor were introduced. They were not presented before the
Labor Arbiter and the NLRC although they were executed on 30
March 1998, several months prior to the filing of the complaint
for illegal dismissal by Magno on 12 January 1999
- The appellate court’s affirmance of the decision of the NLRC is
principally anchored on the ground that petitioners failed to
A2010 - 13 - Disini
adduce the 1996 and 1997 Financial Statements audited by an
independent external auditor before the Labor Arbiter and the
NLRC. By merely upholding the evidentiary weight accorded to
financial statements duly audited by independent external
auditors, grave abuse of discretion on the part of the NLRC is
hardly imaginable as it is unfounded
- It is essentially required that the alleged losses in business
operations must be proven. The employer bears the burden of
proving the existence or the imminence of substantial losses
with clear and satisfactory evidence that there are legitimate
business reasons justifying a retrenchment. Should the
employer fail to do so, the dismissal shall be deemed unjustified
- Moreover, petitioners failed to act in consonance with the rule
that retrenchment shall be a remedy of last resort.
retrenchment is not perfectly justified as there was no showing
that the retrenchment was the last recourse resorted to by
petitioners. Although petitioners allege in their petition before
this Court that they had undertaken cost-cutting measures
before they resorted to retrenchment, their contention does not
inspire belief for the evidence shows that the petition for
certiorari filed by petitioners with the Court of Appeals is bereft
of any allegation of prior resort to cost-cutting measures other
than retrenchment
DISTINCTION REDUNDANCY AND
RETRENCHMENT
AG&P UNITED RANK AND FILE ASSN V NLRC
(ATLANTIC GULF AND PACIFIC COMPANY OF
MANILA INC)
265 SCRA 159
MENDOZA; November 29, 1996
NATURE
Special Civil Action for Certiorari
FACTS
- Petitioner union is the duly certified bargaining agent of the
rank and file employees of the respondent corporation.
- As a result of a deadlock in the negotiations for a collective
bargaining agreement, the union declared a strike on
September 22, 1987.
- Less than a month later, the Department of Labor and
Employment assumed jurisdiction over the dispute. Then
Secretary Franklin Drilon rendered a decision on February 10,
1988 from which both parties appealed.
- On January 11, 1988, prior to the rendition of the decision of
the Secretary of Labor and Employment, the president of
respondent company announced the adoption by the company
of several cost-cutting measures to forestall impending financial
losses. Among these was a so-called "redundancy program,"
which, as implemented on March 1, 1988, resulted in the layoff
of around 177 employees, some of whom were officers and
members of the petitioner union. The affected employees were
given separation pay equivalent to one month pay for every
year of service, for which they signed documents of waiver.
- On March 14, 1988, however, petitioners filed a complaint for
unfair labor practice and illegal dismissal.
- After trial, Labor Arbiter Mendoza found the complaint to be
without merit and accordingly dismissed it. He found the
"redundancy program" necessary for the company's existence
and considered private respondent's practice of rehiring or
reemploying dismissed employees under the said program as a
managerial prerogative, made not only in pursuance of the
company's policy of giving preference to its dismissed workers,
but actually beneficial to the workers as well. Moreover, he held
that petitioners' acceptance of termination pay and other
benefits constituted a waiver of their right to question their
dismissal.
- On appeal, the NLRC reversed the labor arbiter's ruling.
Labor Law 1
- The company moved for a reconsideration. On May 29, 1992,
the NLRC under R.A. No. 6715, reconsidered the decision and
reinstated the decision of the labor arbiter.
- Petitioners filed a motion for reconsideration but their motion
was denied
ISSUE
WON the NLRC gravely abused its discretion by declaring the
legality of the redundancy program of the company
HELD
NO
- It is now settled that the NLRC has the power to admit on
appeal additional evidence to show lawful cause for dismissal,
provided that the delay in the submission of said evidence is
explained and the same clearly proves the employer's
allegation of a valid cause for dismissing his employees.
- In the case at bar, evidence of losses for the years 1987 up to
1990 was, belatedly introduced in the NLRC. But the delay was
satisfactorily explained by respondent company, as the audit
conducted on its financial report by Sycip Gorres Velayo and Co.
was completed only in 1991. The additional evidence presented
confirmed private respondent's allegation that the losses
expected by the company were substantial and reasonably
imminent to justify the layoff of the individual petitioners.
- It is necessary to distinguish "redundancy" from
"retrenchment." Both are mentioned in Art. 283 of the Labor
Code as just causes for the closing of establishments or
reduction of personnel. "Redundancy" exists when the services
of an employee are in excess of what is required by an
enterprise. "Retrenchment," on the other hand, is one of the
economic grounds for dismissing employees and is resorted to
primarily to avoid or minimize business losses. Private
respondent's "redundancy program, " while denominated as
such, is more precisely termed "retrenchment" because it is
primarily intended to prevent serious business losses.
- The Labor Code recognizes retrenchment as one of the
authorized causes for terminating the employer-employee
relationship and the decision to retrench or not to retrench is a
management prerogative. In the case at bar, the company
losses were duly established by the financial statements
presented by both parties.
- Petitioners contend that the "redundancy program" was
actually a union-busting scheme of management, aimed at
removing union officers who had declared a strike. This
contention cannot stand in the face of evidence of substantial
losses suffered by the company. Moreover, while it is true that
the company rehired or reemployed some of the dismissed
workers, it has been shown that such action was made only as
company projects became available and that this was done in
pursuance of the company's policy of giving preference to its
former workers in the hiring of project employees. The rehiring
or reemployment does not negate the imminence of losses,
which prompted private respondent to retrench.
- Lastly, it is not disputed that petitioners signed documents of
waiver. Petitioners insist that the documents are without any
effect because quitclaims and releases are contrary to public
policy and therefore, null and void. Not all quitclaims and
releases are, however, contrary to public policy. If the
agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not
later be disowned simply because of a change of mind. It is only
where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person
making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as
a valid and binding undertaking.
Disposition Dismissed.
A2010 - 14 - Disini
DISTINCTION CLOSURE AND
RETRENCHMENT
JAT GEN SERVICES V NLRC (MASCARINAS)
421 SCRA 78
QUISUMBING; January 26, 2004
NATURE
Certiorari on decision of CA affirming NLRC affirming LA finding
petitioner liable for illegal dismissal and ordering petitioners to
pay private respondent Mascarinas separation pay, backwages,
legal holiday pay, service incentive leave pay and 13th month
pay in the aggregate sum of P85,871.00.
FACTS
- JAT is engaged in the business of selling second-hand heavy
equipment. It hired private respondent as helper tasked to
coordinate with the cleaning and delivery of the heavy
equipment sold to customers. Initially, private respondent was
hired as a probationary employee and was paid P165 per day
that was increased to P180 in July 1997 and P185 in January
1998.
- In October 1997, the sales of heavy equipment declined
because of the Asian currency crisis. Consequently, JAT
temporarily suspended operations. It advised its employees,
including private respondent, not to report for work starting on
the first week of March 1998. JAT indefinitely closed shop
effective May 1998.
- A few days after, Mascarinas filed a case for illegal dismissal
and underpayment of wages.
- On December 14, 1998, JAT filed an Establishment
Termination Report with the DOLE, notifying its decision to
close its business operations due to business losses and
financial reverses.
ISSUE
WON private respondent was illegally dismissed
HELD
NO
Ratio Article 283 of the Labor Code is clear that an employer
may close or cease his business operations or undertaking even
if he is not suffering from serious business losses or financial
reverses, as long as he pays his employees their termination
pay in the amount corresponding to their length of service, It
would, indeed, be stretching the intent and spirit of the law if
we were to unjustly interfere in management’s prerogative to
close or cease it s business operations just because said
undertaking is not suffering from any loss. (Industrial Timber
Corp. v NLRC)
Reasoning
- While the CA defined the issue to be the validity of dismissal
due to alleged closure of business, it cited jurisprudence
relating to retrenchment to support its resolution and
conclusion. While they are often used interchangeably and are
interrelated, they are actually two separate and
independent causes for termination of employment.
Termination of an employment may be predicated on one
without the need of resorting to the other.
- Closure of business, on one hand, is the reversal of fortune of
the employer whereby there is a complete cessation of business
operations and/or an actual locking-up of the doors of
establishment, usually due to financial losses. Closure of
business as an authorized cause for termination of employment
aims to prevent further financial drain upon an employer who
cannot pay anymore his employees since business has already
stopped.
- On the other hand, retrenchment is reduction of personnel
usually due to poor financial returns so as to cut down on costs
of operations in terms of salaries and wages to prevent
bankruptcy of the company. It issometimes also referred to as
downsizing. Retrenchment is an authorized cause for
termination of employment which the law accords an employer
Labor Law 1
who is not making good in its operations in order to cut back on
expenses for salaries and wages by laying off some employees.
The purpose of retrenchment is to save a financially ailing
business establishment from eventually collapsing.
- However, the burden of proving that such closure is bona fide
falls upon the employer. JAT’s submitted financial statements
were bereft of details on the extent of alleged losses incurred.
- So we proceed to determining if there was valid dismissal on
the ground of closure or cessation of operations for reasons
other than substantial business losses. JAT’s income statement
showed declining sales –enough to justify the closure of
business.
The dismissal being valid, backwages need not be awarded.
Dispositive petition is given due course. The assailed
Resolutions of the Court of Appeals in CA-G.R. SP No. 60337 are
AFFIRMED with the MODIFICATION that the award of P66,924.00
as backwages is deleted. The award of separation pay
amounting to P10,296.00 and the other monetary awards,
namely salary differentials in the amount of P1,066.00, legal
holiday pay in the amount of P1,850.00, service incentive leave
pay in the amount of P925.00 and the 13th month pay in the
amount of P4,910, or a total of P29,047.00 are maintained. No
pronouncements as to costs.
ALABANG COUNTRY CLUB V NLRC (ALABANG
COUNTRY CLUB INDEPENDENT EMPLOYEES UNION)
466 SCRA 329
CARPIO-MORALES; August 9, 2005
NATURE
Petition for review on certiorari. Alabang Country Club Inc.
(ACCI) seeks to set aside the appellate court’s decision which
denied its motion for reconsideration, and ordered the
reinstatement of herein 63 respondents-members of the labor
organization Alabang Country Club Independent Employees
Union, without loss of seniority rights and other privileges, and
payment of full backwages.
FACTS
- ACCI’s internal auditor conducted a study on the profitability
of ACCI’s Food and Beverage Department
- Her report showed that from 1989-1993, the F&B Dept had
been incurring substantial losses of around P8,727,135
- Realizing that it was no longer profitable for ACCI to maintain
its own F&B Dept, the management decided to cease from
operating it, and to open it to a contractor, which would be
willing to operate its own food and beverage business within the
club.
- ACCI entered into an agreement with La Tasca Restaurant for
it to operate the F&B Dept.
- ACCI sent its F&B Dept employees letters informing them their
services would be terminated effective 1 month later, that they
would get separation pay of 125% of their monthly salary for
every year of service, that La Tasca agreed to absorb all
affected employees immediately with the status of regular
employees without need of undergoing probationary period,
and that they would receive the same salary they were
receiving at the time of their termination
- The Union filed a complaint for illegal dismissal, unfair labor
practice, regularization and damages with prayer for the
issuance of a writ of preliminary injunction against ACCI
- The ACCI ceased operating its F&B Dept as scheduled, and La
Tasca began operating its own F&B business
- Meanwhile, in the proceedings before the Labor Arbiter,
respondent union informed that the F&B division had been
reporting gaining profits as shown by the Statement of Income
and Deficit prepared by SGV. They thus argued that compliance
with standards for losses to justify their retrenchment were not
met by ACCI.
- ACCI averred that it may exercise management prerogatives
to adopt a cost-saving and cost-consciousness program t
improve efficiency in its operations, etc.
A2010 - 15 - Disini
- By decision of April 30, 1999, the Labor Arbiter dismissed the
complaint for illegal dismissal on the ground that a business
entity has the right to reduce its work force if necessitated by
compelling economic factors which endanger its existence or
stability.
- On appeal, the NLRC acknowledged the right of ACCI to
regulate, according to its own discretion and judgment, all
aspects of employment including the lay-off of workers because
of losses in the operation of its business, lack of work and
considerable reduction in the volume of business. It thus
dismissed the appeal.
- Private respondents thereupon brought their case, via petition
for certiorari before the Court of Appeals, alleging that the
Labor Arbiter and the NLRC committed grave abuse of
discretion and utter ignorance of the law in completely
disregarding the audited financial statements prepared by
SGV&Co. showing that ACCI’s F & B Department had been
consistently earning profits.
- By decision of August 14, 2002, the Court of Appeals reversed
those of the NLRC and the Labor Arbiter. It held that due to
ACCI’s failure to prove by sufficient and competent evidence
that its alleged losses were substantial, continuing and without
any immediate prospect of abating them, the bona fide nature
of the retrenchment appeared doubtful
- ACCI’s motion for reconsideration was denied by the appellate
court by Resolution of March 6, 2003
- During the pendency of the whole case, petitioner the
separation package of sixty-two (62) of the sixty-three (63)
individual respondents on account of which they executed
Releases, Waivers and Quitclaims in its favor.
ISSUE
WON respondents were terminated for an authorized cause
HELD
YES
Reasoning
- The court first distinguished between retrenchment and
closure of a business undertaking, because the respondents
were relying on a case (Lopez Sugar Corp. v Federation of Free
Workers) involving retrenchment on the ground of serious
business losses being allowed subject to certain conditions.
- The court, however, viewed this case as one involving closure
of business undertaking.
- **Retrenchment is the reduction of personnel for the
purpose of cutting down on costs of operations in terms of
salaries and wages resorted to by an employer because of
losses in operation of a business occasioned by lack of work and
considerable reduction in the volume of business.
- **Closure of a business or undertaking due to business
losses is the reversal of fortune of the employer whereby there
is a complete cessation of business operations to prevent
further financial drain upon an employer who cannot pay
anymore his employees since business has already stopped.
- While the Labor Code provides for the payment of separation
package in case of retrenchment to prevent losses, it does not
obligate the employer for the payment thereof if there is
closure of business due to serious losses.
- In the present case, when petitioner decided to cease
operating its F & B Department and open the same to a
concessionaire, it did not reduce the number of personnel
assigned thereat. It terminated the employment of all
personnel assigned at the department.
- As in the case of retrenchment, however, for the closure of a
business or a department due to serious business losses to be
regarded as an authorized cause for terminating employees, it
must be proven that the losses incurred are substantial and
actual or reasonably imminent; that the same increased
through a period of time; and that the condition of the company
is not likely to improve in the near future.
- As did the appellate court, this Court finds that the study
report submitted by the internal auditor of petitioner, the only
evidence submitted to prove its alleged losses, is self-serving
and falls short of the stringent requirement of the law that the
Labor Law 1
employer prove sufficiently and convincingly its allegation of
substantial losses.
- Petitioner’s failure to prove that the closure of its F & B
Department was due to substantial losses notwithstanding, this
Court finds that individual respondents were dismissed on the
ground of closure or cessation of an undertaking not due
to serious business losses or financial reverses, which is allowed
under Article 283 of the Labor Code:
Art. 283. Closure of establishment and reduction of
personnel. – The employer may also terminate the
employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of the establishment or
undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the worker and the Ministry of Labor and
Employment at least one (1) month before its intended date
thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at
least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of the
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (½)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one
(1) whole year.
- While petitioner did not sufficiently establish substantial losses
to justify closure of its F & B Department on this ground, there
is basis for its claim that the continued maintenance of said
department had become more expensive through the years. An
evaluation of the financial figures appearing in the audited
financial statements prepared by the SGV&Co. shows that
ninety one to ninety six (91% - 96%) percent of the actual
revenues earned by the F & B Department comprised the costs
and expenses in maintaining the department. Petitioner’s
decision to place its F & B operations under a concessionaire
must then be respected, absent a showing of bad faith on its
part.
- While the closure of F & B Department is found to be justified,
petitioner is, under the above-quoted provision of Art. 283 of
the Labor Code, mandated to pay separation pay computed
from the time individual respondents commenced their
employment until the time the department ceased operations,
in an amount equivalent to one (1) month pay or at least one-
half (½) month pay for every year of service, whichever is
higher. In petitioner’s case, it in fact voluntarily doled out to
some of individual respondents separation pay equivalent to
one month and a quarter (1¼) for every year of service, a
fraction of a year being considered as one year.
- Respondents not having been illegally dismissed, they are not
entitled to backwages.
By petitioner’s information, it had paid, during the pendency of
the case, the separation package of sixty-two (62) of the sixty-
three (63) individual respondents on account of which they
executed Releases, Waivers and Quitclaims in its favor.
Disposition Petition GRANTED
COVERAGE
PHILIPPINE TUBERCULOSIS SOCIETY INC V NLRC
294 SCRA 567
MENDOZA; August 25, 1998
NATURE
This is a petition for certiorari to set aside the decision of the
NLRC declaring the retrenchment of 116 employees of
petitioner invalid and ordering the reinstatement and
backwages to them.
A2010 - 16 - Disini
FACTS
- The Philippine Tuberculosis Society, Inc. is a non-stock and
non-profit domestic corporation with the primary objective of
fighting tuberculosis in the Philippines. It has employees who
are represented by private respondent National Labor Union.
- In the proceedings before the NLRC, it was shown that, in
1989, the Society began to experience serious financial
difficulties when it incurred a deficit of P2 million. The shortfall
increased to P9,100,000.00 in 1990 and was certain to become
worse were it not for quick measures taken by petitioner.
- First, the Society leased a property in Tayuman to a fastfood
outlet, cancelled its service agreement with a janitorial
company, and sold its equity in the Philippine Long Distance
Telephone Company (PLDT). Second, it withdrew from the Pag-
Ibig Fund Program, negotiated with the Government Service
Insurance System for the restructuring of its obligations, and
applied for exemption from minimum wage increases. Finally, it
disapproved the overtime pay of supervisory and managerial
employees, obtained the waiver of personnel of their
entitlement to wage differentials, and implemented the
retrenchment of one hundred sixteen (116) employees.The
retrenchment is the subject of the present suit.
- On September 27, 1991, respondent NLU filed a notice of
strike against the Society with the National Conciliation and
Mediation Board (NCMB), charging the Society with unfair labor
practice in terminating the services of the aforementioned
employees.
- Conferences were scheduled by the NCMB, which however
failed to resolve the case. On November 6, 1991, then
Secretary of Labor and Employment Ruben Torres certified the
case to the NLRC on the ground that the labor dispute seriously
affected the national interest.
- On August 31, 1993, the NLRC rendered a decision declaring
as invalid the retrenchment of the employees concerned on the
ground that the Society did not take seniority into account in
their selection.
ISSUE
WON NLRC committed grave abuse of discretion in rendering its
decision
HELD
NO
- Clearly (under the Labor Code), retrenchment or reduction of
the workforce in cases of financial difficulties is recognized as a
ground for the termination of employment.
- Although petitioner is a non-stock and non-profit
organization, retrenchment as a measure adopted to
stave off threats to its existence is available to it.
- However, the employer’s prerogative to layoff employees is
subject to certain limitations set forth in Lopez Sugar
Corporation v. Federation of Free Workers as follows:
- Firstly, the losses expected should be substantial and not
merely de minimis in extent. If the loss purportedly sought to
be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bonafide
nature of the retrenchment would appear to be seriously in
question. Secondly, the substantial loss apprehended must be
reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in
other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious
consequences for the livelihood of the employees retired or
otherwise laid-off. Because of the consequential nature of
retrenchment, it must, thirdly, be reasonably necessary and
likely to effectively prevent the expected losses. The employer
should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor
costs. An employer who, for instance, lays off substantial
numbers of workers while continuing to dispense fat executive
bonuses and perquisites or so-called “golden parachutes,” can
scarcely claim to be retrenching in good faith to avoid losses. To
impart operational meaning to the constitutional policy of
providing “full protection” to labor, the employer’s prerogative
Labor Law 1
to bring down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic means
- e.g., reduction of both management and rank-and-file bonuses
and salaries, going on reduced time, improving manufacturing
efficiencies, trimming of marketing and advertising costs, etc. -
have been tried and found wanting.
- Lastly, but certainly not the least important, alleged losses if
already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient
and convincing evidence. The reason for requiring this
quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this
ground for termination of services of employees.
- In addition to the above, the retrenchment must be
implemented in a just and proper manner. As held in
Asiaworld Publishing House, Inc. v. Ople:
… there must be fair and reasonable criteria to be used in
selecting employees to be dismissed, such as: (a) less
preferred status (e.g. temporary employee); (b) efficiency
rating; and (c) seniority.
- There is substantial evidence in the record to support the
NLRC’s finding that the Society suffered financial distress as a
result of growing deficits which were not likely to abate.
Petitioner presented to the NLRC the balance sheets, financial
statements, and the reports of its external auditors for the
years 1989 and 1990. We cannot, therefore, say that the
finding of the NLRC is unsupported by substantial evidence.
Accordingly, the NLRC could rightly conclude:
Given the claim of the Society that its present financial
troubles were occasioned by a dearth of funding from its
traditional sources of revenue, . . . it is Our considered view
that the Society’s claim to retrench employees . . . is valid.
- Nor do we think the NLRC erred in holding that though the
Society was justified in ordering a retrenchment, its
implementation of the scheme rendered the retrenchment
invalid. That is because in selecting the employees, the Society
disregarded altogether the factor of seniority. As the NLRC
noted:
- We noted with concern that the criteria used by the Society
failed to consider the seniority factor in choosing those to be
retrenched, a failure which, to our mind, should invalidate the
retrenchment, as the omission immediately makes the selection
process unfair and unreasonable. Things being equal, retaining
a newly hired employee and dismissing one who had occupied
the position for years, even if the scheme should result in
savings for the employer, since he would be paying the
newcomer a relatively smaller wage, is simply unconscionable
and violative of the senior employee’s tenurial rights. In Villena
vs. NLRC, 193 SCRA 686, February 7, 1991, the Supreme Court
considered the seniority factor an important ingredient for the
validity of a retrenchment program. According to the Court,
the following legal procedure should be observed for a
retrenchment to be valid; (a) one-month prior notice to
the employee as prescribed by Article 282 of the Labor
Code; and b) use of a fair and reasonable criteria in
carrying out the retrenchment program, such as 1) less
preferred status (as in the case of temporary
employees) 2) efficiency rating, 3) seniority, and 4)
proof of claimed financial losses.
- Petitioner has not explained why the said employees had to be
laid off without considering their many years of service to the
Society. The fact that these employees had accumulated
seniority credits indicates that they had been retained in the
employ of the Society because of loyal and efficient service. The
burden of proving the contrary is on petitioner.
Disposition Petition DISMISSED for lack of showing that in
rendering its decision, NLRC committed grave abuse of
discretion.
BALBALEC V NLRC (RURAL BANK OF BANGUED)
251 SCRA 399
KAPUNAN; December 19, 1995
A2010 - 17 - Disini
FACTS
- The Rural Bank of Bangued dismissed Paulino Balbalec, Juan
Bolante and Rolando Beleno, petitioners, alleging that its
workforce was being retrenched for losses suffered by the bank
during the years 1984-1988. It stressed that management's
decision to dismiss them was made to "protect the bank's
stability and profitability" and to "enable the bank to comply
with provisions of the new minimum wage law."
- Petitioners alleged that they were singled out for dismissal
after they refused to sign an agreement for deferment of wage
increases under RA 6727, an agreement which all other
employees signed. The bank, on the other hand, averred that
retrenchment of its workforce was necessary to prevent
business losses. It further alleged that said termination would
not hamper its operations and denied that petitioners were
singled out, claiming that the latter ranked last in seniority
among its employees.
- The Labor Arbiter decided that there was no valid
retrenchment, hence complainants were illegally dismissed. The
NLRC sustained the Labor Arbiter's findings. On motion for
reconsideration, however, the NLRC partially reversed itself with
respect to the issue of retrenchment, upholding the bank's
dismissal of petitioners on the basis of a valid retrenchment.
ISSUE
WON the bank's dismissal of petitioners was justified by a valid
retrenchment
HELD
YES
Ratio The law recognizes the right of every business entity to
reduce its workforce if the same is made necessary by
compelling economic factors which would endanger its
existence or stability. In spite of overwhelming support granted
by the social justice provisions of our Constitution in favor of
labor, the fundamental law itself guarantees, even during the
process of tilting the scales of social justice towards workers
and employees, "the right of enterprises to reasonable returns
of investment and to expansion and growth." [quoting Art XIII,
Sec 3, last paragraph of the Consti]
Reasoning To hold otherwise would not only be oppressive and
inhuman, but also counterproductive and ultimately subversive
of the nation's thrust towards a resurgence in our economy
which would ultimately benefit the majority of our people.
Where appropriate and where conditions are in accord with law
and jurisprudence, the Court has authorized valid reductions in
the workforce to forestall business losses, the hemorrhaging of
capital, or even to recognize an obvious reduction in the volume
of business which has rendered certain employees redundant.
- Article 283 of the Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel
- The employer may also terminate the employment of any
employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
worker and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least onehalf (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one
(1) whole year.
- The article not only contemplates the termination of
employment of workers or employees to minimize established
business losses but also to prevent impending losses, for the
Labor Law 1
law's phraseology explicitly uses the phrase "retrenchment to
prevent losses." However, retrenchment strikes at the very core
of an individual's employment and the burden clearly falls upon
the employer to prove economic or business losses with
appropriate supporting evidence. After all, not every asserted
potential loss is sufficient legal warrant for a reduction of
personnel and the evidence adduced in support of a claim of
actual or potential business losses should satisfy certain
established standards, to wit:
1. The losses expected and sought to be avoided must be
substantial and not merely de minimis;
2. The apprehended substantial losses must be reasonably
imminent, as such imminence can be perceived objectively
and in good faith by the employer;
3. The retrenchment should reasonably be necessary and
likely to prevent effectively the expected losses;
4. The losses, both the past and forthcoming, must be proven
by sufficient and convincing evidence.
- The bank posted losses in the amount of P12,920.22,
P3,888.34 and P17,865.12 for the years 1984, 1985 and 1986,
respectively. Against these losses, the bank registered a net
income of P12,702.59 and P68,085.56 in 1988 and 1989,
respectively. Its net profit of P60,085.56 would instead have
been a net loss had not the bank deferred the implementation
of the wage increase under RA 6640. In addition, the bank was
faced with a serious financial problem resulting from a
considerable reduction of its total resources by 27.23% and
total loan investments by 35.79% from 1984 to 1988. Past due
loan ratio ranged from 29.13% to 32.13% in 1986 to 1988 such
that it was required by the Central Bank to set aside a reserve
for bad debts in the amount of P359,464.50 as of December 31,
1988. It should be noted that unlike huge commercial banks
with large capitalization, the bank involved is a small rural bank
barely afloat and surviving on a measly capitalization of
P500,000. Were we to deny its urgent request to streamline its
work force to enable it to maintain stability and modest
profitability, we would be sending a small financial institution
teetering on the verge of financial ruin tumbling down on the
road to bankruptcy.
- The State recognizes the pivotal role of small rural banks in
the development of the countryside through its loan portfolios
and other services to the rural folk. While courts must be
constantly vigilant in validating claims of business losses to
prevent unscrupulous employers from feigning such losses in
order to dismiss their personnel, we are satisfied that the Rural
Bank of Bangued undertook the drastic act of cutting down its
workforce in order to prevent imminent substantial loss to its
business. As to petitioners' claim that they were singled out in
the process because they happened to be the only employees
who did not sign an agreement for deferment of wages under
RA 6727, suffice it to say that such assertion is merely
speculative because the bank clearly followed the standard for
dismissing its personnel by selecting the last in seniority among
its 10 employees.
Dispositive Decision of the NLRC AFFIRMED with
MODIFICATION.
PROCEDURE
MAYON HOTEL & RESTAURANT V ADANA
458 SCRA 609
PUNO; May 16, 2005
NATURE
Petition for certiorari to annul CA decision
FACTS
- On various dates starting in 1981, petitioner hotel and
restaurant hired the 16 respondents.
- Due to the expiration and non-renewal of the lease contract
for the rented space occupied by the said hotel and restaurant,
operations of the business were suspended. The operation of
A2010 - 18 - Disini
the restaurant was continued in its new location, while waiting
for the construction of a new Mayon Hotel & Restaurant. Only
nine of the sixteen employees continued working in the Mayon
Restaurant at its new site.
- On various dates, the 16 employees filed complaints for
underpayment of wages and other money claims against
petitioners
- The Labor Arbiter awarded substantially all of respondents’
money claims and held that based on the evidence presented,
Josefa Po Lam is the owner/proprietor of Mayon Hotel &
Restaurant, and is the proper respondent in these cases.
- NLRC reversed labor arbiter’s decision and dismissed all
complaints.
- CA reinstated labor arbiter’s decision
ISSUES
1. WON Josefa Po Lam should to be held liable as the owner of
petitioner Mayon Hotel & Restaurant, and the proper
respondent in this case
2. WON respondents Loveres, Guades, Macandog, Atractivo,
Llarena and Nicerio were illegally dismissed
3. WON respondents are entitled to their money claims
HELD
1. YES
- The records of the case belie petitioner Josefa Po Lam’s claim
that she is merely an overseer. While Josefa Po Lam claims that
it is her daughter, Pacita Po, who owns the hotel and restaurant
when the latter purchased the same, Josefa failed to submit the
document of sale as allegedly the sale was only verbal although
the license to operate said hotel and restaurant is in the name
of Pacita which, despite our Order to Josefa to present the same,
she failed to comply. While several documentary evidences
were submitted by Josefa wherein Pacita was named therein as
owner of the hotel and restaurant, there were documentary
evidences also that were submitted by Josefa showing her
ownership of said enterprise Respondents testified that it was
Josefa who exercises all the acts and manifestation of ownership
of the hotel and restaurant like transferring employees from the
Greatwall Palace Restaurant which she and her husband Roy Po
Lam previously owned; it is Josefa to whom the employees
submit reports, draws money for payment of payables and for
marketing, and attends to Labor Inspectors during ocular
inspections.
2. YES
- The records are unequivocal that since petitioner Mayon Hotel
& Restaurant suspended its hotel operations and transferred its
restaurant operations in Elizondo Street, respondents Loveres,
Macandog, Llarena, Guades and Nicerio have not been
permitted to work for petitioners. Respondent Alamares, on the
other hand, was also laid-off when the Elizondo Street
operations closed, as were all the other respondents. Since
then, respondents have not been permitted to work nor
recalled, even after the construction of the new premises at
Peñaranda Street and the reopening of the hotel operations
with the restaurant in this new site.
- Article 286 of the Labor Code is clear — there is termination of
employment when an otherwise bona fide suspension of work
exceeds six months. The cessation of employment for more
than six months was patent and the employer has the burden of
proving that the termination was for a just or authorized cause.
- Even after six months of what should have been just a
temporary lay-off, the same respondents were still not recalled
to work. More than three years after the supposed “temporary
lay-off,” the employment of all of the respondents with
petitioners had ceased, notwithstanding that the new premises
had been completed and the same operated as a hotel with bar
and restaurant. This is clearly dismissal — or the permanent
severance or complete separation of the worker from the
service on the initiative of the employer regardless of the
reasons therefor.
- We find substantial evidence that petitioners intended the
termination to be permanent. First, respondents filed the
complaint for illegal dismissal immediately after the closure of
Labor Law 1
the hotel operations in Rizal Street, notwithstanding the alleged
temporary nature of the closure of the hotel operations, and
petitioners’ allegations that the employees assigned to the
hotel operations knew about this beforehand. Second, in their
position paper submitted to the Labor Arbiter, petitioners made
no mention of any intent to recall these respondents to work
upon completion of the new premises. Third, the various
pleadings on record show that petitioners held respondents,
particularly Loveres, as responsible for mismanagement of the
establishment and for abuse of trust and confidence. The
vehemence of petitioners’ accusation of mismanagement
against respondents, especially against Loveres, is inconsistent
with the desire to recall them to work. Fourth, petitioners’
memorandum on appeal also averred that the case was filed
“not because of the business being operated by them or that
they were supposedly not receiving benefits from the Labor
Code which is true, but because of the fact that the source of
their livelihood, whether legal or immoral, was stopped on
March 31, 1997, when the owner of the building terminated the
Lease Contract.” Fifth, petitioners had inconsistencies in their
pleadings in referring to the closure. Sixth, that petitioners
terminated all the other respondents, by not employing them
when the Hotel and Restaurant transferred to its new site on
Peñaranda Street. Indeed, in this same memorandum,
petitioners referred to all respondents as “former employees of
Mayon Hotel & Restaurant.”
- Even assuming that the cessation of employment was merely
temporary, it became dismissal by operation of law when
petitioners failed to reinstate respondents after the lapse of six
months, pursuant to Article 286
- Serious business losses do not excuse the employer from
complying with the clearance or report required under Article
283 of the Labor Code and its implementing rules before
terminating the employment of its workers. In the absence of
justifying circumstances, the failure of petitioners to observe
the procedural requirements set out under Article 284, taints
their actuations with bad faith, especially since they claimed
that they have been experiencing losses in the three years
before 1997.
-Even assuming that the closure was due to a reason beyond
the control of the employer, it still has to accord its employees
some relief in the form of severance pay.
- While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, the
dismissal of employees must be made within the parameters of
law and pursuant to the tenets of fair play. And in termination
disputes, the burden of proof is always on the employer to
prove that the dismissal was for a just or authorized cause.
Where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter
of illegal dismissal.
- Under these circumstances, the award of damages was
proper. As a rule, moral damages are recoverable where the
dismissal of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy.
3. YES
- Petitioners failed to submit the pertinent employee files,
payrolls, records, remittances and other similar
documents which would show that respondents rendered work
entitling them to payment for overtime work, night shift
differential, premium pay for work on holidays and rest day, and
payment of these as well as the COLA and the SILP. By choosing
not to fully and completely disclose information and present the
necessary documents to prove payment of labor standard
benefits due to respondents, petitioners failed to discharge the
burden of proof. Indeed, petitioners’ failure to submit the
necessary documents which as employers are in their
possession, inspite of orders to do so, gives rise to the
presumption that their presentation is prejudicial to its cause.
- The cost of meals and snacks purportedly provided to
respondents cannot be deducted as part of respondents’
minimum wage. Respondents were not interviewed by the
DOLE as to the quality and quantity of food appearing in the
A2010 - 19 - Disini
applications of petitioners for facility evaluation prior to its
approval to determine whether or not respondents were indeed
given such kind and quantity of food. Also, there was no
evidence that the quality and quantity of food in the Orders
were voluntarily accepted by respondents.
- Even granting that meals and snacks were provided and
indeed constituted facilities, such facilities could not be
deducted without compliance with certain legal requirements.
The employer simply cannot deduct the value from the
employee's wages without satisfying the following: (a) proof
that such facilities are customarily furnished by the trade; (b)
the provision of deductible facilities is voluntarily accepted in
writing by the employee; and (c) the facilities are charged at
fair and reasonable value.
- More important, food or snacks or other convenience provided
by the employers are deemed as supplements if they are
granted for the convenience of the employer. The criterion in
making a distinction between a supplement and a facility does
not so much lie in the kind (food, lodging) but the purpose.
Considering, therefore, that hotel workers are required to work
different shifts and are expected to be available at various odd
hours, their ready availability is a necessary matter in the
operations of a small hotel, such as petitioners’ business. The
deduction of the cost of meals from respondents’ wages,
therefore, should be removed.
- The 5% of the gross income of the establishment cannot be
considered as part of the respondents’ wages. Although called
profit share, such is in the nature of share from service charges
charged by the hotel.
- Petitioners themselves have admitted that the establishment
employs “more or less sixteen employees,” therefore they are
estopped from claiming that the applicable minimum wage
should be for service establishments employing 15 employees
or less.
- The employer cannot exempt himself from liability to pay
minimum wages because of poor financial condition of the
company. The payment of minimum wages is not dependent
on the employer’s ability to pay.
Disposition Petition is denied. The case is REMANDED to the
Labor Arbiter for the RECOMPUTATION of the total monetary
benefits awarded and due to the employees concerned in
accordance with the decision.
TEMPORARY RETRENCHMENT
SEBUGERO V NLRC (GTI SPORTSWEAR)
248 SCRA 532
DAVIDE JR; September 27, 1995
NATURE
Special civil action for certiorari
FACTS
- Petitioners were among the thirty-eight (38) regular
employees of private respondent GTI Sportswear who were
given "temporary lay-off"notices due to alleged lack of work and
heavy losses caused by the cancellation of orders from abroad
and by the garments embargo. Believing that their "temporary
lay-off" was a ploy to dismiss them, resorted to because of their
union activities and was in violation of their right to security of
tenure, laid-off employees filed complaint with Labor Arbiter.
- GTI denied the claim of illegal dismissal and asserted that it
was its prerogative to lay-off its employees temporarily for a
period not exceeding six months to prevent losses, and that the
lay-off affected both union and non-union members. It justified
its failure to recall the 38 laid-off employees after the lapse of
six months because of the subsequent cancellations of job
orders made by its foreign principals.
- 22 of the 38 complainants accepted the separation pay. The
petitioners herein did not.
- LA said there was justification to lay-off temporarily some
employees. That their principals transferred their orders were
Labor Law 1
proven by correspondence. Although, as a general rule,
Respondent company has the prerogative and right to resort to
temporary lay-off, such right is likewise limited to a period of six
(6) months applying Art. 286. However, Respondent company
should have recalled them after the end of the six month period
or at the least reasonably informed them (complainants) that
the Respondent company is still not 'in a position to recall them,
and if the same cannot be met, then the company should
implement retrenchment and pay its employees separation pay.
Hence, there is in this complaint a clear case of constructive
dismissal. Reinstatement is not prudent, separation pay is in
order.
- GTI appealed to NLRC. NLRC concurred with the findings of
the Labor Arbiter that there was a valid lay-off of the petitioners
due to lack of work, but disagreed with the latter's ruling
granting back wages. NLRC said that having established lack of
work, it follows that retrenchment took place and not
constructive dismissal.
- Petitioners filed this action.
ISSUES
1. WON the ground for termination of employment was
redundancy
2. WON termination was legal
HELD
1. NO, the ground in this case is retrenchment.
- Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual
requirements of the enterprise.
- Retrenchment on the other hand, is used interchangeably with
the term "lay-off." It is the termination of employment initiated
by the employer through no fault of the employee's and without
prejudice to the latter, resorted to by management during
periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls
2. YES, it is legal, but it is defective.
- Six months is the period set by law that the operation of a
business or undertaking may be suspended thereby suspending
the employment of the employees concerned. The temporary
lay-off wherein the employees likewise cease to work should
also not last longer than six months. After six months, the
employees should either be recalled to work or permanently
retrenched.
- Failing to comply with this would be tantamount to dismissing
the employees and the employer would thus be liable for such
dismissal.
- We must determine whether there was compliance with the
law regarding a valid retrenchment at anytime within the six
month-period that they were temporarily laid-off. Three basic
requisites for valid retrenchment:
- it is necessary to prevent losses and losses are proven
- written notice to employees and DOLE at least 1 mo prior to
intended date of retrenchment
- separation pay
- Here, both the Labor Arbiter and the NLRC found that the
private respondent was suffering and would continue to suffer
serious losses.
- In this case, it is undisputed that the petitioners were given
notice of the temporary lay-off. There is, however, no evidence
that any written notice to permanently retrench them was given
at least one month prior. There is also nothing in the records to
prove that a written notice was ever given to the DOLE.
- With respect to the payment of separation pay, the NLRC
found that GTI offered to give the petitioners their separation
pay but that the latter rejected such offer which was accepted
only by 22 out of the 38 original complainants.
- CONCLUSION: RETRENCHMENT IS DEFECTIVE IN THE FACE OF
FINDING THAT REQUIRED NOTICES TO PETITIONERS AND DOLE
ARE NOT GIVEN. But this doesn’t make the retrenchment
illegal.
- Where the dismissal of employee is for just cause and is
proven to be but he is not accorded right to due process,
dismissal is upheld but employer must be sanctioned for non-
compliance.
A2010 - 20 - Disini
REQUIREMENTS – STANDARDS
LOPEZ SUGAR CORP V FED OF FREE WORKERS
PHILIPPINE LABOR UNION ASSOCIATION (PLUA-
NACUSIP)
189 SCRA 179
FELICIANO; August 30, 1990
NATURE
Certiorari
FACTS
- Lopez Sugar Corporation (LPC), allegedly, to prevent losses
due to major economic problems, and exercising its privilege
under the 1975-1977 CBA entered into with PLUA-NACUSIP,
caused the retrenchment and retirement of a number of its
employees.
- LPC filed with the MOLE a combined report on retirement and
application for clearance to retrench affecting eighty six (86) of
its employees. Of these 86 employees, 59 were retired and 27
were to be retrenched in order to prevent losses.
- Federation of Free Workers (FFW), as the certified bargaining
agent of the rank-and-file employees of LPC, also filed with the
MOLE a complaint for unfair labor practices and recovery of
union dues.
- In said complainant, FFW claimed that the terminations
undertaken by LPC were violative of the security of tenure of its
members and were intended to "bust" the union and hence
constituted an unfair labor practice.
- FFW claimed that after the termination of the services of its
members, LPC advised 110 casuals to report to its personnel
office.
- FFW further argued that to justify retrenchment, serious
business reverses must be "actual, real and amply supported by
sufficient and convincing evidence." FFW prayed for
reinstatement of its members who had been retired or
retrenched.
- LPC denied having hired casuals to replace those it had retired
or retrenched. It explained that the announcement calling for
110 workers to report to its personnel office was only for the
purpose of organizing a pool of extra workers which could be
tapped whenever there were temporary vacancies by reason of
leaves of absence of regular workers.
- LA: denied LPC’ s application for clearance to retrench its
employees on the ground that for retrenchment to be valid, the
employer's losses must be serious, actual and real and must be
amply supported by sufficient and convincing evidence. The
application to retire was also denied on the ground that LPC's
prerogative to so retire its employees was granted by the 1975-
77 CBA had long ago expired. LPC was, therefore, ordered to
reinstate 27 retired or retrenched employees represented by
PLUAand FFW and to pay them full backwages from the time of
termination until actual reinstatement.
- On appeal, the NLRC, finding no justifiable reason for
disturbing the decision of the Labor Arbiter, affirmed that
decision
ISSUE
WON NLRC acted with GAD in denying LPC’ s combined report
on retirement and application for clearance to retrench
HELD
NO
- A283 of the LC provides:
Article 283. Closure of establishment and reduction of
personnel. — The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
Labor Law 1
notice on the workers and the Ministry of Labor and Employer
at least one (1) month before the intended date thereof. In
case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be
entitled to a se pay equivalent to at least his one (1) month
pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent
losses and in cases, of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
- In ordinary connotation, the phrase "to prevent losses" means
that retrenchment or termination of the services of some
employees is authorized to be undertaken by the employer
sometime before the losses anticipated are actually sustained
or realized. It is not, in other words, the intention of the
lawmaker to compel the employer to stay his hand and keep all
his employees until sometime after losses shall have in fact
materialized ; if such an intent were expressly written into the
law, that law may well be vulnerable to constitutional attack as
taking property from one man to give to another
- When, or under what circumstances does the employer
becomes legally privileged to retrench and reduce the number
of his employees?
- The general standards in terms of which the acts of petitioner
employer must be appraised:
1) the losses expected should be substantial and not
merely de minimis in extent. If the loss purportedly sought
to be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bona fide
nature of the retrenchment would appear to be seriously in
question.
2) The substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively
and in good faith by the employer. There should, in other
words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with
serious consequences for the livelihood of the employees
retired or otherwise laid-off.
3) Because of the consequential nature of retrenchment, it
must be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have
taken other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs than labor costs. To
impart operational meaning to the constitutional policy of
providing "full protection" to labor, the employer's
prerogative to bring down labor costs by retrenching must be
exercised essentially as a measure of last resort, after less
drastic means — e.g., reduction of both management and
rank-and-file bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of marketing
and advertising costs, etc. — have been tried and found
wanting.
4) If already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient
and convincing evidence. The reason for requiring this
quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this
ground for termination of services of employees.
-Garcia v. National Labor Relations Commissions:
. . . But it is essentially required that the alleged losses in
business operations must be prove[n] (NAFLU vs. Ople,
[1986]). Otherwise, said ground for termination would be
susceptible to abuse by scheming employers who might be
merely feigning business losses or reverses in their business
ventures in order to ease out employees.
- WON an employer would imminently suffer serious or
substantial losses for economic reasons is essentially a question
of fact for the Labor Arbiter and the NLRC to determine.
A2010 - 21 - Disini
- In the instant case, the LA found no sufficient and convincing
evidence to sustain petitioner's essential contention that it was
acting in order to prevent substantial and serious losses.
- The principal difficulty with LPC' s case as above presented
was that no proof of actual declining gross and net revenues
was submitted. No audited financial statements showing the
financial condition of petitioner corporation during the above
mentioned crop years were submitted.
- LPC conspicuous failed to specify the cost-reduction measures
actually undertaken in good faith before resorting to
retrenchment. Upon the other hand, it appears from the record
that petitioner, after reducing its work force, advised 110 casual
workers to register with the company personnel officer as extra
workers.
- LPC argued that it did not actually hire casual workers but that
it merely organized a pool of "extra workers" from which
workers could be drawn whenever vacancies occurred by
reason of regular workers going on leave of absence but the LA
and the NLRC did not accord much credit to LPC's explanation.
*AS REGARDS The RETIREMENTS effected by LPC
- On this point, SC finds for LPC saying that ”although the CBA
expired on 31 December 1977, it continued to have legal
effects as between the parties until a new CBA had been
negotiated and entered into.” This proposition finds legal
support in Article 253 of the Labor Code, which provides:
Article 253 — Duty to bargain collectively when there exists a
collective bargaining agreement. — When there is a collective
bargaining agreement, the duty to bargain collectively shall
also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement
at least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of
the existing agreement during the 60-day period and/or until
a new agreement is reached by the parties. (Emphasis
supplied)
- Accordingly, in the instant case, despite the lapse of the
formal effectivity of the CBA by virtue of its own provisions, the
law considered the same as continuing in force and effect until
a new CBA shall have been validly executed.
- Hence, LPC acted within legal bounds when it decided to retire
several employees in accordance with the CBA. That the
employees themselves similarly acted in accordance with the
CBA is plain from the record.
- Even after the expiration of the CBA, LPC's employees
continued to receive the benefits and enjoy the privileges
granted therein. If the workers chose to avail of the CBA despite
its expiration, equity — if not the law—dictates that the
employer should likewise be able to invoke the CBA.
- The fact that several workers signed quitclaims will not by
itself bar them from joining in the complaint. Quitclaims
executed by laborers are commonly frowned upon as contrary
to public policy and ineffective to bar claims for the full
measure of the worker's legal rights.
- AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU:
In labor jurisprudence, it is well establish that quitclaims
and/or complete releases executed by the employees do not
estop them from pursuing their claims arising from the unfair
labor practice of the employer. The basic reason for this is
that such quitclaimants and/or complete releases are against
public policy and, therefore, null and void. The acceptance of
termination pay does not divest a laborer of the right to
prosecute his employer for unfair labor practice acts.
- Cariño vs. ACCFA, (1966) ~ Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel.
The reason is plain. Employer and employee, obviously, do
not stand on the same footing The employer drove the
employee to the wall. The latter must have to get hold of
money. Because, out of job, he had to face the harsh
necessities of life. He thus found himself in no position to
resist money proffered. His, then, is a case of adherence, not
of choice. One thing sure, however, is that petitioners did not
Labor Law 1
relent their claim. They pressed it. They are deemed not to
have waived any of their rights. Renuntiatio non praesumitur
Disposition Petition for Certiorari is partially GRANTED and
NLRC’ s decision affirming that portion of the Decision of the
Labor Arbiter ordering the reinstatement judgment of
employees who had been retired by LPC under the applicable
provisions of the CBA is AFFIRMED.
(*all illegally retrenched were ordered to be reinstated and
given backwages; those who executed quitclaims-said amount
shall be deducted from their backwages and where
reinstatement is no longer possible, backwages + separation
pay na lang. BUT those who were retired by LPC were found to
be valid as per the CBA.
EMCO PLYWOOD CORP V ABELGAS
[PAGE 14]
BLUCOR MINERALS CORP V AMARILLA
458 SCRA 37
PANGANIBAN; May 4, 2005
NATURE
Petition for review on certiorari
FACTS
- Respondent Amarilla is a regular employee of herein Petitioner
Blucor Minerals Corporation ('Blucor,' for brevity), having
worked at Blucor's mining business since January 4, 1987 and
assigned in the latter's internal security force. Co-respondent
Aldiano is also a regular employee of Blucor, assigned at the
latter's services and engineering department since August 9,
1995 and continued to work thereat in the course of Blucor's
usual business operations. Co-respondent Parcon is likewise a
regular employee of Blucor since September 10, 1998, assigned
at the latter's field operation. On July 31, 2000, Blucor notified
Amarilla, Aldiano and Parcon to the effect that Blucor is
terminating their employment due to retrenchment, effective
August 31, 2000.
- Respondents questioned their termination from employment
by filing a complaint before the arbitration branch of NLRC, for
illegal dismissal against Blucor Minerals Corporation and its
President, alleging that herein petitioner did not incur
substantial losses in its operation so as to justify their
retrenchment.
- Blucor Minerals Corporation opposed the complaint, alleging
that they maintained two operations called Blucor-1 and Blucor-
2 and that due to the economic crisis affecting the country and
the fact that the Blucor-1 operation yielded gold with low grade
or quality, Blucor incurred serious business losses, so that it
resorted to cost-reduction measures by closing the Blucor-2
operation and retrenching some workers, including herein
respondents. In support thereof, Blucor presented its annual
income tax return and financial statements showing the net loss
in the amount of P2,038,846.10 for the year 2000.
- After the parties filed their respective pleadings, Executive
Labor Arbiter Villanueva rendered his decision, declaring Blucor
Minerals Corporation and its President guilty of illegal dismissal
- Labor Arbiter Villanueva also ruled that since reinstatement is
no longer feasible in this case, payment of separation pay is
more appropriate.
- Blucor Minerals Corporation appealed to NLRC, contending
that the Labor Arbiter committed grave abuse of discretion in
ignoring the financial statement for the year 2000 operations as
adequate proof of their serious business losses warranting the
retrenchment of complainants. Blucor argued that the
jurisprudence, i.e., Lopez Sugar Corporation v. Federation of
Free Workers and Asian Alcohol Corporation v. NLRC, cited by
the Labor Arbiter are obsolete and no longer controlling.
- Subsequently, NLRC promulgated its assailed resolution,
vacating and setting aside the decision of Labor Arbiter
A2010 - 22 - Disini
Villanueva, and dismissing in the main the complaint for illegal
dismissal. It held that Blucor was justified in terminating the
services of [respondents] due to retrenchment under Article
283 of the Labor Code. The NLRC ordered Blucor to pay
respondents their separation pay, service incentive leave pay
and proportionate 13th month pay.
- Respondents moved for the reconsideration of the September
14, 2001 resolution of the NLRC. Alleging that the said
resolutions of NLRC were issued with grave abuse of discretion
amounting to lack or excess of jurisdiction, respondents filed a
Petition for Certiorari with the CA.
- The CA ruled that the dismissal was unjustified, as Blucor had
failed to prove with clear and satisfactory evidence that
legitimate business reasons existed to justify retrenchment. By
themselves, Blucor's Income Tax Return and Audited Financial
Statements for the year 2000 did not sufficiently prove the
existence or the imminence of substantial losses.
ISSUE
WON the CA was correct in disregarding the Income Tax Return
and the Audited Financial Statements of the herein petitioners
as basis for retrenchment due to serious business losses
HELD
YES
- Before any reduction of personnel becomes legal, any claim of
actual or potential business losses must satisfy the following
established standards: (1) the losses incurred are substantial,
not de minimis; (2) the losses are actual or reasonably
imminent; (3) the retrenchment can be fairly regarded as
necessary and likely to be effective in preventing the expected
losses; and (4) sufficient and convincing evidence prove the
alleged losses, if already incurred, or the expected imminent
losses sought to be forestalled are proven.
- It is a well-settled rule that the employer bears the burden of
proving the existence or the imminence of substantial losses, a
burden that is by nature an affirmative defense. It is the duty of
the employer to prove with clear and satisfactory evidence that
legitimate business reasons exist to justify retrenchment;
failure to do so necessarily results in a finding that the dismissal
was unjustified. Absent any convincing evidence that the
alleged losses are substantial and actual, the dismissal of
employees would be unjustified.
- To prove that it incurred losses, petitioners presented its
Income Tax Return and Audited Financial Statements for the
year 2000 alone. Previously, however, the company had
admittedly enjoyed profitable initial years of operation. This
situation falls short of the stringent requirement of the law that
the employer must sufficiently and convincingly prove its
allegation of substantial losses. It is interesting to note that
while petitioners admit that the company began to incur losses
only in 2000, Blucor effectively terminated respondents'
services on August 31 of that same year. When respondents
requested copies of the company's financial statement to see
for themselves the state of Blucor's finances, petitioners
informed them that their request was premature. The latter
would now have this Court decide that the corporation indeed
suffered substantial losses necessitating retrenchment, based
solely on the tax returns and financial statements for the year
2000.
- Petitioners likewise failed to show any reasonable necessity for
the retrenchment. Although the law recognizes it as a valid
means to avert substantial losses, retrenchment must be
exercised as a "measure of last resort when other less drastic
means have been tried and found to be inadequate.
Disposition Petition denied
SAN MIGUEL CORP V ABELLA
[PAGE 59]
PHIL CARPET EMPLOYEES ASSN V STO TOMAS
483 SCRA 128
Labor Law 1
CALLEJO SR; February 22, 2006
FACTS
- Phil. Carpet Mfg. Corp. (PCMC) retrenched 88 workers in 2004.
Of the 88, 77 were Union members. The Union alleged illegal
dismissal. The company said they were suffering losses due to
the Asian financial crisis, the 9/11 and the Iraq war. They
showed figures to the effect that the net income and net profit
of the company decreased in increasing percentages from 2000
to 2001 to 2002 to 2003.
- [The SC later found out that the decrease in net income
ensued because PCMC declared cash dividends for its
shareholders amounting to P28,000,000.00.]
ISSUE
WON the dismissals were illegal
HELD
YES
- Retrenchment is an authorized cause for the termination of
employment under Article 283 of the Labor Code. However, the
retrenchment effected by PCMC is invalid due to a substantive
defect, non-compliance with the substantial requirements to
effect a valid retrenchment; it necessarily follows that the
termination of the employment of petitioner Union's members
on such ground is, likewise, illegal.
- Retrenchment is defined as the termination of employment
initiated by the employer through no fault of the employee and
without prejudice to the latter, resorted by management during
periods of business recession, industrial depression or seasonal
fluctuations or during lulls over shortage of materials. It is a
reduction in manpower, a measure utilized by an employer to
minimize business losses incurred in the operation of its
business.
- The prerogative of an employer to retrench its employees
must be exercised only as a last resort, considering that it will
lead to the loss of the employees' livelihood. It is justified only
when all other less drastic means have been tried and found
insufficient or inadequate. Moreover, the employer must prove
the requirements for a valid retrenchment by clear and
convincing evidence; otherwise, said ground for termination
would be susceptible to abuse by scheming employers who
might be merely feigning losses or reverses in their business
ventures in order to ease out employees.
- The requirements are:
(1) that the retrenchment is reasonably necessary and likely
to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real,
or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer;
(2) that the employer served written notice both to the
employees and to the Department of Labor and Employment
at least one month prior to the intended date of
retrenchment;
(3) that the employer pays the retrenched employees
separation pay equivalent to one month pay or at least 1/2
month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees' right to
security of tenure; and
(5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status (i.e., whether
they are temporary, casual, regular or managerial
employees), efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
- What the law speaks of is serious business losses or
financial reverses. Sliding incomes or decreasing gross
revenues are not necessarily losses, much less serious business
losses within the meaning of the law. The bare fact that an
employer may have sustained a net loss, such loss, per se,
absent any other evidence on its impact on the business, nor on
A2010 - 23 - Disini
expected losses that would have been incurred had operations
been continued, may not amount to serious business losses
mentioned in the law. 50 The employer must also show that its
losses increased through a period of time and that the condition
of the company will not likely improve in the near future.
Disposition Petition granted.
NATURE OF LOSS
LOPEZ SUGAR CORP V FEDERATION OF FREE
WORKERS
[PAGE 150]
EDGE APPAREL INC V NLRC
[PAGE 262]
BOGO-MEDELLIN SUGARCANE PLANTERS ASSN V
NLRC (ALU, MONTILLA)
296 SCRA 108
PANGANIBAN; September 25, 1998
FACTS
- The workers performed the functions of computer, sampler
and scalers. They joined and became members of Associated
Labor Unions, with Bonifacio Montilla as its. The company told
him to withdraw his membership from the Associated Labor
Unions or else they will not be hired at the start of the milling
season and will be dismissed. The workers did not heed the
warning and stuck to their membership with the private
respondent union. As a consequence and as earlier warned of
being dismissed if they persisted in their union activities,
notices of termination were sent to the workers informing them
that their services will be terminated due to financial difficulties.
While the said notices stated that their services will be
terminated 30 days from date, they were not allowed to work
within that 30 day period and Montilla was immediately
replaced by Gavino Negapatan. The workers alleged that their
dismissal was sought due to their membership [in] the private
respondent union as they have not violated any company rules
and regulations. There is also no allegation to this effect by the
respondents and the latter strongly advocated retrenchment to
prevent losses as their basis in terminating the [private
respondents]. Aggrieved of the respondents' actuations they
filed the present complaint or before the expiration of the 30
days notice. Just on the 30th day of the notice of termination,
four of the workers were paid their corresponding
separation/gratuity pay and accordingly signed their Quitclaim
and Release.
ISSUE
WON the retrenchment was justified
HELD
NO
- Retrenchment is the termination of employment effected by
management during periods of business recession, industrial
depression, seasonal fluctuations, lack of work or considerable
reduction in the volume of the employer's business. Resorted to
by an employer to avoid or minimize business losses, it is a
management prerogative consistently recognized by this Court
and allowed under Article 283 of the Labor Code as follows:
"ART. 283. Closure
of establishment and reduction of personnel. — The employer
may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undue taking unless the
closing is for the purpose of circumventing the provisions of
this Title by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month
Labor Law 1
before the intended date thereof . . . In case of retrenchment
to prevent losses . . ., the separation pay shall be equivalent
to one (1) month pay for every year of service, which ever is
higher. A fraction of at least six (6) months shall be
considered one (1) whole year."
- In a number of cases, the Court has laid down the following
requisites of a valid retrenchment: (1) the losses incurred are
substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing the
expected losses; and (d) the alleged losses, if already incurred,
or the expected imminent losses sought to be forestalled, are
proven by sufficient and convincing evidence. In the present
case, petitioners miserably failed to prove (1) substantial losses
and (2) the reasonable necessity of the retrenchment.
No Sufficient and Substantial
Evidence of Business Loss
- To justify retrenchment, the employer must prove serious
business losses. Indeed, not all business losses suffered by the
employer would justify retrenchment under this article. The
Court has held that the "'loss' referred to in Article 283 cannot
be just any kind or amount of loss; otherwise, a company could
easily feign excuses to suit its whims and prejudices or to rid
itself of unwanted employees."
- In the case at bar, Petitioner Corporation claimed that the
retrenchment of private respondents was justified, because it
suffered business losses, as evidenced by its Comparative
Statement of Revenue and Expenses for crop years for two
years. In their rebuttal, petitioners allege the following: (1) the
comparative financial statement of the corporation duly reflects
its income and expenses in a given taxable year and, despite its
different nomenclature, is substantially the same as a profit and
loss statement or any other financial statement; and (2) the
National Internal Revenue Code (NIRC) requires the certification
of an independent certified public accountant only if the
taxpayer's gross receipts exceed P25,000 in any quarter of any
taxable year.
- The contentions of petitioners are untenable. A comparative
statement of revenue and expenses for two years, by itself, is
not conclusive proof of serious business losses. The Court has
previously ruled that financial statements audited by
independent external auditors constitute the normal method of
proof of the profit and loss performance of a company. While
Petitioner Corporation avers that it was not required to file
audited financial statements under Section 232 of the Tax
Code, it failed to establish its exemption through any evidence
showing that its quarterly gross revenues did not exceed
P25,000. Thus, its claim that it did not need to have its financial
statements certified by a certified public accountant is without
basis in fact and in law and does not excuse it from complying
with the usual requirement. Besides, the requirement of the Tax
Code is one thing, and the requirement of the Labor Code is
quite another. Moreover, the financial statement of Petitioner
Corporation for two crop years is insufficient proof of serious
business losses that would justify the retrenchment of private
respondents.
CAMA V JONI’S FOOD SERVICES
425 SCRA 259
QUISUMBING; March 10, 2004
NATURE
Petition for review on certiorari of a decision and resolution of
the CA
FACTS
- Respondent Joni’s Food Services, Inc., (JFSI) is a corporation
engaged in the coffee shop and restaurant business, with
several branches or outlets. Feliciano is its president and
general manager.
- Petitioners were employees of JFSI having been hired on
various dates during the 1970s to the 1990s.
A2010 - 24 - Disini
- In the 1990s, JFSI had eight (8) outlets for its coffee shop and
restaurant business.
- In 1997, faced with dropping sales, however, it shut down
three of these shops to avert serious business losses.
- 1998 saw JFSI operations in the red. JFSI incurred a total net
loss of P2,541,537.70 as of December 31, 1998. As a result,
JFSI shut down more outlets, leaving it with just three operating
outlets at the end of 1998.
- Bleak business conditions continued to plague the company
and by the end of the first quarter of 1999, the remaining
branches were also closed.
- On April 5, 1999, the petitioners, filed a complaint for illegal
dismissal, separation pay, service incentive leave pay, 13th
month pay, attorney’s fees, remittance of SSS and Pag-Ibig
contributions, and refund of excess withholding taxes against
JFSI.
- Following failed attempts to reach an amicable settlement
between complainants and respondents, formal hearings
ensued before the Labor Arbiter.
- On October 25, 1999, the Labor Arbiter rendered a decision
finding respondent not liable for illegal dismissal, but directing it
to pay the complainants separation pay, service incentive leave
pay and attorney’s fees
- In holding that the petitioners were entitled to separation pay,
the Labor Arbiter recognized that JFSI did suffer business losses,
but that he did not consider these serious enough so as to
warrant denial of the petitioners’ separation pay.
- Respondents appealed to the NLRC
- NLRC affirmed the decision appealed from with the
modification of deleting the award for attorney’s fees.
- JFSI moved for reconsideration, but this was denied
- It filed a special civil action for certiorari with the Court of
Appeals
- The Court of Appeals granted the writ of certiorari prayed for
by JFSI, and declared the decision of the NLRC null and void for
having been issued with grave abuse of discretion.
- Petitioners moved for reconsideration, but the appellate court
denied the motion in its resolution
ISSUE
WON the termination of petitioners’ employment due to serious
business losses suffered by JFSI precluded payment of
separation pay
HELD
YES
- In the instant case, it was duly established that respondent
company incurred losses in 1998, which led it to close several
outlets, resulting in the lay-off of petitioners. Both the Labor
Arbiter and the NLRC ruled that the losses were not so severe
as to prevent the respondent from paying separation pay to the
petitioners. The Court of Appeals ruled to the contrary.
- To find out whether the appellate court erred or not, a review
of the evidence based on financial statements using ratio
analyses is called for.
- To test the liquidity of JFSI for the periods under consideration,
working capital ratio is used. The current ratios derived clearly
show that in 1997, JFSI did not have sufficient current assets to
pay its current liabilities. It was even less liquid in 1998,
indicating that the firm faced difficulty in paying current
obligations as they fell due.
- Using the gross profit ratio, which indicates the mark-up on
the company’s products, we find that in 1997, for every peso of
sales generated by respondent, gross profit or mark-up
amounted to almost 52 centavos, but this went down in 1998 to
just a fraction over 49 centavos
- If we were to employ the net profit (loss) ratio, which is widely
used as a measure of the overall profitability of business
operations, it can be seen that for every peso of sales earned
by the respondent in 1997, less than half a centavo (0.39%)
represented profit. This is an inadequate and unsatisfactory
profit ratio. The situation was worse in 1998, since for every
peso of sales made by respondent, no profit was made, but
Labor Law 1
instead a loss was incurred. A loss of 50.1% recorded in 1998
appears to us quite serious.
- The Constitution, while affording full protection to labor,
nonetheless, recognizes “the right of enterprises to reasonable
returns on investments, and to expansion and growth.”
- In line with this protection afforded to business by the
fundamental law, Article 283 of the Labor Code clearly makes a
policy distinction. It is only in instances of “retrenchment to
prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses” that employees whose
employment has been terminated as a result are entitled to
separation pay.
- In other words, Article 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 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.
Disposition The petition is denied for lack of merit.
PHILIPPINE CARPET V STO. TOMAS
[PAGE 272]
SLIDING INCOME
SAN MIGUEL JEEPENEY SERVICE V NLRC
265 SCRA 35
PANGANIBAN; November 28, 1996
NATURE
Civil action of Certiorari alleging grave abuse of discretion of
NLRC
FACTS
- The 23 complainants were formerly working (as drivers,
dispatchers and mechanic) with San Miguel Jeepney Service
(SMJS), with services ranging from two to eight years. SMJS had
a contract with the U.S. Naval Base Facility located in San
Miguel, San Antonio, Zambales, to provide transportation
services to personnel and dependents inside said facility.
- When this contract expired, owner and general manager of
SMJS, “opted not to renew the existing contract nor bid on the
new contract”, due to financial difficulties, he having suffered a
net loss the prior year. As a consequence, the services of the
complainants were terminated.
- By that time, however, the 23 had already filed a complaint for
non-compliance with the minimum wage law from 1980
onwards, plus non-payment of the 13th month pay, legal holiday
pay, overtime pay, service incentive leave pay and separation
pay.
- Labor Arbiter: Complainants were not entitled to such
benefits (13th month, holiday, service incentive pay), being
workers on a purely commission basis.
- NLRC: Modified the LA’s ruling, holding that “all the
complainants are regular employees in the contemplation of Art
280; thus, they are entitled to separation pay.
Petitioners’ Claims
> They cannot be held liable for separation pay because it had
been “experiencing financial reverses since 1986.” They cited
figures showing “sliding incomes.”
> They argue that in order to award separation pay, there must
be some numerical and factual basis for the computation
thereof, which they claim is absent in this case.
ISSUES
1. WON there is factual bases for SMJS’ contention that it has
suffered “serious business losses”
2. WON complainant-workers should be granted separation pay
HELD
1. NO
A2010 - 25 - Disini
Ratio What the law speaks of is serious business losses or
financial reverses. Clearly, sliding incomes (decreasing gross
revenues) are not necessarily losses, much less serious
business losses within the meaning of the law.
- Requisites of a valid retrenchment: (a) the losses expected
should be substantial and not merely de minimis in extent; (b)
the substantial losses apprehended must be reasonably
imminent; (c) the retrenchment must be reasonably necessary
and likely to effectively prevent the expected losses; and (d)
the alleged losses, if already incurred, and the expected
imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.”
Reasoning
- In the nature of things, the possibility of incurring losses is
constantly present, in greater or lesser degree, in the carrying
on of business operations, since many of the factors which
impact upon the profitability or viability of such operations may
be substantially outside the control of the employer. Employer
bears the burden of proving his allegation of economic or
business reverses with clear and satisfactory evidence, it being
in the nature of an affirmative defense.
- In this case, the loss per se, absent any other evidence, and
viewed in the light of the amounts of gross receipts the
business generated historically, may not be deemed the serious
business loss contemplated by law. Neither did petitioners
present any evidence whatsoever regarding the impact of the
said net loss on the business nor on expected losses that would
have been incurred had operations been continued.
2. YES
Ratio Being regular employees, they are entitled to security of
tenure and their services may be terminated only for causes
provided by law. They are also to be accorded the benefits
provided under the Labor Code, including separation pay for
loss of employment resulting from retrenchment to prevent
losses or closure/cessation of operation not due to serious
business losses.
Reasoning
- Complainants were unarguably performing work necessary
and desirable in the business of SMJS. Without the services
rendered by private respondents, petitioners could not have
conducted their business of providing transportation services
within the naval base. This plus the fact that private
respondents had each rendered from two to eight years of
service cause them to come squarely within Art. 280 of the LC
and are considered regular employees. The mere fact that they
were paid on commission basis does not affect or change their
status as regular employees.
- Being regular employees, they are entitled to the protection of
minimum wage status. Hence, the separation pay due them
may be computed on the basis of the minimum wage prevailing
at the time their services were terminated.
Disposition Assailed resolution is AFFIRMED. The separation
pay of the private respondents equivalent to one-half month
pay for every year of service shall be computed at the then
prevailing minimum daily wage of P53.
PROOF OF LOSS
LOPEZ SUGAR CORP V FEDERATION OF FREE
WORKERS
[PAGE 270]
BOGO-MEDELLIN SUGAR CANE PLANTERS ASSN
INC V NLRC
[PAGE 273]
MITSUBISHI MOTORS V CHRYSLER
[PAGE 102]
Labor Law 1
DANZAS INTERCONTINENTAL INC V DAGUMAN
456 SCRA 383
TINGA; April 15, 2005
NATURE
Petition for review of the CA decision
FACTS
- Danzas Intercontinental, Inc. is engaged in the business of
forwarding and brokerage
Respondents:
- Henry Daguman, Amador Castro, Richard Salvador and Jonas
Culala, in a letter dated August 14, 1999, were notified by the
respondents that due to losses the brokerage department of
Danzas to which the complainants belonged shall be closed on
September 14, 1999 for which they will be given a separation
pay equal to one month or one half month for every year of
service which ever is higher. However, respondents contend
that the brokerage department was not closed and is in fact
under operation by Elizabeth Gotiam, Sevilla Enzon, Shelbie
Ocampo, Jenie Prado, Roden Reyes and Rodel Trias who are
newly hired personnel of the respondents precisely to take over
the tasks of complainants and that the names of these people
appear as such newly hired employees in the company’s payroll
and in the lists of employees that were submitted to the SSS
and the HMDF. the brokerage department was not really closed
but its responsibilities just transferred to Ms. Elizabeth Gotiam
and her staff, hence, their dismissal should be considered illegal
and they should be reinstated to their former positions and
should be awarded backwages plus moral and exemplary
damages.
- Petitoners:
> Danzas and Claude Schaer claim that they had to close the
brokerage department because its accumulated losses had
already amounted to P5.449M and that as a consequence of
such closure they had to resort to the retrenchment of the
personnel belonging to the brokerage department which include
the complainants. They further aver that new employees were
hired not to replace private respondents but to monitor the
activities of outside brokers who were engaged to finish the
work for the company’s remaining clients. Thus, the
engagement of new employees was coterminous with the
completion of the work for these clients and only for the
purpose of winding up the company’s brokerage business on
account of E.O. 11. Belatedly, they claimed that, whether they
like it or not, the brokerage department can no longer be
opened because respondent company is no longer allowed to
engage in the business of brokerage under Executive Order No.
11 which limits the exercise of the broker’s profession to Filipino
nationals only.
- The Labor Arbiter dismissed the complaint . The NLRC affirmed
said decision
- Respondents claim that the NLRC committed grave abuse of
discretion in affirming the findings of the Labor Arbiter that
there was sufficient evidence to prove that the Brokerage
Department of Danzas Intercontinental has been suffering
losses to justify its closure. The CA denied petitioners’ appeal.
ISSUES
1. WON petitioners were able to prove that the brokerage
department was incurring substantial business losses which
would justify retrenchment.
2. WON the brokerage department was indeed closed down
HELD
1. NO
- The labor arbiter and the NLRC both found that petitioners
validly exercised their management prerogatives recognized
under Article 283 of the Labor Code, viz:
- ART. 283. Closure of establishment and reduction of
personnel. -- The employer may also terminate the employment
of any employee due to the installation of labor saving devices,
A2010 - 26 - Disini
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
worker and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (½) month pay for every
year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
- It is neither the function of the law nor its intent to supplant
the prerogative of management in running its business, such as,
to compel the latter to operate at a continuing loss simply
because it has to maintain its workers in employment. Such an
act would be tantamount to a taking of property without due
process of law.HOWEVER, the burden of proving that the
termination was for a valid or authorized cause rests on the
employer who must comply with certain substantive and
procedural requirements. For instance, the requirements for a
valid retrenchment which must be proved by clear and
convincing evidence are: (1) that retrenchment is reasonably
necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer; (2)
that the employer served written notice both to the employees
and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment; (3) that the
employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half (½) month
pay for every year of service, whichever is higher; (4) that the
employer exercises its prerogative to retrench employees in
good faith for the advancement of its interest and not to defeat
or circumvent the employees’ right to security of tenure; and
(5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for
certain workers.
- The condition of business losses justifying retrenchment is
normally shown by audited financial documents like yearly
balance sheets and profit and loss statements as well as annual
income tax returns. Financial statements must be prepared and
signed by independent auditors. Otherwise, they may be
assailed as self-serving. Since the losses incurred must be
substantial and actual or reasonably imminent, it is necessary
that the employer show that the losses increased through a
period of time and that the condition of the company is not
likely to improve in the near future.
- The same evidence is generally required when the
termination of employees is by reason of closure of the
establishment or a division thereof for economic reasons,
although the more overriding consideration is, of course, good
faith. The employer must prove that the cessation of or
withdrawal from business operations was bona fide in character
and not impelled by a motive to defeat or circumvent the
tenurial rights of employees. Parenthetically, if the business
losses that justify the closure of the establishment are duly
proved, the right of affected employees to separation pay is lost
for obvious reasons. Otherwise, the employer closing his
business is obligated to pay his employees their separation pay.
- It is worth noting in this regard that the employer’s
prerogative to close or abolish a department or section of his
establishment for economic reasons such as to minimize
expenses and reduce capitalization is as much recognized as
management’s prerogative to close the entire establishment
and cease operations due to adverse economic conditions. In
Labor Law 1
the instant case, petitioners presented in evidence an affidavit
of the company’s financial comptroller, financial statements for
the year 1999 and a quarterly report in support of the
company’s claim of losses. Petitioners maintain that they were
not given an opportunity to present the company’s audited
financial statements before the NLRC because private
respondents’ appeal thereto was dismissed without notice to
petitioners. Since the case was brought to the CA on certiorari,
the audited financial statements attached to petitioners’
Comment on Petition were no longer considered. Consequently,
the CA ruled that the financial documents presented by
petitioners are insufficient to prove their claim of business
losses.
- As they have the burden of proving the existence of an
authorized cause, petitioners should have presented the
company’s audited financial statements before the labor arbiter
who is in the position to evaluate evidence. That they failed to
do so and only presented these documents to the CA on
certiorari is lamentable considering that the admission of
evidence is outside the sphere of the CA’s certiorari jurisdiction.
Neither can this Court in the present petition admit in evidence
the company’s audited financial statements much more make a
ruling on the question of whether the company incurred
substantial losses justifying retrenchment on the basis thereof
as this Court is not a trier of facts. Besides, it cannot even be
ascertained from the audited financial statements attached to
the instant petition whether the losses incurred by the company
were indeed attributable to the brokerage department. We
therefore agree with the appellate court that petitioners failed
to substantiate their claim of valid retrenchment.
2. NO
- The petitioners’ evidence in support of their claim that the
company’s brokerage department was closed down is wanting.
For instance, the records contain a letter from petitioners
addressed to their clients insinuating that private respondents
voluntarily left the company and that the brokerage department
was merely reorganized and not closed down.
- Petitioners’ assertion that the brokerage department was
closed down because it has been found to be unprofitable and
because the company did not want to run afoul of E.O. 11 which
prohibits corporations with foreign equity to engage in the
brokerage business is controverted by the foregoing letter
which clearly expresses that the brokerage department was
merely restructured to improve brokerage services. Moreover,
petitioners’ allegations are unsubstantiated and self-serving.
Apart from a letter from the SEC requiring the company to
appear and show cause why its articles of incorporation should
not be amended to delete the business of customs brokerage
from its primary purpose, which does not even appear to have
been complied with, petitioners have not presented any
evidence in support of its bullish claim that the brokerage
department has been closed down.
- On the contrary, respondents’ contention to the effect that
the company continued in operation is supported by
documentary evidence such as affidavits, transshipment permit
and certificate of importation to the effect that the brokerage
department continued in operation at least until June 2000.
- The hiring of new employees purportedly to oversee the
performance of outside brokers negates the need for the
termination of private respondents due to closure of the
brokerage department. The termination of respondents was
therefore unjustified either as retrenchment to prevent losses
because petitioners’ evidence to prove business losses was
insufficient, or closure of the establishment because the
brokerage department did not actually cease operations.
BURDEN OF PROOF
SY V CA (SAHOT)
398 SCRA 301
QUISUMBING; February 27, 2003
A2010 - 27 - Disini
NATURE
Petition for review on certiorari of a decision of the Court of
Appeals
FACTS
- Respondent Jaime Sahot started working as a truck helper for
the petitioner when he was 23. Later on the company were
renamed several times until it became SBT Trucking
Corporation. For 36 years before his dismissal, respondent
continuously served the trucking business of the petitioners.
- in 1994, Sahot was 59 years old, he had been incurring
absences as he was suffering from various ailments, particularly
the pain in his left thigh. He filed a week-long leave when he
was treated for his various ailments. He filed a formal request
for extension of his leave, and during this time he was
threatened that if he refused to go back to work he would be
terminated. He could not retire on pension because petitioners
never paid his correct SSS premiums. He could no longer work
as his left thigh hurt abominably. Eventually petitioners
dismissed him from work on June 30.
- Sahot filed a complaint for illegal dismissal. Petitioners claim
that Sahot was their “industrial partner”; that respondent only
became their employee in 1994; that Sahot went on leave and
never reported back to work nor did he file an extension of his
leave (therefore, should be deemed to have voluntarily
resigned)
- LA: pro-petitioners (no illegal dismissal, they were industrial
partners, but still pay financial assistance)
- NLRC: pro-respondent (employee, no abandonment of job,
entitled to separation pay for 29 years)
- CA: affirmed with modification (employee, with separation pay
for 36 years)
ISSUES
1. WON there was an employer-employee relationship between
petitioners and respondent Sahot (or WON Sahot is an
“industrial partner” of the petitioners)
2. WON there was a valid dismissal
3. WON Sahot is entitled to separation pay
HELD
1. YES. No partnership, Sahot was employee.
Ratio The elements to determine the existence of an
employment relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the
employee’s conduct. The most important element is the
employer’s control of the employee’s conduct, not only as to
the result of the work to be done, but also as to the means and
methods to accomplish it.
Reasoning
- Private respondent actually engaged in work as an employee:
he did not have the freedom to determine where he would go,
what he would do, and how he would do it; merely followed
instructions of petitioners as long as he was paid his wages.
- ON PARTNERSHIP: A1767, NCC- contract of partnership is
where 2 or more persons bind themselves to contribute money,
property or industry to a common fund, with the intention of
dividing the profits among themselves.
…as applied in this case: no written agreement exist to prove
partnership; no proof respondent was receiving a share in the
profits, no proof that he actively participated in the
management, administration and adoption of policies of the
business.
- “if doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be tilted
in favor of the latter
2. NO
Ratio In termination cases, the burden is upon the employer to
show by substantial evidence that the termination was for
lawful cause and validly made. A277, LC puts the burden of
proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether
the employer admits or does not admit the dismissal. For an
Labor Law 1
employee’s dismissal to be valid, (a) the dismissal must be for a
valid cause, and (b) the employee must be afforded due
process.
Reasoning
- ON VALID CAUSE: if disease as a ground for termination, refer to
A284, LC and Sec8, Book VI, Rule I of the Omnibus
Implementing Rules of the Labor Code where a certification by
competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a period
of 6 months even with proper medical treatment. If curable,
then employee would be required to take a leave, then
reinstate to formal position upon restoration of his normal
health. The requirement for a medical certificate cannot be
dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent
of the employee’s illness and thus defeat the public policy in
the protection of labor.
…as applied in the case: petitioners did not comply with the
medical certificate requirement before Sahot’s dismissal was
effected
- ON DUE PROCESS: The employer is required to furnish an
employee with 2 written notices before the latter is dismissed:
(1) the notice to apprise the employee of the particular acts or
omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the
employee of his dismissal, to be issued after the employee has
been given reasonable opportunity to answer and to be heard
on his defense.
…as applied in the case: No notice given, but instead what
they did to threaten the employee with dismissal, then
actually implement the threat when the occasion presented
itself because of private respondent’s painful left thigh
3. YES
Ratio. An employee who is terminated because of disease is
entitled to “separation pay equivalent to at least one month
salary or to one-half month salary for every year of service,
whichever is greater.
…as applied in the case: entitled to separation pay computed
at P2,080 times 36 years or P74, 880.
Disposition petition is DENIED and the decision of the Court
of Appeals dated February 29, 2000 is AFFIRMED. Petitioners
must pay private respondent Jaime Sahot his separation pay for
36 years of service at the rate of one-half monthly pay for every
year of service, amounting to P74, 880.00, with interest of six
per centum (6%) per annum from finality f this decision until
fully paid.
NATIONAL BOOKSTORE INC V CA (YMASA,
GABRIEL)
378 SCRA 194
BELLOSILLO; February 27, 2002
FACTS
- Petitioner National Bookstore employed private respondents
Ymasa and Gabriel as Cash Custodian and Head Cashier. They
were routinely tasked with counting the previous day’s sales
and placing them in separate plastic bags to be deposited in
INTERBANK and PCIB. The bags were held for safekeeping in the
Branch vault but upon retrieval to deposit the money with
roving tellers, the money was counted again but the amount for
PCIB was short of P42,758.
- Private respondents were asked by Management to explain in
writing why they should not be dismissed for the loss of
company funds and were placed under preventive suspension.
Private respondents in turn denied responsibility, emphasizing
they had no access to the vault and that they were thoroughly
searched by the guard before leaving. They also asserted their
loyalty and sincerity in their work as they had been employed
there over 13 years.
- Petitioner found their explanation unsatisfactory and
terminated them for gross neglect of duty and loss of
A2010 - 28 - Disini
confidence. Private respondents filed a complaint for illegal
dismissal. The Labor Arbiter found in their favor, stating that the
dismissal was not founded on valid and justifiable grounds.
Petitioners appeal with the NLRC was denied, as was their
petition for certiorari with the CA for lack of merit.
ISSUES
WON private respondents were illegally dismissed
HELD
YES
- The onus of proving that the dismissal of the employee was for
a valid and authorized cause rests on the employer. Failure to
discharge the same would mean the dismissal was not justified
and therefore illegal.
- The requisites for a valid dismissal are (a) the employee must
be afforded due process (b) the dismissal must be for a valid
cause. Petitioner complied with the first requisite by furnishing
the employees with written notices stating cause for
termination, and having decided to do so, the reasons therefor.
- Petitioner accused private respondents of gross neglect of
duty and loss of confidence. Gross negligence is defined as the
failure to exercise slight care or diligence. A perusal of the
records show they weren’t even remotely negligent of their
duties. They were able to illustrate with candor and sincerity
the procedure they took prior to the loss—petitioner’s
allegations on the other hand, were not supported by any
substantive evidence. Assuming arguendo they were negligent,
a single act cannot be categorized as habitual and thus cannot
be a just cause for dismissal.
- Loss of confidence on the other hand must be based on the
willful breach of trust and founded on clearly established facts.
Petitioner failed to establish with certainty the facts upon which
such a breach of confidence could be based. Private
respondents were thus illegally dismissed.
Disposition petition is DENIED for lack of merit
WHEN EFFECTED
LOPEZ SUGAR CORP V FEDERATION OF FREE
WORKERS
[PAGE 270]
CAJUCOM V TPI
451 SCRA 70
SANDOVAL-GUTIERREZ; February 11, 2005
NATURE
Petition for review on certiorari
FACTS
- TPI Philippines Cement Corporation (TP Cement) and TPI
Philippines Vinyl Corporation (TP Vinyl) employed Atty.
Benedicto A. Cajucom VII as Vice-President for Legal Affairs with
a monthly salary of P70,000.00.
- As a result of the economic slowdown then experienced in
this country, respondent TP Cement, having no viable projects,
shortened its corporate term from 50 years to 2 years and 7
months. Thus, respondents implemented cost-cutting
measures resulting in the retrenchment or termination from the
service of their employees, including petitioner.
- Petitioner’s Claim
> Petitioner contested respondents’ action, claiming that his
retrenchment was based erroneously on respondents’ probable
losses, instead of their actual, substantial and imminent
losses, as shown by the following: (1) an increase or
raise in his monthly salary from P70,000.00 in 1995 to
P80,000.00 in 1996; (2) hiring by respondents of more
marketing and accounting employees for the period from July
1997 to December 1998; (3) acquisition, in 1998, of a
Labor Law 1
warehouse; and (4) expansion in 1998 of their operations by
including sales and marketing of oil products. Petitioner
further claimed that respondents were motivated by revenge in
terminating his services. This stemmed from his October 7,
1996 memorandum to respondents’ Executive Vice-President
Thun Tritasavit, also a respondent herein, questioning his
financial transactions detrimental to respondents’ interests.
ISSUE
WON the dismissal of the complainant is illegal
HELD
NO
Ratio To be valid, three requisites must concur, as provided in
Article 283 of the Labor Code, as amended, namely: (1) The
retrenchment is necessary to prevent losses and the same is
proven; (2) Written notice to the employees and to the DOLE at
least one month prior to the intended date thereof; and (3)
Payment of separation pay equivalent to one month pay or at
least ½ month pay for every year of service, whichever is
higher.”
Reasoning
1. The Court is persuaded that retrenchment due to substantial
losses has been sufficiently established and that the dismissal
of complainant pursuant to Art. 283 of the Labor Code, was
justified. TPI acted in good faith in dismissing Cajucom as
proven by the ff acts of the company:
TPI began downsizing their operations as early as April 1996
They moved to a smaller and cheaper three-storey building to
reduce rental costs.
Voluntary termination from the service of some employees
was encouraged upon legal consultation to the complainant.
They increased the salary of complainant from P70,000.00 to
P80,000.00. In order to accommodate such increase,
respondent Tritasavit agreed to deduct the same from his
own salary, thereby, reducing his (respondent Tritasavit’s)
total monthly salary and making it lower than that of
complainant.
They sold some company vehicles and used the proceeds to
meet their operational expenses and pay their obligations.
The audited financial reports prepared by Sycip Gorres Velayo
and Co. show that as of 31 December 1997, TPI Philippines
Cement Corporation incurred losses at P12,375,166.00.
Respondent was in fact very honest to complainant by
forewarning him, a year in advance, of the possibility of his
separation from the service, should there be no changes in
the economic condition, and by helping complainant in
seeking another job by referring him to other companies.
2. The fact that respondents did not comply with the one-month
notice requirement would not invalidate the dismissal but the
petitioner is entitled to an award of nominal damages which the
Court fixed at P20,000.00.
3. It bears reiterating that under Article 283, petitioner is
entitled to an award of separation pay equivalent to one-half
(1/2) month’s pay for every year of service (with a fraction of at
least six (6) months considered one (1) whole year). Since he
had been employed for four (4) years, or from June 1, 1995 to
December 30, 1998, with a monthly salary of P80,000.00, he
should be paid P160,000.00 as separation pay.
Disposition petition is party GRANTED. The challenged
Decision and the Resolution of the Court of Appeals are
AFFIRMED with MODIFICATION in the sense that respondents
are hereby ordered to pay petitioner (1) P160,000.00 as
separation pay; and (2) P20,000.00 as nominal damages.
PROCEDURE (FOR BOTH
RETRENCHMENT AND REDUNDANCY)
SEBUGERO V NLRC
[PAGE 270]
EMCO PLYWOOD CORP V ABELGAS
A2010 - 29 - Disini
[PAGE 14]
INDUSTRIAL TIMBER CORP V ABABON
480 SCRA
YNARES-SANTIAGO; January 5, 2006
NATURE
Petitions for review under Rule 45 ROC assailing the decision of
CA, which set aside the decision of NLRC and the resolution
denying MFR
FACTS
- Industrial Plywood Group Corporation (IPGC) is the owner of a
plywood plant located at Agusan, Pequeño, Butuan City, leased
to Industrial Timber Corporation (ITC) August 30, 1985 for a
period of five years. Thereafter, ITC commenced operation of
the plywood plant and hired 387 workers.
- March 16, 1990, ITC notified the DOLE and its workers that
effective March 19, 1990 it will undergo a "no plant operation"
due to lack of raw materials and will resume only after it can
secure logs for milling.
- Meanwhile, IPGC notified ITC of the expiration of the lease
contract in August 1990 and its intention not to renew the
same.
- June 26, 1990, ITC notified the DOLE and its workers of
shutdown due to the non-renewal of anti-pollution permit that
expired in April 1990. This and the alleged lack of logs for
milling constrained ITC to lay off all its workers until further
notice. This was followed by a final notice of closure or
cessation of business operations on August 17, 1990 with an
advice for all the workers to collect the benefits due them under
the law and CBA.
- October 15, 1990, IPGC took over the plywood plant after it
was issued a Wood Processing Plant Permit , which included the
anti-pollution permit, by the DENR coincidentally on the same
day the ITC ceased operation of the plant.
- Virgilio Ababon, et al. to file a complaint against ITC and IPGC
for illegal dismissal, unfair labor practice and damages. They
alleged, among others, that the cessation of ITC's operation was
intended to bust the union and that both corporations are one
and the same entity being controlled by one owner.
- January 20, 1992, after requiring both parties to submit their
respective position papers, LA held that there was lack of
evidence to prove that it was used to perpetuate fraud or illegal
act; upheld the validity of the closure; and ordered ITC to pay
separation pay of 1/2 month for every year of service.
- Ababon, et al. appealed to the NLRC. NLRC set aside the
decision of the LA and ordered the reinstatement of the
employees to their former positions, and the payment of full
back wages, damages and attorney's fees.
- ITC and IPGC filed MFR. However, it was dismissed for being
filed out of time having been filed only on the date of actual
receipt by the NLRC on June 29, 1993, three days after the last
day of the reglementary period. Thus, they filed a Petition for
Relief from Resolution, which was treated as a 2nd MFR by the
NLRC and dismissed for lack of merit.
Petitioners filed a Notice of Appeal with the SC. Subsequently,
they filed MFR/ 2nd petition for relief with the NLRC.
- SC dismissed the Notice of Appeal for being a wrong mode of
appeal from the NLRC decision. On the other hand, the NLRC
granted the Second Petition for Relief and set aside all its prior
decision and resolutions.
- October 2, 1995, Virgilio Ababon, et al. filed a Petition for
Certiorari with the SC. Pursuant to St. Martin's Funeral Home v.
NLRC, it was referred to the CA for appropriate action and
disposition.
- October 21, 2002, the CA set aside the decision on the 2nd
petition for relief of the NLRC and reinstated its initial decision
and resolution.
- Both filed their respective MFRs which were denied, hence, the
present consolidated petitions for review
Labor Law 1
ISSUES
1. WON NLRC should have taken cognizance of the most recent
MFR
2. WON Ababon, et al. were illegally dismissed due to the
closure of ITC's business; and whether they are entitled to
separation pay, backwages, and other monetary awards
HELD
1. YES
- Substantial justice is best served by allowing the petition for
relief despite procedural defect of filing MFR
- Under Art 218 (c) LC, NLRC may, in the exercise of its
appellate powers, correct, amend, or waive any error, defect or
irregularity whether in substance or in form. Further, Art 221 LC
provides that in any proceeding before the Commission or any
of the LA, the rules of evidence prevailing in courts of law or
equity shall not be controlling and it is the spirit and intention of
this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of
due process.
- Sec14 Rules of Procedure of the NLRC that MFR shall not be
entertained except when based on palpable or patent errors,
provided that the motion is under oath and filed within 10
calendar days from receipt of the order, resolution or decision
should not be interpreted as to sacrifice substantial justice to
technicality. The limitation of the period is to forestall or avoid
an unreasonable delay in the administration of justice, from
which the NLRC absolved ITC and IPGC because the filing of
their MFR was due to excusable negligence.
2. NO
- The records reveal that respondent ITC actually underwent 'no
plant operation' since 19 March 1990 due to lack of log supply.
This s admitted by complainants. Since then several subsequent
incidents prevented respondent ITC to resume its business
operations. Without the raw materials respondent ITC has
nothing to produce. Without the permits it cannot lawfully
operate the plant. And without the contract of lease respondent
ITC has no option but to cease operation and turn over the plant
to the lessor.
- The right to close the operation of an establishment or
undertaking is one of the authorized causes in terminating
employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the
provisions on termination of employment in the LC.
- According to Art 283 LC, a partial or total closure or cessation
of operations of establishment or undertaking may either be
due to serious business losses or financial reverses or
otherwise. Under the first kind, the employer must sufficiently
and convincingly prove its allegation of substantial losses, while
under the second kind, the employer can lawfully close shop
anytime as long as cessation of or withdrawal from business
operations was bona fide in character and not impelled by a
motive to defeat or circumvent the tenurial rights of employees,
and as long as he pays his employees their termination pay in
the amount corresponding to their length of service. Just as no
law forces anyone to go into business, no law can compel
anybody to continue the same. It would be stretching the intent
and spirit of the law if a court interferes with management's
prerogative to close or cease its business operations just
because the business is not suffering from any loss or because
of the desire to provide the workers continued employment.
- In sum, under Art 283 LC, three requirements are necessary
for a valid cessation of business operations: (a) service of a
written notice to the employees and to the DOLE at least one
month before the intended date thereof; (b) the cessation of
business must be bona fide in character; and (c) payment to
the employees of termination pay amounting to one month pay
or at least one-half month pay for every year of service,
whichever is higher.
- In these consolidated cases, we find that ITC's closure or
cessation of business was done in good faith and for valid
reasons.
A2010 - 30 - Disini
- Having established that ITC's closure of the plywood plant was
done in good faith and that it was due to causes beyond its
control, the conclusion is inevitable that said closure is valid.
Consequently, Ababon, et al. could not have been illegally
dismissed to be entitled to full backwages. However, they are
entitled to separation pay equivalent to one month pay or at
least one-half month pay for every year of service, whichever is
higher.
- Although the closure was done in good faith and for valid
reasons, we find that ITC did not comply with the notice
requirement. While an employer is under no obligation to
conduct hearings before effecting termination of employment
due to authorized cause, however, the law requires that it must
notify the DOLE and its employees at least one month before
the intended date of closure.
Disposition the Decision of CA, which set aside the decision
and resolution of NLRC, are hereby REVERSED. The May 24,
1995 Decision of the NLRC reinstating the decision of the Laf
finding that the closure or cessation of ITC's business valid, is
AFFIRMED with the MODIFICATIONS that ITC is ordered to pay
separation pay equivalent to one month pay or to at least one-
half month pay for every year of service, whichever is higher,
and P50,000.00 as nominal damages to each employee.
RE-HIRING EFFECT
ATLANTIC GULF AND PACIFIC CO V NLRC
(GAMBOA, TUASON)
307 SCRA 714
PUNO; May 28, 1999
NATURE
Special civil action for certiorari
FACTS
- Atlantic Gulf (AG&G) is a corporation engaged in general
construction work. It reportedly incurred huge operating losses
of P134.8 million and net losses of P35.42 million as the
construction industry experienced a major slump. To save
itself, Atlantic implemented a redundancy program wherein 177
employees were separated from employment. Among them
were private respondents Gamboa, Tuason, and Din, all
members of the AG&P United Rank and File Association (AG&P
URFA). They all received the benefits due them under the LC.
More than a year later, they charged the company with unfair
labor practice and illegal dismissal.
- The LA rendered a decision in their favor as it was similar to
the cases filed by the 36 employees affected by AG&P’s
retrenchment program in 1988. There they found that the
company’s redundancy program has no basis for
implementation on account of the substantial profits obtained
by the company from 1983 to 1988. Thus, the redundancy
program was but a mere scheme to get rid of the complainants,
all active union members. The receipt by the complainants of
their respective separation pay, even if without protestation or
reservation, does not stop them from asserting their right to
security of tenure and self organization. As mere salaried
employees, complainants were faced with no other choice but to
accept the money to enable them to meet the demands of
everyday living. However, the NLRC set aside the decision of
the LA with regard to Gamboa, Tuason and Din.
- Since the cases a quo stemmed from the same circumstances
as the ones previously filed by the thirty six (36) AG & P
employees, they share the same core issue: Was the
redundancy/retrenchment program undertaken by AG & P in
1988 and the resulting termination of the employment of 177 of
its employees, including private respondents herein, valid?
ISSUE
WON the redundancy/retrenchment program undertaken by AG
& P in 1988 and the resulting termination of the employment of
Labor Law 1
177 of its employees, including private respondents herein, was
valid
HELD
- As already stated, the Labor Code recognizes retrenchment as
one of the authorized causes for terminating the employer-
employee relationship and the decision to retrench or not to
retrench is a management prerogative. In the case at bar, the
company losses were duly established by the financial
statements presented by both parties.
‘In the case at bar, there is no question that respondent’s
income had been continuously decreasing – P205 million in
1984; P175 million in 1985 and P101 million in 1986. In
1987, however, it declared a loss of P34 million. The
declining trend in respondent’s income and losses in 1987
confirms its allegation that respondent is predicting a bleak
future considering the slump not only in foreign contracts but
with respect to domestic contracts as well. True enough,
respondent incurred further tremendous losses in 1990 in the
amount of P176,181,505.00. In other words, the losses or
abrupt down fall in income which respondent wanted to abate
by resorting to the reduction in the number of employees was
imminent and real.’
‘Indeed, the records show that aside from its ‘redundancy
program’, respondent company had to resort to other cost-
cutting measures in order to stave off impending losses.
- Petitioners contend that the ‘redundancy program’ was
actually a union-busting scheme of management, aimed at
removing union officers who had declared a strike. This
contention cannot stand in the face of evidence of substantial
losses suffered by the company. Moreover, while it is true that
the company rehired or reemployed some of the dismissed
workers, it has been shown that such action was made only as
company projects became available and that this was done in
pursuance of the company’s policy of giving preference to its
former workers in the hiring of project employees. The rehiring
or reemployment does not negate the imminence to (sic)
losses, which prompted private respondent to retrench.
- As to the waivers and quitclaims signed, not all waivers and
quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. In the case at
bar, the documents of waiver were executed by the affected
employees without any force or duress used against them by
private respondent or its representatives. The documents
embodied reasonable settlements of the parties’ claims. As a
matter of fact, the employees received separation pay
equivalent to one month pay for every year of service, which
was more than what they were entitled to receive.
- It is necessary to distinguish ‘redundancy’ from
‘retrenchment’. Both are mentioned in Article 283 of the Labor
Code as just causes for the closing of establishments or
reduction of personnel. ‘Redundancy’ exists when the services
of an employee are in excess of what is required by an
enterprise. ‘Retrenchment’, on the other hand, is one of the
economic grounds for dismissing employees and is resorted to
primarily to avoid or minimize business losses. Private
respondent’s ‘redundancy program’, while denominated as
such, is more precisely termed ‘retrenchment’ because it is
primarily intended to prevent serious business losses.
“As already stated, the Labor Code recognizes retrenchment
as one of the authorized causes for terminating the employer-
employee relationship and the decision to retrench or not to
retrench is a management prerogative. In the case at bar, the
company losses were duly established by the financial
statements presented by both parties.
- The petitioner’s contention that the redundancy program was
actually a union-busting scheme of management, aimed at
removing union officers who had declared a strike. This
contention cannot stand in the face of evidence of substantial
losses suffered by the company.
Disposition petition is GRANTED. The public respondent’s
Decision dated 30 September 1996 and Resolution dated
A2010 - 31 - Disini
December 6, 1996 are SET ASIDE. The Temporary Restraining
Order issued on 4 February 1998 is made permanent.
LIABILITY
CAPITOL MEDICAL CENTER V MERIS
470 SCRA 236
CARPIO MORALES; September 16, 2005
FACTS
- Capitol hired Dr. Meris one of its stockholders, as in charge of
its Industrial Service Unit (ISU) at a monthly salary of
P10,270.00.
- Until the closure of the ISU, Dr. Meris performed dual functions
of providing medical services to Capitol’s more than 500
employees and health workers as well as to employees and
workers of companies having retainer contracts with it.
- Dr. Meris received from Capitol’s president and chairman of
the board, Dr. Clemente, a notice advising him of the
management’s decision to close or abolish the ISU and the
consequent termination of his services as Chief thereof
- Dr. Meris, doubting the reason behind the management’s
decision to close the ISU and believing that the ISU was not in
fact abolished as it continued to operate and offer services to
the client companies with Dr. Clemente as its head and the
notice of closure was a mere ploy for his ouster in view of his
refusal to retire despite Dr. Clemente’s previous prodding for
him to do so, sought his reinstatement but it was unheeded.
- Dr. Meris thus filed a complaint against Capitol and Dr.
Clemente for illegal dismissal and reinstatement with claims for
backwages, moral and exemplary damages, plus attorney’s
fees.
ISSUE
WON Capitol validly terminated Dr. Meris’s service as ISU head
HELD
NO
- The right to close the operation of an establishment or
undertaking is explicitly recognized under the Labor Code as
one of the authorized causes in terminating employment of
workers, the only limitation being that the closure must not be
for the purpose of circumventing the provisions on termination
of employment embodied in the Labor Code. The phrase
“closures or cessation of operations of establishment or
undertaking” includes a partial or total closure or cessation.
And the phrase “closures or cessation x x x not due to serious
business losses or financial reverses” recognizes the right of the
employer to close or cease his business operations or
undertaking even if he is not suffering from serious business
losses or financial reverses, as long as he pays his employees
their termination pay in the amount corresponding to their
length of service.
- As long as the company’s exercise of the same is in good faith
to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld.
- The ultimate test of the validity of closure or cessation of
establishment or undertaking is that it must be bona fide in
character.[39] And the burden of proving such falls upon the
employer.
- From the letter of Dr. Clemente to Dr. Meris, it is gathered that
the abolition of the ISU was due to the “almost extinct demand
for direct medical service by the private and semi-government
corporations in providing health care for their employees;” and
that such extinct demand was brought about by “the existing
trend of industrial companies allocating their health care
requirements to Health Maintenance Organizations (HMOs) or
thru a tripartite arrangement with medical insurance carriers
and designated hospitals.”
Labor Law 1
- The records of the case, however, fail to impress that there
was indeed extinct demand for the medical services rendered
by the ISU.
- The termination of the services of Dr. Meris not having been
premised on a just or authorized cause, he is entitled to either
reinstatement or separation pay if reinstatement is no longer
viable, and to backwages.
Disposition The decision of the Court of Appeals dated
February 15, 2002 is hereby AFFIRMED with MODIFICATION.
As modified, judgment is hereby rendered ordering Capitol
Medical Center, Inc. to pay Dr. Cesar Meris separation pay at
the rate of One (1) Month salary for every year of his
employment, with a fraction of at least Six (6) Months being
considered as One (1) Year, full backwages from the time of his
dismissal from April 30, 1992 until the expiration of his term as
Chief of the ISU or his mandatory retirement, whichever comes
first; other benefits due him or their money equivalent; and
attorney’s fees.
D. CLOSING OF BUSINESS
RIGHT
MAC ADAMS METAL V MAC ADAM METAL
ENGINEERING
414 SCRA 411
CORONA; October 24, 2003
NATURE
Petition for review on certiorari of the decision of the CA
FACTS
- Mac Adams Metal Engineering (MAME) and GBS Engineering
Services (GBS) were both owned by spouses Geronimo and
Lydia Sison. From the facts of the case, the spouses decided to
retire from business in 1988 when the wife became sickly. In
July 1992, in a genral meeting of the workers, she announced
her plan to close shop effective early 1993. The announcement
was done early so that the employees can look for alternative
work.
- After the announcement, some employees decided to form a
union, MAMEWU, ostensibly for the purpose of making
representations with the management to reconsider its decision
to close shop or to see to it that all benefits due the employees
would be paid. In the course of the negotiation, the Union
demanded among others that the separation pay to be given
should be 45 days for every year of service. This was not
accepted by Mrs. Sison. It was found out later that even before
Mrs sison could announce her plans to shut down, member of
the Union were already sabotaging the operations through work
slowdowns, picketing, refusal to report to work, and ultimately
strikes.
- It was alleged by the workers that MAME and GBS were being
closed to bust the Union and that these two businesses will
continue under the business names, MBS Machine and
Industrial supply (MBS) and MVS Heavy Equipment Rental and
Builders (MVS). These two companies were subsequently
impleaded as run-away shops MAME and GBS. MBS is partly
owned by Geronimo Sison while MVS is owned by Dominic
Sison, son of the Spouses Sison. It should be noted that the MBS
was engaged in manufacturing carton boxes and other allied
products and MVS was engaged in leasing out heavy
equipment.
- the Union filed a complaint for unfair labor practice against the
two companies. The Labor Arbiter found for the respondents
which was affirmed by the NLRC. The CA also affirmed the
ruling of the Labor Arbiter and the NLRC that there was a
legitimate and bona fide closure and cessation of the business
by MAME and GBS.
A2010 - 32 - Disini
ISSUE
WON the closure of MAME and GBS was done in good faith and
for legitimate business reasons
HELD
YES
- The owner of a business can lawfully close his shop. No law
can force anyone to go into business, no law can compel
anyone to continue the same. It would be stretching the intent
and spirit of the law if the government were to unjustly interfere
with the management’s prerogative to close or cease its
business operations, just because said business is not suffering
from losses or simply to provide the workers the continued
employment.
Reasoning
- The governing article under the labor code with regard closure
is Article 283. Under this article, it seems clear that business
closures will not be interfered with provided however that what
is considered as due to workers be complied with. In addition to
the separation pay required to be paid, the establishment would
also have to serve the workers and the the DOLE notice one
month before the intended date of closure.
- As part of the proof submitted by the respondents, they
presented various notices not only to the employees and DOLE
but also to the SSS, BIR, DTI, And the Municipal licensing
Division of Antipolo.
Disposition Petition dismissed.
CATATISTA V NLRC (VICTORIAS MILLING CO INC)
247 SCRA 46
ROMERO; August 3, 1995
NATURE
petition for review of the NLRC decision Cebu City dated March
8, 1991 which reversed Labor Arbiter decision dated October
18, 1988 and the resolution dated July 23, 1991 which denied
petitioners' motion for reconsideration.
FACTS
- Petitioners CATATISTA, JAIME MONSERATE, FRANCISCO
ELISAN, FERNANDO DE LA PENA, DIEGO TUPAS, ROSENDO
MONSERATE, ERNESTO SIBUNAL, DIOSCORO HINO-O, AURELIO
DESCATAMIENTO, LODOVICO DELA PENA, and DIONISIO
BALLADOS, were regular plantation workers in Hacienda
Binanlutan, one of the six haciendas operated and managed by
private respondent Victorias Milling Company, Inc. with an area
of 14.8 hectares planted to sugarcane.
- June 1984 – Victorias decided to permanently stop and close
its sugarcane operations in Hacienda Binanlutan "due to low
sugar prices which affected the viability and profitability of said
hacienda" and convert it instead into an ipil-ipil plantation. In
view of such decision, management subsequently held a
conference with all thirteen field workers to explain to them the
reason for this move, as well as the computation of their
termination pay
- July 10, 1984 – in a letter, each of the thirteen petitioners was
formally informed of Victoria’s decision to close and stop
sugarcane operations and the reason for such closure and that
"considering that they have been hired specifically for Hacienda
Binanlutan's operations and considering further that there is no
plan to revive sugarcane operations at said company farm,"
their services would be terminated effective August 1, 1984.
- Petitioners received their termination pay or retirement pay
under the pension plan, whichever was higher.
- March 18, 1987 – Catatista et al filed a complaint against
Victorias with the arbitration branch of NLRC for illegal
dismissal, damages and attorney's fees.
- October 18, 1988 - Labor Arbiter Rodolfo Lagoc ordered
Victorias to reinstate Catatista et al without loss of seniority and
with backwages for three (3) years without any qualifications
- NRLC > reversed the decision of the Labor Arbiter
Labor Law 1
- Catatista et al’s MFR to NLRC decision was denied for lack of
merit.
- Petitioners claim that NLRC abused its discretion in
rendering its questioned decision when it misappreciated or
failed to consider the following:
1. Victorias’ net profit from its company-wide operations for
1983 and 1984 at a staggering amount of P 11,508,406.00 and
P48,229,400.00, respectively
2. Victorias’ own admission of profits in the raw and refined
sugar production as stated in page 4, of its Position Paper dated
November 2, 1988;
3. Victorias’ payment of wages and benefits for company
hacienda workers more than what is prescribed by law. It even
granted wage increases at P1.20/day in 1983 to 1985 CBA
which private respondent alleged to be the years it incurred
losses in the hacienda operation;
4. There is a stipulation in the CBA wherein the company shall
comply with statutory salary increases in the event it is decreed
by law-,
5. Victorias’ had not submitted a separate financial statement
or balance sheet for its company haciendas except only an
income statement. Obviously, such income statement cannot
show such items as retained earnings, fixed assets, and real
networth which could be found only in financial statements or
balance sheets that is determinative of losses or profits of any
business;
6. Only Hacienda Binanlutan, where Catatista et al were
employed, has closed its operation exempting other company
haciendas such as Florencia, Candelaria, Pacita, Begonia and
Bacayan;
7. Catatista et al have already worked for two months in the
ipil-ipil plantation before they were terminated from the service;
8. Catatista et al worked also in other company owned
haciendas after milling season in Hacienda Binanlutan and in
case the need arises and return again to Hacienda Binanlutan
upon ressumption of work;
9. Victorias’ change only on crops from sugarcane to ipilipil
trees which is definitely the same agricultural undertaking with
the same need for workers for its operation;
10. After Catatista et al’s termination, Victorias’ hired a
laboronly contractor to supply workers in the ipil-ipil plantation
to the exclusion of Catatista et al;
11. The uncontroverted fact that Hacienda Binanlutan was not
losing in its operation in 1984 but was converted to ipil-ipil
plantation only for reason of 'land use' which is the idea of Mr.
Virgilio Flores who was then Vicgtorias’ Division Head of
Research and Development
ISSUES
WON Catatusta et al were illegally terminated from work
resulting from the closure of Hacienda Binanlutan, one of the
company farms owned by Victorias
(Corollary to the above issue is the validity of the closure of a
business based on the following)
A. WON Victorias’ is in good faith when it closed its business
B. WON such closure is due to causes beyond its control as
enunciated in the case of Armed Forces of the Philippines
Mutual Benefit Association v. Armed Forces Mutual Benefit
Association, Inc. Employees Union
HELD
NO
- Article 283 of the Labor Code provides that:
"The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this title, by serving a written notice on the
workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof. x x x In
case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
A2010 - 33 - Disini
reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year
of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year."
- The termination of employment of the employees of Hacienda
Binanlutan brought about by the closure is to be considered as
retrenchment as Hacienda Binanlutan is only one of the six
haciendas of private respondent. Clearly, private respondent's
purpose in converting said hacienda into an Ipil-ipil plantation
and terminating the service of petitioners is to cut down on
losses which it had adequately shown to have suffered through
an income statement for the fiscal year which ended August 31,
1984.
- This Court has held that "the requisites of a valid
retrenchment are: (a) the losses expected should be substantial
and not merely de minimis in extent; (b) the substantial losses
apprehended must be reasonably imminent; (c) the
retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and (d) the alleged
losses, if already incurred, and the expected imminent losses
sought to be forestalled, must be proved by sufficient and
convincing evidence."
- We see no grave abuse of discretion on the part of NLRC
when it found that "company haciendas including Hacienda
Binanlutan incurred huge losses from years 1982 to 1983 in the
amount of P2,842,778.03."9 Private respondent showed that
Hacienda Binanlutan itself suffered a net loss of P22,624.88.10
It is significant to note that petitioners failed to dispute these
submissions of private respondent which more than satisfy the
first and fourth requirements for a valid retrenchment. The
losses incurred are clearly substantial and sufficiently proven by
means of an income statement of Hacienda Binanlutan and the
financial statement of the company haciendas. Said losses are
not only imminent but had, in fact, already been incurred by
private respondent since 1982. This was even more alarming in
1984 considering the worldwide economic situation, as well as
the low sugar prices during that year, events which were
obviously beyond the control of private respondent.
- Having determined that private respondent suffered losses
and had to resort to retrenchment of its employees in Hacienda
Binanlutan to prevent further losses, this Court holds that
private respondent was within its rights in closing Hacienda
Binanlutan and in terminating the service of petitioners.
- In any case, Article 283 of the Labor Code is clear that an
employer may close or cease his business operations or
undertaking even if he is not suffering from serious business
losses or financial reverses, as long as he pays his employees
their termination pay in the amount corresponding to their
length of service. It would, indeed, be stretching the intent and
spirit of the law, if we were to unjustly interfere in
management's prerogative to close or cease its business
operations just because said business operation or undertaking
is not suffering from any loss. This Court, in the case of
- Maya Farms Employees Organization, et al. v. NLRC
"The rule is well-settled that labor laws discourage
interference with an employer's judgment in the conduct of
his business. Even as the law is solicitous of the welfare of
employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. As long
as the company's exercise of the same is in good faith to
advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid
agreements, such exercise will be upheld."
- Dangan v. NLRC > management's prerogative to close or
abolish a department or section of the employer's
establishment for economic reasons. We reasoned out that
since the greater right to close the entire establishment and
cease operations due to adverse economic conditions is granted
an employer, the closure of a part thereof to minimize expenses
and reduce capitalization should similarly be recognized.
- Special Events & Central Shipping Office Workers Union
v. San Miguel Corporation > the determination of the
usefulness of a section, being a company prerogative, the
closure may not be questioned, specially in this case where it is
Labor Law 1
impelled by economic reasons due to the continuous losses
sustained in its operation, coupled with the lack of demand for
the services of such section.
A. YES
- We are satisfied with private respondent's good faith when it
closed Hacienda Binanlutan.
(1) the necessary notice to the affected employees and to the
then Ministry of Labor and Employment have been sufficiently
complied with.
(2) the affected employees were paid their separation pay
which was computed at one month pay for every year of service
or based on private respondent's pension plan, whichever was
higher.
(3) there was then no brewing labor dispute which could have
served as a motive for closing Hacienda Binanlutan, contrary to
petitioners' insinuation that their demand for meal allowances
prompted private respondent to close Hacienda Binanlutan, a
reason which we deem to be rather trivial. In fact, petitioners
admitted that they received their meal allowances
(4) it took Catatista et al almost three years to file their
complaint which does not seem to be the natural reaction of
persons aggrieved.
B. YES
- A283 LC provides that the employer may terminate the
employment of his employees to prevent losses, For an
employer to validly terminate the service of his employees
under this ground, he has to comply with two requirements,
namely:
(a) serving a written notice on the workers and the DOLE at
least one month before the taking effect of the closure, and
(b) payment of separation pay equivalent to one month pay or
at least one-half (1/2) month pay for every year of service,
whichever is higher, with a fraction of at least six months to be
considered one whole year.
Disposition petition is hereby DISMISSED. The decision of
public respondent NLRC (Fourth Division) dated March 8, 1991
is AFFIRMED.
ALABANG COUNTRY CLUB INC V NLRC
[PAGE 266]
CAPITOL MEDICAL CENTER INC V MERIS
[PAGE 279]
INDUSTRIAL TIMBER CORP V ABABON
[PAGE 277]
PARTIAL CLOSURE
JAT GENERAL SERVICE V NLRC
[PAGE 266]
CHENIVER DECO PRINT TECHNICS CORP V NLRC
(CFW-MAGKAKAISANG LAKAS NG MGA
MANGGAGAWA SA CHENIVER)
325 SCRA 758
QUISUMBING; February 17, 2000
NATURE
Special civil action for certiorari
FACTS
A2010 - 34 - Disini
- Cheniver is a corporation operating its printing business in
Makati. The respondents are members of the labor union and
former employees of Cheniver.
- June 5, 1992 – Cheniver informed its employees that it will
transfer its operations to Batangas. Reasons for the transfer are
expiration of lease contract on the premises of the Makati palnt,
and local authorities’ action to force out Cheniver’s operations
from Makati because of alleged hazards to residents nearby.
- Cheniver gave its employees until the end of June to inform
management if they wanted with Cheniver in its transfer,
otherwise it would hire replacements. Aug1 was the scheduled
start of operations in the new plant in Batangas.
- Aug 4, 1992 – Cheniver wrote its employees to report to the
new location within 7days, otherwise they will be deemed to
have lost interest in the job and would be replaced. However,
no one reported for work in batangas, even after extension of
period of time to report to work.
- Respondents filed a complaint for unfair labor practice and
illegal dismissal, and demanded separation pay (among others).
- LA ruled that the transfer of operations was valid and absolved
cheniver of charges for unfair labor practice and illegal
dismissal. It however ordered payment of separation pay. NLRC
affirmed.
– cheniver contends that the transfer of its business is neither
closure nor retrenchment, thus separation pay should not be
awarded. Also, employees were not terminated but they
resigned because they find the new site to far from their
residences
ISSUE
WON employees are entitled to separation pay considering that
the transfer of the plant was valid
HELD
1. YES
Ratio Art. 283 of the Labor Code provides (in part):
ART. 283. Closure of establishment and reduction of
personnel. - The employer may terminate the employment of
any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title
xxx
- In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. xxx
Reasoning
- there appears no complete dissolution of Cheniver’s business
undertaking but the relocation of its plant to Batangas, in our
view, amounts to cessation of petitioner's business operations
in Makati. It must be stressed that the phrase “closure or
cessation of operation of an establishment or undertaking not
due to serious business losses or reverses” under Art. 283
includes both complete cessation of all business operations and
the cessation of only part of a company's business
- There is no doubt that petitioner has legitimate reason to
relocate its plant because of the expiration of the lease contract
on the premises it occupied. That is its prerogative. But even
though the transfer was due to a reason beyond its control,
Cheniver has to accord its employees some relief in the form of
severance pay.
- Since the closure of the plant is not on account of serious
business losses, Cheniver shall give respondents separation pay
equivalent to at least 1 month or ½ month pay for every year of
service
- that the employees resigned is not convincing. The transfer of
Cheniver to another place hardly accessible to its workers
resulted in the latter's untimely separation from the service not
to their own liking, hence, not construable as resignation
Disposition petition denied. NLRC resolutions AFFIRMED.
Labor Law 1
REQUISITE
ME-SHURN CORP V ME-SHURN WORKERS UNION
448 SCRA 41
PANGANIBAN; January 11, 2005
FACTS
- Regular rank and file employees of Me-Shurn Corporation
organized Me-Shurn Workers Union-FSM, an affiliate of the
February Six Movement (FSM), their union had a pending
application for registration with the Bureau of Labor Relations
(BLR).
- Ten days after the organization petitioner corporation started
placing on forced leave all the rank and file employees who
were members of the union’s bargaining unit.
- The union filed a Petition for Certification Election with the
Med-Arbitration Unit of the Department of Labor and
Employment (DOLE), Reg Office No. 3.
- Instead of filing an answer to the Petition, the corporation filed
a comment stating that it would temporarily lay off employees
and cease operations, on account of its alleged inability to meet
the export quota required by the Board of Investment.
- Respondent union filed a Notice of Strike against petitioner
corporation on the ground of unfair labor practice (illegal
lockout and union busting).
- The corporation imposed a precondition for the resumption of
operation and the rehiring of laid off workers which was for
remaining union officers to sign an Agreement containing a
guarantee that upon their return to work, no union or labor
organization would be organized and instead, the union officers
were to serve as mediators between labor and management.
After the signing of the Agreement, the operations of the
corporation resumed in September 1998.
ISSUE
WON the dismissal of the employees of petitioner Meshurn
Corporation is for an authorized cause (WON there was a valid
reason for the closure of the business or temporary cessation of
operation)
HELD
NO
- To justify the closure of a business and the termination of the
services of the concerned employees, the law requires the
employer to prove that it suffered substantial actual losses.
The cessation of a company’s operations shortly after the
organization of a labor union, as well as the resumption of
business barely a month after, gives credence to the
employees’ claim that the closure was meant to discourage
union membership and to interfere in union activities. These
acts constitute unfair labor practices.
- The reason invoked by petitioners to justify the cessation of
corporate operations was alleged business losses. Yet, other
than generally referring to the financial crisis in 1998 and to
their supposed difficulty in obtaining an export quota,
interestingly, they never presented any report on the financial
operations of the corporation during the period before its
shutdown. Neither did they submit any credible evidence to
substantiate their allegation of business losses.
- However, as previously stated, in all the proceedings before
the two quasi-judicial bodies and even before the CA, no
evidence was submitted to show the corporation’s alleged
business losses. It is only now that petitioners have belatedly
submitted the corporation’s income tax returns from 1996 to
1999 as proof of alleged continued losses during those years.
A2010 - 35 - Disini
- The claim of petitioners that they were compelled to close
down the company to prevent further losses is belied by their
resumption of operations barely a month after the corporation
supposedly folded up.
- Moreover, petitioners attribute their loss mainly to their failure
to obtain an export quota from the Garments and Textile Export
Board (GTEB). Yet, as pointed out by respondents, the
corporation resumed its business without first obtaining an
export quota from the GTEB. Besides, these export quotas
pertain only to business with companies in the United States
and do not preclude the corporation from exporting its products
to other countries. In other words, the business that petitioner
corporation engaged in did not depend entirely on exports to
the United States.
- If it were true that these export quotas constituted the
determining and immediate cause of the closure of the
corporation, then why did it reopen for business barely a month
after the alleged cessation of its operations?
- Proper written notices of the closure were not sent to the
DOLE and the employees at least one month before the
effectivity date of the termination, as required under the Labor
Code. Notice to the DOLE is mandatory to enable the proper
authorities to ascertain whether the closure and/or dismissals
were being done in good faith and not just as a pretext for
evading compliance with the employer’s just obligations to the
affected employees. This requirement is intended to protect the
workers’ right to security of tenure. The absence of such
requirement taints the dismissal.
- The determination to cease operations is a management
prerogative that the State does not usually interfere in. Indeed,
no business can be required to continue operating at a loss,
simply to maintain the workers in employment. That would be
a taking of property without due process of law. But where it is
manifest that the closure is motivated not by a desire to avoid
further losses, but to discourage the workers from organizing
themselves into a union for more effective negotiations with
management, the State is bound to intervene.
TEMPORARY CESSATION OF OPERATION
BASIS
SAN PEDRO HOSPITAL OF DIGOS INC V SEC OF
LABOR
263 SCRA 98
PANGANIBAN; October 11, 1996
NATURE
Petition for certiorari of a decision of NLRC.
FACTS
- The HOSPITAL’s collective bargaining agreement (CBA)3 with
the UNION, which is the exclusive bargaining agent4 of the
hospital's rank-and-file workers, ended in Dec 1990. The
following year, both parties negotiated for the renewal of their
CBA, but they failed to reach an agreement. Eventually, the
UNION went on strike, until the DOLE Secretary assumed
jurisdiction over the labor dispute.5 The Secretary issued an
order directing the striking workers to return to work; the
HOSPITAL to accept all returning workers under the same terms
prior to the work stoppage; and both parties to desist from
committing any act that may aggravate the situation.
- Before the HOSPITAL could receive such order, however, it
already notified the DOLE by letter, that it would temporarily
suspend operations for 6 months effective June 15, 1991, or up
3
The CBA is the end result of the collective bargaining process [see ART.250, Labor
Code]. Both the employer and the exclusive bargaining agent [see footnote 2] have
the duty to bargain collectively, which duty is explained under ARTS.252-253.
4
An exclusive bargaining agent is defined under ART.255.
5
See ART.263(g).
Labor Law 1
to Dec 15, 1991. The HOSPITAL thus refused the return of its
striking workers on account of such suspension of operations.
Several conciliation conferences were held, where the HOSPITAL
stated that it would submit the necessary documents showing
its serious financial condition "should the need be in earnest".
No such documents came, and after the Secretary’s ocular
inspection, he ruled, among others, that the subject suspension
was not for a valid cause but was actually for defeating the
workers' right to self-organization. He also enjoined the
HOSPITAL to enter into a new CBA with the UNION.
ISSUES
1. WON the Secretary is correct in concluding that the subject
temporary suspension was for circumventing the return-to-work
order he issued
2. WON the Secretary gravely abused his discretion when he
ordered the HOSPITAL to enter into a new CBA despite his
knowledge that it had actually ceased operations. Is it correct
HELD
1. YES
Ratio Temporary suspension of operations is a valid exercise
of management prerogative provided it is not carried out in
order to circumvent the provisions of the Labor Code or to
defeat the rights of the employees under the Code. The
determination to suspend operations is a management
prerogative that the State usually does not interfere with, as no
business can be required to continue operating at a loss simply
to maintain the workers in employment. To require such
continued operation would be tantamount to a taking of
property without due process, which the employer has a right to
resist. But where it is shown that the closure is motivated not
by a desire to prevent further losses, but to discourage the
workers from organizing themselves into a union for more
effective negotiation with management, the State is bound to
intervene.
- The burden of proving that such a temporary suspension is
bona fide falls upon the employer. In this instance, the
HOSPITAL had to establish the fact of its precarious financial
health; that its cessation of operation was really necessitated
by its financial condition; and that said condition would
probably be improved by such suspension. The HOSPITAL could
have partly met the foregoing requirements by submitting its
financial statements or records as proof of its financial crisis. Its
unexplained and continued failure to submit its financial
statements raises grave doubts as to the truth of the claimed
financial crisis and the real purpose of the subject suspension.
The HOSPITAL was recklessly pushing its luck when it believed
that the Secretary could be convinced without first obtaining
and examining its financial statements and the notes thereto.
The fact that the conciliator never asked for them is no excuse
for not presenting them, as such was the HOSPITAL’s duty.
Neither is it acceptable for petitioner to allege that the latest
financial statement (for 1991) were still being prepared, since
the financial statement for the prior years 1989 and 1990 would
have sufficed. Petitioner, having wretchedly failed to justify by
even the most rudimentary proof its temporary suspension,
must bear the consequences thereof. Thus, the Secretary did
not act with grave abuse of discretion in finding the temporary
suspension illegal.
2. NO
- Art. 286 of the Code provides that "bona fide suspension…
for a period not exceeding 6 months . . . shall not terminate
employment." Sec.12, Rule 1, Book VI of the Omnibus
Rules provides that the employer-employee relationship shall
be deemed suspended in case of the suspension referred to
above, it being implicitly assumed that once operations are
resumed, the employment relationship is revived. If a valid
suspension of operation merely suspends the
relationship, with more reason will an illegal suspension,
as in this case, not affect the employment relationship.
- There is, thus, no basis for the HOSPITAL to claim that a new
CBA should not be entered into or that collective bargaining
should not be conducted during the temporary suspension. The
A2010 - 36 - Disini
HOSPITAL expressly represented that the suspension was to be
for 6 months only. Absent any other information, the natural
presumption will be that the HOSPITAL would resume
operations after 6 months, and therefore, it follows that a new
CBA will be needed to govern the employment relations of the
parties, the old one having already expired. Clearly then, under
the circumstances, the Secretary cannot be to have gravely
abused his discretion for ordering the parties to enter into a
new CBA.
Disposition DOLE Secretary’s decision AFFIRMED. But since
the HOSPITAL permanently closed after the 6-month
suspension, which closure it has duly justified, SC sustained the
permanent closure and did not anymore compel the HOSPITAL
to negotiate with the UNION for a new CBA. SC, in addition,
penalized the HOSPITAL for the illegal temporary suspension by
awarding backwages to the UNION members from the time they
were refused admittance by the HOSPITAL, until the expiration
of the temporary suspension.
JAT GENERAL SERVICES V NLRC
[PAGE 266]
MAYON HOTEL & RESTAURANT V ADONA
[PAGE 269]
ME-SHURN CORP V ME-SHURN WORKERS UNION
[PAGE 282]
EFFECT ON EMPLOYER-EMPLOYEE
RELATIONSHIP
SAN PEDRO HOSPITAL OF DIGOS V SEC OF LABOR
[PAGE 282]
E. INSTALLATION
ABAPO V CA (SAN MIGUEL CORP)
439 SCRA 594
SANDOVAL-GUTIERREZ; September 30, 2004
NATURE
Petition for review of the decision of CA
FACTS
- The petitioners are former employees of private respondent
San Miguel Corporation (SMC) who were hired on different dates
and assigned to SMC's Mandaue Brewery Plant.
- Sometime in 1991, SMC conducted a viability study of its
business operations and adopted a modernization program.
SMC then brought into the Mandaue plant high-speed machines
to be used in the manufacture of its beer. These machines were
installed in bottling lines 6 and 7. The main line operation
known as lines 1, 2, 3, 4, and 5 ceased to operate. As a
consequence, several functions of the employees were declared
redundant.
- On February 13, 1992, SMC sent to Office of Region VII,
Department of Labor and Employment (DOLE), two letters with
the information that it was terminating the services of the
employees named in the attached list. On February 7, 1992 and
September 28, 1992, SMC sent notices to the affected
employees informing them that they would be given a
separation pay amounting to 175% of their respective monthly
salaries for every year of service, a 3-year free hospitalization
coverage, and free training and consultation for livelihood
programs and small-scale business enterprises, as well as
assistance in local and overseas job placements.
Labor Law 1
- Accordingly, the employees concerned received the said
amounts and executed their respective quitclaims before the
Officers of Region VII DOLE.
- Two years later, those employees filed with the Labor Arbiter
two separate complaints, alleging that SMC did not institute a
modernization program, hence, the company committed an
illegal mass lay-off. They prayed that their separation from the
service be declared illegal and that they be paid their
backwages, separation pay in lieu of reinstatement, and other
benefits. Labor Arbiter rendered a Decision dismissing the
complaints. On appeal, NLRC affirmed the Labor Arbiter’s
decision.
- Petitioners then filed with CA a special civil action for certiorari
which was dismissed. Petitioners' motion for reconsideration
was denied. The grounds relied upon by the CA in dismissing
the petition are: petitioners failed to attach to their petition a
certified true copy of the assailed Resolution of the NLRC in
NLRC Case No. V-0099-97; and they filed the petition 7 days
late.
ISSUE
WON CA gravely abused its discretion in dismissing the petition
HELD
- Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as
amended, is clear that failure to comply with the requirement
that the petition shall be accompanied by a certified true copy
of the resolution being challenged is a sufficient ground for the
dismissal of the petition.
- With respect to the delay in the filing of the petition,
petitioners accepted the finding of the Court of Appeals that
there was indeed a delay of 7 days.
- Granting that the petition is in order, it is still dismissible. In a
similar case (involving the same issue — the validity of the
termination of SMC employees at the Mandaue Brewery), it was
held that the installation of labor-saving devices by SMC at the
Mandaue plant was a proper ground for terminating
employment. The quitclaims and releases, signed by the
employees concerned as reasonable settlements, are binding
upon the parties.
Disposition Petition denied. CA decision affirmed in toto
F. FLOATING STATUS
DISEASE
SY V CA
[PAGE 276]
G. SPECIAL CASE OF BUSINESS
TRANSFERS
NATURE OF LABOR CONTRACT
SUNDOWNER DEV CORP V DRILON (NUWHRAIN,
PENANO)
180 SCRA 14
GANCAYCO; December 6 1989
FACTS
- Hotel Mabuhay, Inc. (Mabuhay) leased the premises belonging
to Santiago Syjuco, Inc. (Syjuco) located in Ermita, Manila. Due
to non-payment of rentals, Syjuco filed an ejectment case
against Mabuhay. Mabuhay offered to amicably settle the case
by surrendering the premises to Syjuco and to sell its assets
and personal property to any interested party.
A2010 - 37 - Disini
- Syjuco offered the said premises for lease to petitioner
Sundowner Dev Corp.
- Mabuhay then offered to sell its assets and personal properties
in the premises to petitioner to which petitioner agreed.
- Syjuco turned over the possession of the leased premises to
petitioner who took possession and occupied the same.
- The National Union of Workers in Hotel, Restaurant and Allied
Services (NUWHRAIN) picketed the leased premises, barricaded
the entrance to the leased premises and denied petitioner's
officers, employees and guests free access to and egress from
said premises.
- Secretary of Labor ordered all striking employees to return to
work and for respondent Mabuhay to accept all returning
employees pending final determination of the issue of the
absorption of the former employees of Mabuhay.
- Mabuhay: it had sold all its assets and personal properties to
petitioner and that there was no sale or transfer of its shares
whatsoever and that Mabuhay completely ceased operation and
surrendered the premises to petitioner so that there exists a
legal and physical impossibility on its part to comply with the
return to work order specifically on absorption.
- NUWHRAIN: there was connivance between Mabuhay and
petitioner in selling the assets and closing the hotel to escape
its obligations to the employees of Mabuhay and so it prays that
petitioner accept the workforce of Mabuhay and pay backwages
from April 15, 1986 to April 28, 1987, the day Mabuhay stopped
operation.
- Drilon issued an order requiring petitioner to absorb the
members of the union and to pay backwages from the time it
started operations up to the date of the order. \
- Petitioner filed motion for reconsideration of the aforesaid
order alleging that the theory of implied acceptance and
assumption of statutory wrong does not apply in the instant
case; that the prevailing doctrine that there is no law requiring
bona fide purchasers of the assets of an on-going concern to
absorb in its employ the employees of the latter should be
applied in this case; that the order for absorption of the
employees of Mabuhay as well as the payment of their
backwages is contrary to law.
ISSUES
1. WON the purchaser of the assets of an employer corporation
can be considered a successor employer of the latter's
employees (WON Sundowner can be compelled to absorb the
employees of respondent Mabuhay)
2. WON there was bad faith
HELD
1. NO
Ratio As a general rule, there is no law requiring a bona fide
purchaser of assets of an on-going concern to absorb in its
employ the employees of the latter.
- However, although the purchaser of the assets or enterprise is
not legally bound to absorb in its employ the employers of the
seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or
clothed with bad faith. (see no. 2)
- Nature of labor contract: The rule is that unless expressly
assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam,
thus binding only between the parties. A labor contract merely
creates an action in personam and does not create any real
right which should be respected by third parties. This conclusion
draws its force from the right of an employer to select his
employees and to decide when to engage them as protected
under our Constitution, and the same can only be restricted by
law through the exercise of the police power.
2. NO
- contrary to the claim of the public respondent that the
transaction between petitioner and Mabuhay was attended with
bad faith, the court finds no cogent basis for such contention.
Thus, the absorption of the employees of Mabuhay may not be
imposed on petitioner.
Labor Law 1
- It is undisputed that when Mabuhay surrendered the leased
premises to Syjuco and asked Syjuco to offer same to other
lessees, it was Syjuco who found petitioner and persuaded
petitioner to lease said premises. Mabuhay had nothing to do
with the negotiation and consummation of the lease contract
between petitioner and Syjuco.
H. PROCEDURAL DUE PROCESS – NATURE
AND REQUIREMENTS
1. REQUIREMENTS
IN GENERAL
AGABON V NLRC
[PAGE 35]
ESSENCE OF DUE PROCESS
CENTRAL PANGASINAN ELEC COOP V MACARAEG
[PAGE 195]
VALIAO V CA
[PAGE 11]
RIGHT TO COUNSEL
SALAW V NLRC (ASSOCIATED BANK, TENGCO,
TUAZON)
202 SCRA 7
SARMIENTO; September 27, 1991
NATURE
Petition for certiorari to review the decision of the NLRC
FACTS
- Espero Salaw was employed by the Associated Bank in 1967
as a credit-investigator-appraiser. His job involved the following
activities: inspecting, investigating, appraising, and identifying
the company's foreclosed assets; giving valuation to its real
properties, and verifying the genuineness and encumbrances of
the titles of properties mortgaged to the bank.
- November 27, 1984 – The investigation unit of the Philippine
Constabulary were able to make Salaw execute a sworn
statement, stating that he disposed acquired assets of the bank
in the form of 20 sewing machines electronic generators for
P60,000 with the help of another bank employee Reynaldo
Madrigal. The said sworn statement was executed without
assistance of counsel.
- December 1984 – Salaw was informed by the bank manager
Tuazon that the bank’s disciplinary would be convened and that
he attend the proceedings without counsel.
- April 1, 1985 – Salaw was terminated effective March 27, 1985
for alleged serious misconduct or willful disobedience and fraud
or willful breach of the trust reposed upon him by the bank.
- Salaw then filed a complaint for illegal termination against the
Associated Bank, Tengco (as chairman of the board) and Tuazon
(as bank manager).
- The Labor Arbiter ruled that Salaw was illegally dismissed and
ordered his reinstatement or payment of backwages and
benefits.
- The respondents appealed and the NLRC reversed the decision
of the Labor Arbiter.
ISSUE
WON Salaw was illegally terminated
A2010 - 38 - Disini
HELD
YES
Ratio The dismissal must not only be for a valid or authorized
cause as provided by law but the rudimentary requirements of
due process-notice and hearing-must also be observed before
an employee may be dismissed.
Reasoning
- Petitioner Salaw was terminated without due process of law.
- The requirement of notice is intended to inform the employee
concerned of the employer's intent to dismiss him and the
reason for the proposed dismissal; on the other hand, the
requirement of hearing affords the employee the opportunity to
answer his employer's charges against him and accordingly to
defend himself before dismissal is effected.
- The initial act of the bank in convening the disciplinary council
would have been a proper step had Salaw been allowed the
assistance of counsel. That would have complied with the
demands of due process had complainant been given the
opportunity to present his own defense and confront the
witnesses, if any, and examine the evidence against him.
- But the records indicate that there was a denial of Salaw’s
constitutional right when his subsequent request to refute the
allegations against him was granted and a hearing was set
"without counsel or representative."
- Section 5 (of Rule 14, Book 5 of the IRR of the Labor Code) of
the said Rule requires that "the employer shall afford the
worker ample opportunity to be heard and to defend himself
with the assistance of his representative, if he so desires."
- The evidence which Associated Bank anchors on is the sworn
statement of Salaw which was executed without the assistance
of counsel.
- Even if administrative and quasi-judicial bodies are not strictly
governed by the procedural rules in adjudicating cases, the
right to counsel is a requirement of substantial due process.
Disposition Judgment set aside and the judgment of the labor
arbiter is reinstated.
NOTICE
COLEGIO DE SAN JUAN DE LETRAN - CALAMBA V.
VILLAS
399 SCRA 550
CORONA; March 26, 2003
NATURE
Petition for review on certiorari
FACTS
- Respondent Belen Villas was employed by the petitioner
School as high school teacher.
She applied for a study leave for six months. The principal of
the high school department told Villas that her request for study
leave was granted for one (1) school year subject to certain
conditions.
- Respondent alleged that she intended to utilize the first
semester of her study leave to finish her masteral degree at the
Philippine Women’s University (PWU). Unfortunately, it did not
push through so she took up an Old Testament course in a
school of religion and at the same time utilized her free hours
selling insurance and cookware to augment her family’s
income. However, during the second semester of her study
leave, she studied and passed 12 units of education subjects at
the Golden Gate Colleges in Batangas City.
- In response to the letters sent her by petitioner to justify her
study leave, she submitted a certification from Golden Gate
Colleges and a letter explaining why she took up an Old
Labor Law 1
Testament course instead of enrolling in her masteral class
during the first semester.
- The President and Rector of the School, Fr. Ramonclaro G.
Mendez, O. P., wrote her, stating that her failure to enroll during
the first semester was a violation of the conditions of the study
leave and that the reasons she advanced for failure to enroll
during the first semester were not acceptable.
- Respondent then filed a case for illegal dismissal and the case
was assigned to the Voluntary Arbitrator who found that
respondent was illegally dismissed. Hence this petition.
ISSUE
WON respondent’s alleged violation of the conditions of the
study grant constituted serious misconduct which justified her
termination from petitioner School
HELD
1. NO
Reasoning
- Under the Labor Code, there are twin requirements to justify a
valid dismissal from employment: (a) the dismissal must be for
any of the causes provided in Article 282 of the Labor Code
(substantive aspect) and (b) the employee must be given an
opportunity to be heard and to defend himself (procedural
aspect).
- In the case at bar, the requirements for both substantive and
procedural aspects were not satisfied.
- We affirm the findings of the Court of Appeals that there was
no violation of the conditions of the study leave grant. Thus,
respondent could not be charged with serious misconduct
warranting her dismissal as a teacher in petitioner School.
Petitioner has failed to convince us that the alleged violations of
the study leave grant constituted serious misconduct which
justified the termination of respondent’s employment. The most
respondent could be charged with was simple misconduct
- Misconduct is improper or wrongful conduct. It is the
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error of judgment. Under
Article 282 of the Labor Code, the misconduct, to be a just
cause for termination, must be serious. This implies that it must
be of such grave and aggravated character and not merely
trivial or unimportant.
- We similarly affirm the Voluntary Arbitrator’s decision that
respondent is not entitled to moral and exemplary damages
and attorney’s fees because there is no evidence showing that
bad faith or malice attended the dismissal of respondent. Moral
damages are recoverable only where the dismissal is attended
by bad faith or fraud, or constitutes an act oppressive to labor,
or is done in a manner contrary to morals, good customs or
public policy. A dismissal may be contrary to law but, by itself
alone, it does not necessarily establish bad faith
Disposition Petition is DENIED.
AGABON V NLRC
[PAGE 35]
STA. CATALINA COLLEGE V NLRC (TERCERO)
416 SCRA 233
CARPIO MORALES; November 19, 2003
NATURE
Petition for review on cetiorari
FACTS
- In June 1955, Hilaria was hired as an elementary school
teacher at the Sta. Catalina College. In 1970, she applied for
and was granted a one year leave of absence without pay on
account of the illness of her mother. After the expiration in
1971 of her leave of absence, she had not been heard from by
A2010 - 39 - Disini
petitioner school. In the meantime, she was employed as a
teacher at the San Pedro Parochial School during school year
1980-1981 and at the Liceo de San Pedro, Biñan, Laguna during
school year 1981-1982.
- In 1982, she applied anew at petitioner school which hired her.
- On May 31, 1997, Hilaria reached the compulsory retirement
age of 65. Retiring pursuant to Article 287 of the Labor Code,
as amended by Republic Act 7641, petitioner school pegged her
retirement benefits at P59,038.35, computed on the basis of
fifteen years of service from 1982 to 1997. Her service from
1955 to 1970 was excluded in the computation, petitioner
school having asserted that she had, in 1971, abandoned her
employment.
- Hilaria insisted, however, that her retirement benefits should
be computed on the basis of her thirty years of service,
inclusive of the period from 1955 to 1970. She thus concluded
that she was entitled to P190,539.90.
ISSUE
WON Hilaria’s services for petitioner school during the period
from 1955 to 1970 should be factored in the computation of her
retirement benefits
HELD
- Hilaria cannot be credited for her services in 1955-1970 in the
determination of her retirement benefits. For, after her one
year leave of absence expired in 1971 without her requesting
for extension thereof as in fact she had not been heard from
until she resurfaced in 1982 when she reapplied with petitioner
school, she abandoned her teaching position as in fact she was
employed elsewhere in the interim and effectively relinquished
the retirement benefits accumulated during the said period.
- It is not disputed that the approved one year leave of absence
without pay of Hilaria expired in 1971, without her, it bears
repeating, requesting for extension thereof or notifying
petitioner school if and when she would resume teaching. Nor
is it disputed that she was rehired only in 1982 after filing anew
an application, without her proffering any explanation for her
more than a decade of absence. Under the circumstances,
abandonment of work at petitioner school in 1971 is indubitably
manifest.
- It should be noted that when Hilaria abandoned her teaching
position in 1971, the law in force was Republic Act 1052 or the
Termination Pay Law, as amended by Republic Act 1787,
Section 1 of which provides:
SEC. 1. In cases of employment, without a definite period, in
a commercial, industrial, or agricultural establishment or
enterprise, the employer or the employee may terminate at
any time the employment with just cause; or without just
cause in the case of an employee by serving written notice on
the employer at least one month in advance, or in the case of
an employer, by serving such notice to the employee at least
one month in advance or one-half month for every year of
service of the employee, whichever is longer, a fraction of at
least six months being considered as one whole year.
The employer, upon whom no such notice was served in case
of termination of employment without just cause may hold
the employee liable for damages.
The employee, upon whom no such notice was served in case
of termination of employment without just cause shall be
entitled to compensation from the date of termination of his
employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
xxx
- Above-stated law should thus apply in the case at bar.
Abandonment of work being a just cause for terminating the
services of Hilaria, petitioner school was under no obligation to
serve a written notice to her.
- As Hilaria was considered a new employee when she rejoined
petitioner school upon re-applying in 1982, her retirement
benefits should thus be computed only on the basis of her years
of service from 1982 to 1997.
- In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an
Labor Law 1
employee upon reaching the age of sixty (60) years or more,
but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5)
years in the said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
Disposition Petition granted in part.
TWO NOTICE RULE
AGABON V NLRC
[PAGE 35]
CAINGAT V NLRC
453 SCRA 142
QUISUMBING; March 10, 2005
NATURE
This petition for review on certiorari of the decision of the CA
upholding the dismissal of petitioner.
FACTS
- In 1983, petitioner Bernardino A. Caingat was hired by
respondent Sta. Lucia Realty and Development, Inc. (SLRDI) as
officer-in-charge of maintaining the facilities and checking the
deliveries of construction materials in the different malls and
subdivisions developed by the SLRDI. In 1990, petitioner
became the General Manager of SLRDI’s sister companies, R.S.
Night Hawk Security and Investigation Agency, Inc., and R.S.
Maintenance and Services, Inc.
- In 1991, the Finance Manager discovered that petitioner
deposited company funds in the latter’s personal account and
used the funds to pay his credit card purchases, utility bills,
trips abroad, and acquisition of a lot in Laguna.
- The company then sent the petitioner a letter which reads:
- Upon verification of financial records of the R.S. Nighthawk
Security & Investigation Agency, Inc. and the R.S. Maintenance
& Services Corporation, where you were designated as
Manager, it was found that you have misappropriated company
funds in the sum of about P5,000,000.00 from 1992 up to the
present.
- On August 13, 1996, without conducting any investigation,
respondent R.S. Maintenance filed a complaint docketed as Civil
Case No. 65841 for sum of money and damages with prayer for
writ of preliminary attachment before the Pasig Regional Trial
Court, Branch 67.
- On August 27, 1998, petitioner filed before the Labor Arbiter, a
complaint, for illegal dismissal against the respondents.
- Petitioner avers that he was dismissed from his employment
by respondents without just and legal cause and respondents
dismissed him from employment without due process of law.
ISSUES
1. WON he was dismissed for just cause
2. WON petitioner was denied due process of law
3. WON the violation of the due process requirement renders
the dismissal illegal
HELD
1. YES
Ratio The petitioner held a position of utmost trust and
confidence. He was entrusted with cash fees for the
maintenance and security services of 80 subdivisions and
clubhouses. He used company funds for payment of his
personal bills. Instead of accounting for his alleged
unauthorized disbursements, petitioner suddenly departed from
the country and returned only after more than three years and
claimed that he was illegally dismissed and he was entitled to
the alleged misappropriated funds by way of commission apart
from the monthly salary he received. Given the circumstances
of this case, we can conclude that management’s loss of trust
A2010 - 40 - Disini
and confidence on petitioner was well justified. Private
respondents had every right to dismiss petitioner. Petitioner’s
long period of disappearance from the scene and departure for
abroad before making a claim of illegal dismissal does not
contribute to its credibility.
2. YES
Ratio The due process prescribed in Article 277 of the Labor
Code, as amended, and in Sections 2 and 7, Rule I, Book VI of
the Implementing Rules of the Labor Code, are mandatory. Two
notices should be sent to the employee. The first notice
apprises the employee of the particular acts or omissions for
which his dismissal is sought; while the second informs the
employee of the employer’s decision to dismiss him. The latter
must come after the employee is given a reasonable period
from receipt of the first notice within which to answer the
charge, and ample opportunity to be heard and defend himself
with the assistance of his representative, if he so desires. In this
case, the respondents only sent the first notice, gleaned from
the June 20, 1996 memorandum. There was no second notice.
Neither the public notice in the Philippine Daily Inquirer, a
newspaper of general circulation, nor the demand letter could
constitute substantial compliance. What the public notice did
was to inform the public that petitioner was already separated
as of June 20, 1996, the same day he was suspended.
- The management failed to observe fully the procedural
requirement of due process for the termination of petitioner’s
employment in its failure to provide two notices as required in
Article 277 of the Labor Code, as amended, and in Sections 2
and 7, Rule I, Book VI of the Implementing Rules of the Labor
Code, which are mandatory.
3. NO, the dismissal is still valid as previously held in Agabon v.
NLRC
Ratio In Agabon v. NLRC, we said that if the dismissal was for
cause, the lack of statutory due process should not nullify the
dismissal, or render it illegal or ineffectual. But the violation of
the petitioner’s right to statutory due process by respondents
warrants the payment of indemnity in the form of nominal
damage.
Disposition The assailed Resolutions of the Court of Appeals
in are hereby MODIFIED. Petitioner Bernardino A. Caingat’s
dismissal from employment by private respondents is upheld on
the ground of loss of trust and confidence on a managerial
employee, a just cause for termination. However, for failure to
comply fully with the requirement of notice as part of due
process, the private respondents are ORDERED to pay
petitioner Bernardino A. Caingat the amount of P30,000.00 as
nominal damages.
HAYLIFT MANILA INC V CA
[PAGE 226]
GENUINO ICE CO INC V MAGPANTAY
[PAGE 206]
HEARING
MAGOS V NLRC
300 SCRA 484
BELLOSILLO; December 28, 1998
NATURE
This special civil action for certiorari
FACTS
- Danilo J. Magos became an employee of PEPSI on 5 April 1987.
He rose from the ranks until he was appointed Route/Area
Manager covering different areas in Northern Mindanao. On 1
March 1991 he was assigned to handle the Butuan Plant in
Surigao City. In July 1991 PEPSI entered into a Sales and
Distributorship Agreement with one Edgar Andanar covering the
Labor Law 1
entire Siargao Island. The Agreement included, among others,
the following terms: (a) that the Distributor shall be the sole
agent of PEPSI in the entire Siargao Island, Surigao City, and (b)
that PEPSI would not directly or indirectly sell to or serve
anybody in the covered territory of the Distributor unless
extremely necessary.
- Andanar complained formally to the Plant General Manager
Val Lugti that petitioner was still serving Tony Chua and Boy
Lim, clients who were both within the area of the agreement.
On 15 April 1992 District Manager Reynaldo Booc issued a
memorandum to petitioner to stop effective immediately
"giving deals to Siargao Island dealers, unless and only, if
Andanar cannot supply them due to unavoidable circumstances
beyond his control," and only up to a specified limit. Magos
reported to Booc a negative trend in the sales of PEPSI in
Siargao Island as a result of Andanar's shortage of stocks and
the conversion to Coke of several wholesalers, notably Boy Lim.
On 16 and 24 June 1992 Ramonito Endozo and Ramon Ganzon,
respectively, reported the sales of Pepsi products by salesman
Prudencio Palen to Boy Lim at "7:1" deal allegedly upon
instructions of petitioner. Such sales were either made to
fictitious dealers or diverted to other dealers without receipts.
- On the basis of these reports, Magos was notified by Booc of
his temporary recall effective 1 July 1992 on the ground of his
"continued refusal to follow orders/instructions of a superior
after 2 or more successive reminders or warnings." 4 He was
also required to submit a written explanation, which he did on
30 June 1992 citing among others: (a) the lack of proper
turnover of jurisdiction to distributor and guidelines thereto; (b)
the rapid conversion to Coke of previous big account dealers
like Boy Lim in Siargao; and, (c) the lack of ability of Andanar to
supply such dealers. Finding Magos' explanation insufficient
PEPSI on 27 July 1992 notified Magos of an administrative
investigation against him on grounds of disobedience and
breach of trust and confidence as shown by the reports of
Endozo and Ganzon, the audit reports of the Home Office
Auditors, the complaint of Andanar and the memorandum of
Booc. 6 On 7 September 1992, Magos was notified of his
termination for disobedience and breach of trust and
confidence. 7
- On 25 September 1992 Magos filed a complaint for illegal
dismissal and non-payment of wages, 13th month pay,
premium pay for holidays and rest days, night shift pay and
allowances. After petitioner waived his right to a formal hearing,
the Labor Arbiter set a date for the submission of position
papers. However, petitioner failed to submit a position paper
even after his two motions for extension to file the same were
granted. After the lapse of the extended period by nine (9)
days, the Labor Arbiter issued an order submitting the case for
resolution and considering the petitioner to have waived his
right to submit evidence. 9 Petitioner's subsequent motion for
reconsideration was denied on the ground that such a motion
was not allowed by the NLRC rules.
- On 18 March 1993 the Labor Arbiter ruled that the dismissal
was valid on grounds of insubordination and loss of confidence
upon proof of Magos' sale of PEPSI products despite the
oppossion of his superiors. Magos' claims for 13th month pay,
holiday pay, rest day pay and night shift differentials were
denied as he was a managerial employee. The Labor Arbiter,
however, found that Magos was dismissed without due process
as it was done in an arbitrary and perfunctory manner without
any investigation to provide him with an opportunity to present
his side. Accordingly, PEPSI was ordered to give Magos financial
assistance of P2,000.00.
- Petitioner appealed to the NLRC imputing grave abuse of
discretion to the Labor Arbiter for denying him the right to
present evidence on his behalf and for sustaining the legality of
his dismissal.
- On 16 May 1995 the NLRC also found that the dismissal of
petitioner was done in an arbitrary manner as there was no
record of any investigation conducted. However, the
Commission opined that there was enough breach of confidence
to justify Magos' dismissal considering that he was duty-bound
to follow and obey the instructions of his superiors irrespective
A2010 - 41 - Disini
of his personal convictions. Thus, inspite of a finding of good
faith on Magos' part and lack of damage on PEPSI, it affirmed
the Arbiter's finding of illegal dismissal and the award of
indemnity. Additionally, in consideration of Magos' good faith
and long service, the Commission also awarded him one-half
(1/2) month separation pay for every year of service.
- Both parties sought recosideration Magos faulted the NLRC for
its failure to award him the reliefs prayed for in his complaint,
while PEPSI questioned the grant of separation pay in Magos
favor. On 29 August 1995 the NLRC denied both motions for
reconsideration.
ISSUE
WON the employee was given due process as regards his
termination
HELD
YES
- Both the NLC and the Labor Arbiter found that no formal
hearing was conducted regarding petitioner's dismissal.
Although a hearing is essential to due process, we did hold that
no formal hearing was necessary when the petitioner had
already admitted his responsibility for the act he was accused
of. Even though petitioner in this case never admitted the
accusations of dishonesty against him, he impliedly
acknowledged his insubordination as shown in his petition.
- During the investigation, Petitioner had however admitted as a
sign of good faith, various "saving measures" that he undertook
to prevent the competitors from easing out Private Respondent
from its dominant market hold in Siargao Island
- Petitioner was subsequently terminated despite all the
pertinent explanations he had given to his immediate superiors
for alleged violation of the above-mentioned Company Rules
and Regulations and for alleged loss of trust and confidence.
- Evidently, Magos regarded his sales to Siargao Island dealers
covered by the Sales and Distributorship Agreement with
Andanar as "saving measures." As a consequence, he earned
the ire of his superiors for persistently ignoring the agreement.
He further risked losing his job by presenting what he deemed
as "pertinent explanations" to justify the questioned sales.
Thus, even if no hearing was conducted on Magos'
disobedience, the requirement of due process was sufficiently
met where petitioner was accorded the chance to explain his
side. The award of indemnity in the sum of P2,000.00 thereto is
no longer warranted in the light of this finding.
CAURDANETAAN PIECE WORKERS UNION V
LAGUESMA
285 SCRA 291
PANGANIBAN; February 24, 1998
NATURE
Petition for Certiorari
FACTS
- Petitioner union has ninety-two (92) members who worked as
'cargador' at the warehouse and ricemills of private respondent
Corfarm at Umingan, Pangasinan since 1982.
- They were paid by private respondent on a piece rate basis.
When private respondent denied some benefits to these
cargadores, the latter organized petitioner union. Upon learning
of its formation, private respondent barred its members from
working with them and replaced them with non-members of the
union sometime in the middle of 1992.
- On July 9, 1992, petitioner filed a petition for certification
election before the Regional Office No. I of the Department of
Labor and Employment
- While this petition for certification election was pending,
petitioner also filed on November 16, 1992, a complaint for
illegal dismissal, unfair labor practice, refund of illegal
deductions, payment of wage differentials, various pecuniary
benefits provided by laws, damages, legal interest,
Labor Law 1
reinstatement and attorney's fees, against private respondent
before the Regional Arbitration Branch No. 1 of Dagupan City
- On November 24, 1992, Labor Arbiter Ricardo Olairez, directed
the parties to submit position paper and to appear for hearing
on the said date. Only the complainant petitioner submitted its
position paper.
- Likewise in the scheduled hearing on December 14, 1992,
private respondent did not appear thus Labor Arbiter Olairez
allowed the president of petitioner union Juanito Costales to
testify and present its evidence ex-parte.
- On December 16 1992, another notice was sent to the parties
to appear on [the] January 7, 1993 hearing by Labor Arbiter
Emiliano de Asis.
- Before the scheduled hearing on January 7, 1993, complainant
petitioner filed a motion to amend complaint and to admit
amended complaint.
- On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an
Order granting the petition for certification election earlier filed.
- Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal
dismissal case ordered respondents to submit their position
paper, together with their documentary evidence, if any, within
10 days from receipt of the order
- On September 7, 1993, public respondent Laguesma issued a
Resolution denying the appeal filed by private respondent
against the order of Med-Arbiter Limos granting the petition for
certification election.
- Acting on said denial, private respondent filed a motion for
reconsideration which was granted in an Order dated January 4,
1994 by public respondent Laguesma dismissing the petition for
certification election for lack of employer-employee
relationship.
- Petitioner in turn filed a motion for reconsideration but it was
denied by public respondent Laguesma when he reaffirmed the
dismissal of petition for certification election.
- Thus, the union filed its first petition for certiorari
- On September 14, 1993, Labor Arbiter Rolando D. Gambito
issued his decision finding the dismissal of petitioner's members
illegal. On appeal by both parties, NLRC set aside the appealed
decision and remanded the case to the labor arbiter for further
proceedings. Petitioner's motion for reconsideration was later
denied.
- The solicitor general, who was supposed to represent both
public respondents, joined petitioner in praying that the petition
in the First Case "be granted and that judgment be rendered
annulling" the assailed Orders of Respondent Laguesma. The
SolGen likewise filed another "Manifestation and Motion (In Lieu
of Comment)" in the Second Case, praying that "judgment be
rendered annulling the resolution of NLRC ordering public
respondent to proceed with the case instead of remanding the
same to the labor arbiter of origin.
- In a Resolution dated March 29, 1995, 13 this Court ordered
the consolidation of the two cases.
ISSUE
WON private respondent was denied due process
HELD
NO
- Petitioner assails the NLRC for setting aside the labor arbiter's
decision and remanding the case for further proceedings.
Petitioner argues that the order of remand "will only prolong the
agony of the 92 union members and their families for living or
existing without jobs and earnings to give them support."
- Further, petitioner contends that the Labor Arbiter had
rendered a decision on September 14, 1993 in favor of
petitioner based on the available records of the case after
giving more than ample opportunities to private respondents
herein to submit their position paper and other pleadings
alleging their evidences against the causes of action of
petitioner alleged in the complaint for illegal dismissal, unfair
labor practice, non-payment of various benefits granted by
existing laws during their employment, illegal deductions or
diminution of their underpaid daily wages, non-payment of
wage increases and other causes of action pleaded by the
A2010 - 42 - Disini
complainant or herein petitioner.
- Private respondent had been duly informed of the pendency of
the illegal dismissal case, but it chose not to participate therein
without any known justifiable cause. The labor arbiter sent
notices of hearing or arbitration to the parties, requiring them
to submit position papers at 1:30 p.m. on November 14, 1992.
Respondent Corfarm did not attend the hearing. According to
Respondent NLRC, there was no proof that Respondent Corfarm
received such notice. In any case, petitioner filed a Motion to
Admit Amended Complaint on December 23, 1992. Again,
another notice for hearing or arbitration on January 7, 1993 was
sent to the parties. This was received by petitioner's counsel as
evidenced by the registry return receipt duly signed by private
respondent's counsel, Atty. Alfonso Bince, Jr. It was only on
January 28, 1993, however, that Atty. Bince entered his
appearance as counsel for Respondent Corfarm. On May 10,
1993, Corfarm was again given a new period of ten (10) days
within which to submit its position paper and documentary
evidence; "otherwise, [the labor arbiter] will be constrained to
resolve this case based on available evidence on record." As
evidenced by a registry return receipt, a copy of said directive
was received by respondent's counsel on May 25, 1993. Still
and all, Corfarm failed to file its position paper. Clearly, private
respondent was given an opportunity to present its evidence,
but it failed or refused to avail itself of this opportunity without
any legal reason. Due process is not violated where a person is
given the opportunity to be heard, but chooses not to give his
side of the case.
- Contrary to the conclusions of the NLRC and the arguments of
private respondent, the findings of the labor arbiter on the
question of illegal dismissal were based on credible, competent
and substantial evidence.
- It is to be borne in mind that proceedings before labor
agencies merely require the parties to submit their respective
affidavits and position papers. Adversarial trial is addressed to
the sound discretion of the labor arbiter. To establish a cause of
action, only substantial evidence is necessary; i.e., such
relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds equally
reasonable might conceivably opine otherwise.
- As ruled in Manalo vs. Roldan-Confesor:
"Clear and convincing proof is '. . . more than mere
preponderance, but not to extent of such certainty as is
required beyond reasonable doubt as in criminal
cases . . .'while substantial evidence '. . . consists of more
than a mere scintilla of evidence but may be somewhat less
than a preponderance . . .' Consequently, in the hierarchy of
evidentiary values, We find proof beyond reasonable doubt at
the highest level, followed by clear and convincing evidence,
preponderance of evidence, and substantial evidence, in that
order."
- Evidence to determine the validity of petitioner's claims, which
the labor arbiter relied upon, was available to Respondent
NLRC. These pieces of evidence are in the case records.
- It must be stressed that labor laws mandate the speedy
administration of justice, with least attention to technicalities
but without sacrificing the fundamental requisites of due
process. In this light, the NLRC, like the labor arbiter, is
authorized to decide cases based on the position papers and
other documents submitted, without resorting to the technical
rules of evidence. Verily, Respondent NLRC noted several
documentary evidence sufficient to arrive at a just decision.
Indeed, the evidence on record clearly supports the conclusion
of the labor arbiter that the petitioners were employees of
respondent, and that they were illegally dismissed.
- Why Respondent NLRC refused to rule directly on the appeal
cannot be explained. The remand of a case or an issue to the
labor arbiter for further proceedings is unnecessary, considering
that the NLRC was in a position to resolve the dispute based on
the records before it and particularly where the ends of justice
would be served thereby. Remanding the case would needlessly
delay the resolution of the case which has been pending since
1992.
Disposition both petitions are GRANTED
Labor Law 1
NATIONAL SEMICONDUCTOR (HK) DISTRIBUTION,
LTD V NLRC (SANTOS)
291 SCRA 348
BELLOSILLO; June 26, 1998
FACTS
- Petitioner National Semiconductor (HK) Distribution, Ltd., a
foreign corporation, manufactures and assembles electronic
parts for export.
- Respondent Edgar Philip C. Santos was employed by NSC as a
technician in its Special Products Group assigned to the
graveyard shift starting at ten o’ clock in the evening until six o’
clock in the morning.
- On 8 January 1993 Santos did not report for work on his shift.
He resumed his duties as night shift Technician Support only on
9 January 1993. However, at the end of his shift the following
morning, he made two (2) entries in his daily time record (DTR)
to make it appear that he worked on both the 8th and 9th of
January 1993.
- His immediate supervisor, Mr. Joel Limsiaco, checked the DTRs
and found out that Santos indeed did not report for work on 8
January. But when he checked Santos’ DTR again in the
morning of 9 January 1993 he found the entry made by Santos
for the day before.
- Informal investigations were conducted by management.
Santos was required in a memorandum to explain in writing
within 48 hours from notice why no disciplinary action should be
taken against him for dishonesty, falsifying daily time record
DTR and violation of company rules and regulations.
- Santos submitted his written explanation alleging that he was
ill on the day he was absent. As regards the entry on 8
January, he alleged that it was merely due to oversight or
carelessness on his part.
- Finding Santos' explanation unsatisfactory, NSC dismissed him
on the ground of falsification of his DTR, which act was inimical
to the company and constituted dishonesty and serious
misconduct.
- Santos filed a complaint for illegal dismissal and non-payment
of back wages, premium pay for holidays and rest days, night
shift differential pay, allowances, separation pay, moral
damages and attorney’s fees.
- The Labor Arbiter found that Santos was dismissed on legal
grounds although he was not afforded due process, hence, NSC
was ordered to indemnify him P1,000.00.
- NSC appealed to the NLRC which affirmed the Labor Arbiter.
- NSC imputes grave abuse of discretion to the NLRC in
affirming the Labor Arbiter’s award of night shift differentials
and P1,000.00 indemnity for alleged violation of due process. It
contends that the question of non-payment of night shift
differentials was never raised as an issue nor pursued and
proved by Santos in the proceedings before the Labor Arbiter;
that Santos was already paid his night shift differentials, and
any further payment to him would amount to unjust
enrichment; and, that the P1,000.00 indemnity is totally
unjustified as he was afforded ample opportunity to be heard.
ISSUES
1. WON the complainant should be awarded a night shift
differential
2. WON the requirements of due process substantially were
complied with in dismissing the worker
HELD
1. YES
- The fact that Santos neglected to substantiate his claim for
night shift differentials is not prejudicial to his cause.
- The burden of proving payment rests on petitioner NSC.
Santos’ allegation of non-payment of this benefit, to which he is
by law entitled, is a negative allegation, which need not be
supported by evidence unless it is an essential part of his cause
of action.
A2010 - 43 - Disini
- His main cause of action is his illegal dismissal, and the claim
for night shift differential is but an incident of the protest
against such dismissal. Thus, the burden of proving that
payment of such benefit has been made rests upon the party
who will suffer if no evidence at all is presented by either party.
- Jimenez v. National Labor Relations Commission:
As a general rule, one who pleads payment has the burden
of proving it. Even where the plaintiff must allege non-
payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing
with legal certainty that the obligation has been discharged
by payment.
- By choosing not to fully and completely disclose
information to prove that it had paid all the night
shift differentials due to private respondent,
petitioner failed to discharge the burden of proof.
- Complainant should be awarded a night shift differential but
limited to three (3) years considering the prescriptive period of
money claims.
2. YES
- Santos was accorded full opportunity to be heard before he
was dismissed.
- The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an
opportunity to explain one’s side.
- Petitioner furnished private respondent notice as to the
particular acts which constituted the grounds for his dismissal.
- By requiring him to submit a written explanation within 48
hours from receipt of the notice, the company gave him the
opportunity to be heard in his defense. Private respondent
availed of this chance by submitting a written explanation. -
Furthermore, investigations on the incident were actually
conducted on 9 January 1993 and 11 January 1993.
- Respondent was notified on 14 January 1993 of the
management’s decision to terminate his services.
- It is clear that the minimum requirements of due process have
been fulfilled by petitioner.
- That the investigations conducted by petitioner may not be
considered formal or recorded hearings or
investigations is immaterial.
- A formal or trial type hearing is not at all times and in all
instances essential to due process, the requirements of which
are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy. It is
deemed sufficient for the employer to follow the natural
sequence of notice, hearing and judgment.
Disposition Petition was dismissed.
LA CARLOTA PLANTERS ASSN INC V NLRC
[PAGE 238]
LAVADOR V “J” MARKETING CORP
497 SCRA
SANDOVAL-GUTIERREZ; June 28, 2005
NATURE
Petition for review on certiorari
FACTS
- January 7, 1991: Elsie T. Lavador was employed by “J”
Marketing Corporation as a daily paid worker. Eventually, she
was promoted as assistant cashier in respondent’s branch office
at Butuan City, receiving a monthly salary of P3,834.00.
- Claiming that respondent failed to remit the P1,000.00
payment of Robert Braza; to issue official receipt for the
P1,259.00 check payment of Chelito M. Delliva; and to apply the
same to his account, respondent issued inter-office memoranda
dated June 9, 1999 and August 23, 1999 charging petitioner
with misappropriation and directing her to submit a written
explanation. In the meantime, respondent reassigned her as
receptionist.
Labor Law 1
- September 1, 1999: after evaluating the evidence against
petitioner, respondent issued a notice terminating her services
for loss of trust and confidence.
- Lavador filed with the Office of the Labor Arbiter a complaint
for illegal dismissal against respondent and Rogelio U. Soyao,
its Executive Vice President and General Manager.
- Labor Arbiter rendered a Decision finding that petitioner was
not illegally dismissed from the service but ordering
respondents to pay her P12,392.73 as salary differential and
P1,239.27 attorney’s fees.
- Upon appeal, the NLRC rendered a Decision affirming with
modification the Decision of the Labor Arbiter in the sense that
the award of salary differential and attorney’s fee is deleted.
Petitioner's MFR was denied.
- On appeal, CA rendered a Decision affirming with modification
the assailed NLRC Decision. While the said court upheld the
termination of petitioner’s employment, however, it ordered
respondents to pay her P10,000.00 as damages for violating her
right to due process. Petitioner's MFR was denied.
ISSUE
WON petitioner was deprived of her right to due process
HELD
YES
- Section 2, Rule XXIII, Book V of the Implementing Rules of the
Labor Code provides fro the standards of due process and
requirements of notice to be followed in all cases of termination
of employment.
- Santos vs. San Miguel Corporation: Procedural due process
requires the employer to give the employee two notices. First is
the notice apprising him of the particular acts or omissions for
which his dismissal is sought. Second is the subsequent notice
informing him of the employer’s decision to dismiss him.
- Homeowners Savings and Loan Association, Inc. vs. NLRC:
Actual adversarial proceeding becomes necessary only for
clarification or when there is a need to propound searching
questions to unclear witnesses. This is a procedural right which
the employee must, however, ask for. It is not an inherent right.
- Petitioner requested that an investigation be conducted but
respondents vehemently refused. Clearly, petitioner was
deprived of her right to due process.
- Agabon vs. National Labor Relations Commission:
Procedurally, (1) if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought, a hearing
or an opportunity to be heard and after hearing or opportunity
to be heard, a notice of the decision to dismiss; x x x.
- From the foregoing rules four possible situations may be
derived: (1) the dismissal is for a just cause under Article 282 of
the Labor Code, for an authorized cause under Article 283, or
for health reasons under Article 284, and due process was
observed; (2) the dismissal is without just or authorized cause
but due process was observed; (3) the dismissal is without just
or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process
was not observed.
xxx In the fourth situation, the dismissal should be upheld.
While the procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, employer should be held
liable for non-compliance with the procedural requirements of
due process.
xxx The violation of the petitioners’ right to statutory due
process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances.
xxx Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe
this form of damages would serve to deter employers from
future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or
A2010 - 44 - Disini
recognition of this fundamental right granted to the latter
under the Labor Code and its Implementing Rules.”
- In this case, the dismissal of petitioner from the service is due
to dishonesty or a just cause. But due process was not observed
as no hearing was conducted despite her request. Thus,
respondents should be held liable for violation of her right to
due process and should pay her indemnity in the form of
nominal damages, pursuant to our ruling in Agabon, which we
fix at P20,000.00.
Disposition Petition is GRANTED.
SEPARATE OPINION
PANGANIBAN
- reiterates his dissent in Agabon v. NLRC & Serrano v. NLRC
that a violation of due process should be sanctioned by
reinstatement and back wages, not merely nominal damages.
POSITION PAPER
SHOPPES MANILA INC V NLRC (CAYUCA & TORNO)
419 SCRA 354
CALLEJO; January 14, 2004
NATURE
Petition for review of decision of CA.
FACTS
- Shoppes Manila is a domestic corporation engaged in
garments manufacturing using the brand name “KAMISETA.”
- On May 6, 1994, the petitioner employed private respondent
Lorie Torno as trimmer In April 1997 the private respondent and
a co-employee, Maricar Buan, were tasked to handle the
inventory of finished products.
- Shoppes Manila received information from the head of its
production department that Buan and the private respondent
had been stealing “KAMISETA” items from the factory.
- On July 30, 1997, the private respondent’s supervisor, Ms.
Myrasol O. Silva, conducted the inspection and submitted a
report to the effect that she found Kamiseta property in Torno’s
residence. Shoppes Manila issued a disciplinary action form
suspending the private respondent indefinitely without pay. On
August 25, 1997, a notice of dismissal was addressed to the
private respondent specifying the charge against her.
- Torno failed to appear during the scheduled hearing.
Consequently, the petitioner decided to dismiss the private
respondent from her employment. Despite mandatory
conferences, the parties did not reach an amicable settlement.
- In due course, the parties submitted their respective position
papers and replies. The petitioner filed a motion for the labor
arbiter to conduct a formal investigation on its claim that a full
blown hearing during which the witnesses can be cross-
examined by the opposing counsel was necessary to ascertain
the truth.
- LA Tumanong (labor arbiter given jurisdiction over the case)
was replaced by LA Cuyuca who issued an order declaring that
the case was submitted for decision. The petitioner filed a
manifestation and motion informing LA Cuyuca that a formal
hearing had been set by LA Tumanong and requested that the
case be set for hearing anew. However, no action was taken by
LA Cuyuca on the said motion. In August 1998 LA Cayuca
rendered a decision in favor of Torno, holding that she was
illegally dismissed. LA Cuyuca declared that the private
respondent was denied of her right to due process before she
was dismissed from her employment and that the petitioner
failed to show that it notified the private respondent of the
charges against her.
Labor Law 1
- Shoppes Manila appealed to the NLRC, arguing that LA
Cuyuca’s failure to conduct a hearing deprived the petitioner of
its vested right; consequently, her decision was null and void.
NLRC dismissed the appeal.
Petitioner’s Claim
- When LA Tumanong agreed to conduct a formal hearing of the
case and, indeed, set the case for hearing, the petitioner
thenceforth acquired a vested right.
ISSUE
WON Shoppes Manila had a vested right to a formal hearing
because the first labor arbiter granted its motion (This case is
under Position Paper as Requirement in the outline)
HELD
NO, Shoppes Manila is not entitled to said right.
Ratio The holding of a formal hearing or trial is discretionary
with the labor arbiter and is something that the parties cannot
demand as a matter of right.
- The requirements of due process are satisfied when the
parties are given the opportunity to submit position papers
wherein they are supposed to attach all the documents that
would prove their claim in case it be decided that no hearing
should be conducted or was necessary.
Reasoning
- Pursuant to Section 5, Rule V of the New Rules of Procedure of
the NLRC, the labor arbiter has the authority to determine
whether or not there is a necessity to conduct formal hearings
in cases brought before him for adjudication.
- It is entirely within the authority of the labor arbiter to decide
a labor case before him, based on the position papers and
supporting documents of the parties, without a trial or formal
hearing.
- The order of LA Tumanong granting the petitioner’s motion for
a hearing of the case was not conclusive and binding on LA
Cuyuca who had the discretion either to hear the case before
deciding it, or to forego with the hearing (if in her view, there
was no longer a need therefore as the case could be resolved
on its merits based on the records).
- The Court affirms the decision of the CA that Torno was not
legally dismissed. In order to effect a valid dismissal, the law
requires that (a) there be just and valid cause as provided
under Article 282 of the Labor Code; and (b) the employee be
afforded an opportunity to be heard and to defend himself.
Shoppes Manila had failed to show that it had complied with the
two-notice requirement: (a) a written notice containing a
statement of the cause for the termination to afford the
employee ample opportunity to be heard and defend himself
with the assistance of his representative, if he so desires; (b) if
the employer decides to terminate the services of the
employee, the employer must notify him in writing of the
decision to dismiss him, stating clearly the reason therefor
Disposition Petition is dismissed, and decision of CA is
affirmed.
C.F. SHARP & CO V ZIALCITA
495 SCRA 387
QUISUMBING; July 17, 2006
NATURE
Petitioner seeking the reversal of the Decision of the CA
dismissing its petition for certiorari against the NLRC, as well as
the Resolution denying its motion for reconsideration
FACTS
- Petitioner C.F. Sharp & Co., Inc. hired respondent Renato
Zialcita as a clerk in its Crewing Department. It promoted him to
Assistant Crewing Manager and tasked him to process shipping
papers of the petitioner’s seamen. The petitioner alleged that
seaman Marcial Tanoy returned to the country bringing with
him US$1,000 from another seaman, Fernando Guerrero. On
May 27, 1993, Tanoy gave the money to respondent Zialcita.
On June 14, 1993, when Guerrero’s father and sister came to
A2010 - 45 - Disini
the petitioner’s office to get the money, the respondent denied
he had it. On June 25, 1993, the Guerreros came back together
with Tanoy. This time, the respondent acknowledged he had the
money but could not give it to them then. On June 29, 1993, he
returned US$800 to Guerrero’s father. The respondent also
issued a promissory note on the balance. The Guerreros
reported the matter to the Senior Crewing Manager, who
immediately paid the deficiency. Respondent was served with a
notice giving him 72 hours to respond to the Guerreros’
complaint, and placed on preventive suspension immediately.
- Respondent averred that Tanoy had approached him on May
28, 1993, but he refused to accept the money due to the
petitioner’s policy against unauthorized handling of remittances
from its seamen. When the Guerreros went to his office, he
informed them that he did not have the money, and on June 23,
1993, Tanoy returned and begged him to accept the money
since he was leaving for the Visayas and Guerrero’s wife would
pick it up the following day. She did not come so he brought the
money home. On June 25, 1993, the Guerreros went to his
office but he advised them to come back since the money was
in his house. The respondent then brought back the money to
his office and placed it inside his drawer. When the Guerreros
returned on June 29, 1993, he discovered that US$200 was
missing. He gave them the US$800 and promised to return the
US$200. The respondent later learned that the Guerreros
submitted to the Senior Crewing Manager a complaint against
him. On July 2, 1993, he reimbursed the petitioner the balance
of US$200.
- Not finding the explanation acceptable, the petitioner
dismissed Zialcita. Respondent filed a complaint for illegal
dismissal with money claims and damages before the NLRC.
The Labor Arbiter ordered respondent to reinstate the
complainant. The NLRC vacated the decision on the ground that
the case was decided prematurely without affording the
petitioner the opportunity to present rebuttal evidence. Upon
remand, the Labor Arbiter dismissed the complaint for lack of
merit. The NLRC reversed the Arbiter’s decision. The CA
affirmed the NLRC, finding that the date when the respondent
received the money from Tanoy was pivotal. If he received it on
May 27, 1993, he would be guilty of gross misconduct for giving
the Guerreros a run-around. But if he received it only on June
23, 1993, the charge of gross misconduct against him would
fail. Since petitioner failed to show what sanction is imposed in
its policies for the cited violation, the appellate court upheld the
NLRC ruling that the respondent should be reinstated and
punished only with 1 month suspension.
ISSUES
1. WON Tanoy’s affidavit should be given credence although he
was not cross-examined
2. WON there is just cause to dismiss respondent
HELD
1. YES
Ratio Trial-type hearings are not required in labor cases and
these may be decided on verified position papers, with
supporting documents and their affidavits. It is not necessary
for the affiants to appear and testify and be cross-examined by
the counsel for the adverse party. Be that as it may, Tanoy’s
affidavit is still insufficient to establish that the respondent was
guilty of gross misconduct as Tanoy failed to allege the specific
date when he gave the money to the respondent. There is no
indubitable proof that as of June 14, 1993, respondent already
had the money.
2. NO
Ratio To be a valid ground for dismissal, loss of trust and
confidence must be premised on the fact that the employee
concerned is invested with delicate matters, such as the
handling or care and protection of the property and assets of
the employer. It was not shown that respondent handled
company property and assets. Respondent was remiss in his
duties when he received the money, failed to turn it over to the
proper custodians, and failed to produce the entire amount
when it was finally claimed. However, dismissal is
Labor Law 1
incommensurate to the offense committed, especially in the
absence of any malicious intent or fraud on the respondent’s
part.
Obiter
- In termination cases, the employer bears the onus of proving
that the dismissal was for just cause. When the breach of trust
or loss of confidence alleged is not borne by clearly established
facts, as in this case, such dismissal on the cited grounds
cannot be allowed.
Disposition petition is DENIED. The assailed Decision of the
CA is AFFIRMED.
FAILURE OF DUE PROCESS
EFFECT OF FAILURE – SUBSTANTIVE –
PROCEDURAL
AGABON V NLRC
[PAGE 35]
ALADDIN V CA
460 SCRA 234
AZCUNA; June 21, 2005
NATURE
Petition for certiorari
FACTS
- Petitioner Aladdin Transport Corp hired Rafael Rodriguez in
1990 as an accounting clerk. In 1997, respondent alleged that
her sister had a fight with their personnel manager. He was
then barred from entering the company’s premises. He was
then asked to take a leave of absence for a month.
- While he was on leave, he received a letter from their
personnel manager asking him to shed light about the SSS
contribution that he allegedly did not remit. Respondent merely
said he tried to report to the office, but petitioner did not allow
him. Later he received a letter informing him of his preventive
suspension. He wrote a letter to the President of the company
but did not receive any reply. He then filed a complaint before
the labor arbiter.
- Petitioner alleges that respondent used company funds and
lent them with interest to his co-employees. Petitioner also
alleges that respondent has illegally been making payroll
salary deductions and has failed to remit SS contribution of his
co-employees.
- The Labor Arbiter then ruled in favor of the petitioner. NLRC
affirmed. The CA, however, found that even though there was
just cause in the dismissal, respondent was not given due
process. It ordered the payment of backwages and
reinstatement.
ISSUE
WON the CA erred in ordering the payment of backwages
HELD
YES
- Recently, this Court has had occasion to revisit the Serrano
doctrine and the present rule is set forth in the Agabon v. NLRC,
et al.,[5] namely, that where the dismissal is based on a just
cause, the failure to give the required notice does not invalidate
the same, but merely holds the employer liable for damages for
violating said notice of requirement. The amount of damages
was fixed at Thirty Thousand Pesos (P30,000) by way of nominal
damages.
Disposition Petition GRANTED
A2010 - 46 - Disini
GLAXO WELLCOME PHILIPPINES INC V
NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA
453 SCRA 256
PANGANIBAN; March 11, 2005
NATURE
Petition for Review of the decision of the CA
FACTS
- Union NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA (NEW-
DFA) filed a Petition for Certification Election with the DOLE-NCR
seeking to represent the bargaining unit comprised of all the
regular rank-and-file employees of [petitioner] company GLAXO-
WELLCOME.
- Several days before the election GLAXO-WELLCOME issued a
circular relative to the improvement of the company’s
retirement policy bringing different employees to different
resorts.
- In the meantime, GLAXO-WELLCOME adopted a new Car
Allocation Policy. Under the provisions of the said car plan, a
prioritization schedule in the assignment of company vehicles is
to be fixed based on the sales performance of the employees.
Pursuant to the same, several company cars had to be re-
assessed and re-assigned in favor of other employees more
qualified under the priority list. Incidentally, included among the
vehicles that had to be re-allocated in accordance with the
priority schedule of the new car plan were [those] of union
officers Norman Cerezo and Jossie Roda de Guzman.
- Accordingly, a memorandum was sent by the company to
[Respondent] de Guzman advising her that she would have to
surrender the vehicle assigned to her in light of the new car
policy. De Guzman refused to turn over said car and instead
sought reconsideration from the company’s National Sales
Manager. The latter did not accede to de Guzman’s request.
De Guzman, thru counsel, wrote the company, asking that the
withdrawal of her car be held in abeyance. The company,
however, rejected her petition. On December 7, 1990, de
Guzman received another memorandum from the company,
again instructing her to return the vehicle. The following day,
de Guzman sent a letter to the company reiterating her plea for
the suspension of the withdrawal of her car. On December 17,
1990, a final warning was sent to de Guzman instructing her to
return her assigned vehicle or else she would be charged for
insubordination and be dismissed. Finally, because of de
Guzman’s staunch refusal to comply with the order, through a
letter dated December 20, 1990, she was cited, and at the
same time, terminated for gross insubordination. Norman
Cerezo was of the same case.
- The Union alleged undue interference due to a massive
electioneering and manipulative acts of GLAXO-WELLCOME
prior to and during the certification election and that the new
Car Allocation Policy adopted by the company was intended to
harass, retaliate and discriminate against union officers and
members. Union also challenged the legality of the suspension
and dismissal of two of its officers, namely: Norman Cerezo and
Jossie Roda de Guzman. It argued that the suspension and
dismissal were effected without any prior hearing (Which was
the only sticking issue in this case).
- Labor Arbiter dismissed the charges of unfair labor practice,
illegal dismissal and illegal suspension filed against GLAXO-
WELLCOME by union. NLRC affirmed the dismissal of the
complaint. NLRC likewise denied the motion for
reconsideration.The CA affirmed the ruling of the National Labor
Relations Commission (NLRC) adopted the findings of the labor
arbiter. It held that respondents had failed to proffer
convincing evidence to prove that petitioner’s assailed
acts were ill-motivated and deliberately orchestrated to
interfere with or otherwise influence the conduct of the
certification elections.
Labor Law 1
- Moreover, the CA ruled that there was nothing
objectionable per se about the programs or incentive
schemes that the company had provided for the
employees. The appellate court said that the grant of
benefits to the employees, as well as the adoption of the
Car Allocation Policy, constituted a proper exercise of
the company’s management prerogatives. This plain
company practice had been set up to make petitioner’s
employee benefits competitive with those of other
pharmaceutical corporations. De Guzman and Cerezo
were among those adversely affected by the policy,
because they had failed to meet the sales performance
required thereunder, not because they were officers of
the union.
- However, the CA held that the dismissal of De Guzman
and the suspension of Cerezo had not been validly
effected. Opining that their defiant actuation toward
management constituted willful disobedience, which was a just
cause for the termination of their employment, the appellate
court conceded the validity of the dismissal and suspension.
Nonetheless, the CA said that those actions (dismissal and
suspension) effected by petitioner could not be deemed
legal, because it had failed to comply with procedural
due process mandated by the Labor Code and with the
two-notice requirement under the Implementing Rules.
According to the CA, petitioner did not accord private
respondents the benefit of a proper charge, an opportunity to
defend themselves, and a formal investigation.
- The appellate court opined that the Memoranda were merely
demands for respondents to comply with the order to turn over
their assigned cars. Those Memoranda merely intimated the
possibility that De Guzman and Cerezo might be charged and
dismissed if they continued to disobey the order.
ISSUE
WON the Court of Appeals erred in ruling that petitioner did not
observe procedural due process in terminating and suspending
the employment of de Guzman and Cerezo, respectively
HELD
YES, since there was substantial compliance through the
memoranda.
- In the present case, petitioner sent respondents a total of
three Memoranda stating that their stubborn refusal to comply
with the car policy and to surrender the subject vehicle
constituted gross insubordination, for which they could be
dismissed. The December 5, 1990 Memorandum sent to
Respondent De Guzman specified her acts that constituted
gross insubordination.
- To each Memorandum, respondents were able to reply and
expla sincein, with the aid of their counsel, why they had
refused to return the vehicles; and, in effect, why they should
not be dismissed for gross insubordination. Initially, they asked
petitioner not to implement the car policy in the light of the
Complaint and the Motion for the Issuance of a Writ of
Preliminary Injunction that they had filed. They explained that
they could not work effectively and efficiently for the company
without the cars that had been assigned to them.
- In their written replies to petitioner’s succeeding Memoranda
-- which reiterated that their actions constituted gross
insubordination and could result in their termination --
respondents, still through their counsel, reasoned that they
were not claiming ownership of the car. They said that their
refusal to surrender the car to the company could not be
denominated as gross insubordination, because they were
merely acting upon the advice of their counsel. They added
that, to enjoin the implementation of the car policy, they had
already lodged with the NLRC a complaint for unfair labor
practice.
- Their counsel further alleged that De Guzman was
apprehensive that she might not immediately be given a
replacement upon the return of the car. He stressed that the
vehicle was necessary to prevent adverse effects on the sales
performance of respondents. Ultimately, after petitioner had
A2010 - 47 - Disini
sent them a final warning, to which they also ably replied, it
served them a letter terminating their employment.
- Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of
Rule 1 of Book VI of the Implementing Rules require strict literal
compliance with the stated procedure; only substantial
compliance is needed. On this basis, the Memoranda sent to
respondents may be deemed to have sufficiently conformed to
the first notice required under the Implementing Rules. The
Memoranda served the purpose of informing them of the
pending matters beclouding their employment and of extending
to them an opportunity to clear the air. In fact, not only were
respondents duly informed of the particular acts for which their
dismissal was sought; they were, in truth and in fact, able to
defend themselves and to respond to the charges with the
assistance of a counsel of their own choosing. Respondents
were amply informed of the cause of their dismissal. Their
correspondence with petitioner took almost a month, which was
sufficient “cooling time” within which the parties could have,
and in fact had, tried to settle the problem amicably. Moreover,
petitioner’s Memoranda amply gave them a distinct, different
and effective first level of remedy (which was to surrender the
vehicles) to protect their jobs. Furthermore, they were still able
to file a Complaint with the labor arbiter, with better knowledge
of the cause of their dismissal, with longer time to prepare their
case, and with greater opportunity to take care of the financial
needs of their family pendente lite.
- Agabon v. NLRC effectively reverted to Wenphil and ruled that
a dismissal due to abandonment -- a just cause -- was not illegal
or ineffectual, even if done without due process; but that the
employer should indemnify the employee with “nominal
damages for non-compliance with statutory due process.”
- To stress, if the dismissal is based on a just cause under
Article 282 of the Labor Code, the employer must give the
employee (1) two written notices and (2) a hearing (or at least,
an opportunity to be heard). The first notice is intended to
inform the employee of the employer’s intent to dismiss and the
particular acts or omissions for which the dismissal is sought.
The second notice is intended to inform the employee of the
employer’s decision to dismiss. This decision, however, must
come only after the employee has been given a reasonable
period, from receipt of the first notice, within which to answer
the charge; and ample opportunity to be heard with the
assistance of counsel, if the employee so desires.
- The twin requirements of (a) two notices and (b) hearing are
necessary to protect the employee’s security of tenure, which is
enshrined in the Constitution, the Labor Code and related laws.
Disposition Petition is GRANTED and the challenged Decision
REVERSED. The Decision of the NLRC dated August 28, 1998,
affirming that of the labor arbiter dated August 15, 1995, is
REINSTATED.
2. OTHER PROCEDURAL MATTERS
BURDEN AND DEGREE OF PROOF
BURDEN
EQUITABLE PCI BANK V CAGUIOA
466 SCRA 658
PANGANIBAN; August 12, 2005
NATURE
Petition for Review of CA Decision
FACTS
- Generosa A. Caguioa was a Senior Manager of Equitable PCI
Bank. She had worked for said bank for 35 years. On Feb 3,
Labor Law 1
2000, George L. Go, respondent’s Chairman of the Board, called
her attention to the complaint of client Antonio Jarina regarding
an ‘accounting activities,’ involving her participation, which cost
him considerable damage. It was about bank checks, which
were issued to Jarina in exchange for cash at a discounted rate
-- all by means of his own capital. Jarina initially benefited from
the ‘new transactions’ but in August 1997, no further interest
was credited into his account and his ‘principal’ had not been
returned to him. The ‘scheme failed,’ resulting in his loss of
investments of around P4.3M. She denied any knowledge of the
discounting activities. - VP and Internal Auditor Nuguid directed
her to explain and show cause why she ‘should not be
administratively/financially dealt with the bank’s Code of
Conduct’ in connection with the said incidents. She pointed to
an Arlene Pascual as the culprit and claimed that Jarina picked
on her as Ms. Pascual had already resigned and moved to the
US. But a certain Evelyn Magadia testified that Arlene would not
have acted on her own had it not been for the instigation of
Caguioa and Ruth Amador. Magadia even declared that she
liaised for Arlene Pascual in the check discounting transactions,
and Arlene would sometimes instruct her to go to the Bank’s
New York branch in order to pick up and deliver envelopes
containing cash to complainant Genie Caguioa. Magadia stated
that the envelopes containing cash were the complainant’s
shares in the proceeds of the check discounting activity.
- After evaluation and investigation, bank found her guilty of
‘having personally participated in the check discounting activity
of Mr. Antonio Jarina, and therefrom, personally
benefited/profited to the prejudice of the bank.’ She was
dismissed with automatic forfeiture of benefits. She then filed
complaint. LA upheld the dismissal of Caguioa, finding her to
have violated its Code of Conduct. NLRC reversed ruling that
dismissal was illegal and invalid. CA held that Caguioa was
illegally dismissed for lack of clear and convincing evidence
which establish her direct participation in the alleged check
discounting activity/transaction remotely detrimental to the
business and interest of the petitioner bank. Revelations made
by Evelyn Magadia were insufficient to justify the dismissal.
ISSUES
1. WON the totality of the evidence proves that the bank legally
terminated the employment of respondent
2. WON CA gravely erred in ruling that the information provided
by Mrs. Magadia and the complaint of Mr. Jarina were hearsay
HELD
1. YES
- The Court is not proscribed from determining and resolving
factual issues where, as in the present case, (a) the findings
and conclusions of the labor arbiter, on one hand, and the NLRC
and the CA, on the other, are inconsistent on material and
substantial points; (b) the findings of the NLRC and the CA are
capricious and arbitrary; and (c) the CA’s findings that are
premised on a supposed absence of evidence are in fact
contradicted by the evidence on record.
- Due process requires that in reaching a decision, a tribunal
must consider the entire evidence presented. Thus, it must (1)
accord all contending parties the opportunity to be heard and
(2) consider every piece of evidence presented in favor of each
party.
- As the employer, petitioner bank has the burden of proving
the legality of respondent’s dismissal. The petitioners’ case
rises or falls on the strength of the employer’s evidence, not on
the weakness of the employee’s defense. The employer,
however, needs only to adduce substantial evidence, which has
been defined to be such relevant evidence that a reasonable
mind might accept as adequate to support a conclusion.
- The records show that more than substantial evidence
supports LA’s finding that Caguioa had direct participation in
the check-discounting scheme, and that her dismissal was valid.
Constituting substantial evidence were the Sworn Statement of
Sibayan on the investigation he conducted; the Complaint of
Jarina; the audit trail; and the schedule of withdrawals and
deposits in Jarina’s account, a fact sworn to by Vivian Tiu (a VP
A2010 - 48 - Disini
of the Bank) and uncontroverted by Caguioa. Such evidence is
adequate to justify the conclusion that respondent was indeed a
direct participant in and beneficiary of the unauthorized check-
discounting transactions.
2. YES
- It is not necessary that the affidavits and other documents
presented conform with the technical rules of evidence since in
labor cases the rules of evidence prevailing in courts of law or
equity are not controlling. It is sufficient that the documents
submitted by the parties have a bearing on the issue at hand
and support the positions taken by them. Therefore, the
information provided by Magadia, as corroborated by the Sworn
Statement of Sibayan, and the Complaint of Jarina, should be
accorded probative value.
- See A221 of LC and Sec 3 of Rule V of the New Rules of
Procedure of the NLRC
Disposition Petition GRANTED and the assailed Decision and
Resolution REVERSED and SET ASIDE. The Decision of the labor
arbiter is REINSTATED.
CF SHARP & CO INC V ZIALCITA
[PAGE 290]
DEGREE
CENTRAL PANGASINAN ELEC COOP INC V
MACARAEG
[PAGE 195]
SALVADOR V PHIL MINING SERVICE CORP
[PAGE 195]
PRESCRIPTION PERIOD
AZCOR MANUFACTURING INC V NLRC
[PAGE 197]
OFFER TO REINSTATE
RANARA V NLRC
212 SCRA 631
CRUZ; August 14, 1992
NATURE
Appeal from NLRC decision
FACTS
- Petitioner Carlos Ranara had been working as a driver with
respondent Oro Union Construction Supply, when he was told by
Fe Leonar, secretary of the other private respondent, Jimmy
Ting Chang, not to come back the following day. Thinking that
she was only joking, he reported for work as usual on Nov. 11,
1989, but was surprised to find some other person handling the
vehicle previously assigned to him. It was only then that Ranara
realized that he had really been separated. When he
approached Leonar to ask why his services were being
terminated, she replied that he was hard headed and that
Chang sis not like his services.
- Ranara filed a complaint 3 days later with DOLE for illegal
dismissal, reinstatement with full back wages, underpayment of
wages, overtime pay, non-payment of 13th month pay, service
incentive leave, separation pay and moral damages.
- The private respondents denied charges, contending that the
petitioner had not been illegally dismissed. Chang said had not
authorized Leonar, or even his mother who was the officer-in-
charge during his absence at the time, to terminate Ranara's
Labor Law 1
employment. The truth was that it was Ranara who abandoned
his work when he stopped reporting from Nov. 11, 1989.
- LA held that Ranara had not been illegally dismissed. The
decision stressed that at the hearing of December 28, 1989,
Chang offered to re-employ the petitioner as he was needed in
the store but the latter demurred, saying he was no longer
interested. This attitude, according to the Labor Arbiter, showed
that it was the petitioner who chose to stop working for Chang
and not the latter who terminated his employment. The decision
was affirmed on appeal by NLRC. Hence, this appeal.
ISSUE
WON petitioner Ranara did not abandon his work and was
illegally dismissed
HELD
YES
- We reject as a rank falsity the private respondents' claim that
the petitioner had not been illegally dismissed and in fact
abandoned his work.
- On illegal dismissal: The secretary would not have presumed
to dismiss him if she had not been authorized to do so,
considering the seriousness of this act. It is worth noting that
neither Chang's mother, who was the officer-in-charge in his
absence, nor Chang himself upon his return, reversed her act
and reinstated the petitioner.
- It is clear that the petitioner was illegally dismissed without
even the politeness of a proper notice. Without cause and
without any investigation, formal or otherwise, Ranara was
simply told that he should not report back for work the following
day. When he did so just the same, thinking she had only
spoken in jest, he found that somebody else had been
employed in his place. When he protested his replacement, he
was even scolded for being "hard-headed" and not accepting
his dismissal.
- On abandonment: The charge of abandonment does not
square with the recorded fact that three days after Ranara's
alleged dismissal, he filed a complaint with the labor
authorities. The two acts are plainly inconsistent. Neither can
Ranara's rejection of Chang's offer to reinstate him be legally
regarded as an abandonment because the petitioner had been
placed in an untenable situation that left him with no other
choice.
- On Offer to Reinstate: The fact that his employer later
made an offer to re-employ him did not cure the vice of his
earlier arbitrary dismissal. The wrong had been committed and
the harm done. Notably, it was only after the complaint had
been filed that it occurred to Chang, in belated gesture of good
will, to invite Ranara back to work in his store. Chang's sincerity
is suspect. We doubt if his offer would have been made if
Ranara had not complained against him. At any rate, sincere or
not, the offer of reinstatement could not correct the earlier
illegal dismissal of the petitioner.
Disposition Petition GRANTED. Petitioner is entitled to
separation pay and 3 years' back wages in lieu of
reinstatement.
G. SANCTIONS AND REMEDIES
14.07 GENERAL RULE
NATURE OF REMEDIES – TWIN
REMEDIES
PHESCHEM V MOLDEZ
458 SCRA 339
PUNO; May 9, 2005
FACTS
A2010 - 49 - Disini
- PHESCHEM INDUSTRIAL CORPORATION employed respondent
PABLITO V. MOLDEZ as operator of its payloader and bulldozer
at its quarrying site in Palompon, Leyte
- He was suspended from work without pay for a period of
seven (7) days, without being informed of its reason. he
reported back to work only to be told that the President of the
corporation, Tomas Y. Tan, was ill and his suspension had been
extended for another 7 days without pay. Again, no reason was
offered for said decision. After the lapse of the extension,
respondent was not allowed to return to work. When he inquired
about the status of his employment, Viacrusis assured him that
he will be rehired in due time. Eight (8) months passed but
respondent received no word from petitioner
- filed a complaint against petitioner for illegal suspension and
dismissal. He prayed for reinstatement, or if reinstatement is
not possible, an award of separation pay
-corporation averred that dismissal for just cause. They said
that the bulldozer operated by Moldez malfunctioned due to his
negligence thus resulting to their loss of more or less 500,000
due to repair and non-utilization.
- Labor Arbiter held petitioner guilty of illegal dismissal and
ordered the reinstatement of respondent and payment of his
backwages. This was affirmed by NLRC and CA
ISSUE
WON CA erred in affirming decisions and WON Moldez is
entitled to separation pay in spite of his reinstatement
HELD
- Decision of CA is affirmed. However, the circumstances in the
case at bar do not warrant the award of separation pay to
respondent in lieu of reinstatement to his former position
- The legal consequences of an illegal dismissal are
reinstatement of the employee without loss of seniority rights
and other privileges, and payment of his full backwages,
inclusive of allowances, and other benefits or their monetary
equivalent. The law intended reinstatement to be the general
rule. It is only when reinstatement is no longer feasible that
payment of separation pay is awarded to an illegally dismissed
employee
- Payment of separation pay as a substitute for reinstatement is
allowed only under exceptional circumstances, (1) when
reasons exist which are not attributable to the fault or beyond
the control of the employer, such as, when the employer, who is
in severe financial strait and has suffered serious business
losses, has ceased operations, implemented retrenchment, or
abolished the position due to the installation of labor-saving
devices; (2) when the illegally dismissed employee has
contracted a disease and his reinstatement will endanger the
safety of his co-employees; or, (3) where strained relationship
exists between the employer and the dismissed employee
NUEVA ECIJA ELECTRIC CORP V NLRC
[PAGE 229]
LAKPUE DRUG INC V BELGA
[PAGE 208]
GREAT SOUTHERN MARITIME SERVICES CORP V
ACUNA
425 SCRA 422
AUSTRIA-MARTINEZ; February 28, 2005
NATURE
Petition for Certiorari
FACTS
- Petitioner Great Southern Maritime Services Corporation is a
manning agency organized and existing under Philippine laws. It
is the local agent of petitioner Ferry Casinos Limited. Petitioner
Labor Law 1
Pioneer Insurance and Surety Corporation is the surety
company of petitioner GSMSC.
- On October 7, 1993, respondents Jennifer Anne B. Acuña,
Haydee Anne B. Acuña, Marites T. Clarion, Marissa C. Enriquez,
Graciela M. Torralba, and Mary Pamela A. Santiago filed a
complaint for illegal dismissal against petitioners before the
Philippine Overseas Employment Administration (POEA)
- Respondents claim that: between the months of March and
April 1993, they were deployed by petitioner GSMSC to work as
croupiers (card dealers) for petitioner Ferry Casinos Limited
under a six-month contract with monthly salaries of US$356.45
plus fixed overtime pay of US$107 a month and vacation leave
pay equivalent to two months salary pro rata, except for
respondent Jennifer Anne B. Acuña who had a monthly salary of
US$250.56 plus fixed overtime pay of US$87.17 and vacation
leave pay equivalent to two months salary pro rata; sometime
in July 1993, Sue Smits, the Casino Manager, informed them
that their services were no longer needed; considering that
their plane tickets were already ready and they were subjected
to harassment, they had no alternative but to sign documents
on July 11 and 12, 1993 specifying that they were the ones who
terminated their employment; they were repatriated on July 25,
1993.
- Petitioners denied the allegations of respondents and averred
that respondents voluntarily resigned from employment.
- On October 5, 1995, the POEA decided the case against
petitioners
- The POEA ruled that the respondents were illegally dismissed
since petitioners failed to prove that respondents’ voluntarily
resigned from employment. It held that the alleged resignation
letters are only declarations of release and quitclaim.
- Petitioners appealed to the NLRC
- NLRC set aside the decision of the POEA and dismissed the
complaint for illegal dismissal. The NLRC held that the
contested letters are not only declarations of release and
quitclaim but resignations as well. It further held that there is
no concrete evidence of undue pressure, force and duress in
the execution of the resignation letters. The NLRC gave
credence to petitioners’ claim that respondents pre-terminated
their contracts en masse because two of the respondents,
Haydee Anne B. Acuña and Marites T. Clarion, are now working
in Singapore.
- Respondents filed a motion for reconsideration but the NLRC
denied
- On July 18, 1997, respondents filed a petition for certiorari
before us, docketed as G.R. No. 129673.
- On October 3, 1997, petitioners prayed for outright dismissal
of the petition for: (a) failure of respondents to submit a verified
statement of the material dates to show that the petition was
filed on time, and (b) filing a certification on non-forum
shopping signed only by their counsel. In addition, petitioners
argued that the issues raised are factual and there is no
showing that the NLRC committed grave abuse of discretion.
- On January 27, 1998, the Solicitor General, in lieu of Comment,
manifested that he is unable to sustain the position of the NLRC
because the allegation that respondents voluntarily resigned
was not substantially established and respondents’ non-
compliance with the formal requirements of the petition should
be waived since the petition is meritorious.
- The NLRC filed its own Comment praying for the dismissal of
the petition and the affirmance of its decision with finality. It
argued that in reversing the POEA, it focused its attention on
the correct evaluation of the evidence on record which
substantially showed that petitioners did not dismiss
respondents but that the latter resigned en masse on July 12,
1993.
- The Court referred the petition to the Court of Appeals which
set aside the decision of the NLRC and reinstated the decision
of the POEA.
- On July 21, 1999, petitioners filed a motion for reconsideration
but the Court of Appeals denied it in a Resolution dated
September 22, 1999.
ISSUE
A2010 - 50 - Disini
WON the Petition for Certiorari filed by respondents should have
been denied outright
HELD
NO
- Petitioners maintain that the petition for certiorari should have
merited outright dismissal for non-compliance with the
mandatory requirements of the rules. There is no statement
indicating the material dates when the decision of the NLRC
was received and when the motion for reconsideration was
filed. Likewise, the certification on non-forum shopping was not
signed by respondents but by their counsel. In any event,
petitioners insist that respondents voluntarily resigned from
their employment.
- Section 3 of Rule 46 of the Rules of Court provides that there
are three material dates that must be stated in a petition for
certiorari brought under Rule 65: (a) the date when notice of
the judgment or final order or resolution was received, (b) the
date when a motion for new trial or for reconsideration when
one such was filed, and, (c) the date when notice of the denial
thereof was received. This requirement is for the purpose of
determining the timeliness of the petition, since the perfection
of an appeal in the manner and within the period prescribed by
law is jurisdictional and failure to perfect an appeal as required
by law renders the judgment final and executory.
- As a general rule, these requirements are mandatory,
meaning, non-compliance therewith is a sufficient ground for
the dismissal of the petition.
- In the case before us, the failure to comply with the rule on a
statement of material dates in the petition may be excused
since the dates are evident from the records. A thorough
scrutiny of the records reveals that the January 15, 1997
decision of the NLRC was received by respondents’ counsel on
January 24, 1997. On February 19, 1997, respondents filed a
motion for reconsideration25 which was denied by the NLRC in a
Resolution dated April 30, 1997.26 Respondents’ counsel
received the resolution on May 30, 1997 and they filed the
petition for certiorari on July 18, 1997.
- In view of the retroactive application of procedural laws,
Section 4, Rule 65 of the 1997 Rules of Procedure, is the
governing provision. It provides that when a motion for
reconsideration is timely filed, the 60-day period for filing a
petition for certiorari shall be counted from notice of the denial
of said motion. While respondents’ motion for reconsideration
was filed 16 days late, the NLRC nonetheless acted thereon and
denied it on the basis of lack of merit. In resolving the merits of
the motion despite being filed out of time, the NLRC
undoubtedly recognized that it is not strictly bound by the
technicalities of law and procedure. Thus, the 60-day period for
filing of a petition for certiorari should be reckoned from the
date of the receipt of the resolution denying the motion for
reconsideration, i.e., May 30, 1997, and thus, the filing made on
July 18, 1997 was well within the 60-day reglementary period.
- As regards the verification signed only by respondents’
counsel, this procedural lapse could have warranted the
outright dismissal of respondents’ petition for certiorari before
the Court of Appeals. However, it must be remembered that the
rules on forum shopping, which were precisely designed to
promote and facilitate the orderly administration of justice,
should not be interpreted with such absolute literalness as to
subvert its own ultimate and legitimate objective which is the
goal of all rules of procedure - that is, to achieve substantial
justice as expeditiously as possible.
- Needless to stress, rules of procedure are merely tools
designed to facilitate the attainment of justice. They were
conceived and promulgated to effectively aid the court in the
dispensation of justice. Courts are not slaves to or robots of
technical rules, shorn of judicial discretion. In rendering justice,
courts have always been, as they ought to be, conscientiously
guided by the norm that on the balance, technicalities take a
backseat against substantive rights, and not the other way
around. Thus, if the application of the Rules would tend to
frustrate rather than promote justice, it is always within our
Labor Law 1
power to suspend the rules or except a particular case from its
operation.
- As the Court eloquently stated in the case of Aguam vs. Court
of Appeals It is a far better and more prudent course of action
for the court to excuse a technical lapse and afford the parties a
review of the case on appeal to attain the ends of justice rather
than dispose of the case on technicality and cause a grave
injustice to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.
- Indeed, where a decision may be made to rest on informed
judgment rather than rigid rules, the equities of the case must
be accorded their due weight because labor determinations
should not only be secundum rationem but also secundum
caritatem.
- In this case, the Court of Appeals aptly found compelling
reasons to disregard respondents’ procedural lapses in order to
obviate a patent injustice.
Disposition Petition Denied
CABATULAN V BUAT
451 SCRA 234
CALLEJO SR; February 14, 2005
NATURE
Certiorari on decision and resolution of CA reinstating the May
28, 1997 resolution of NLRC.
FACTS
- Respondent spouses Julio and Cecilia Cosmiano were engaged
in the trucking business under the name “J.C. Trucking”. They
rented out heavy equipment such as dump trucks, bucket
loaders, fork loaders and log haulers. They hired petitioner as
operations manager and purchasing officer.
- On April 8, 1993, respondent spouses and their children went
on a world tour and entrusted the business operations to
Cabatulan.
- On May 11, 1993, an altercation ensued between petitioner
and a certain Isidro Alaan (security aide) regarding the
purchase of spare parts. At about 1:30pm of the same day,
petitioner was asked to meet Vincent Cosmiano (Julio’s
brother). Before meeting Vincent, Cabatulan passed by the
premises of J.C. Trucking but was refused admission by Alaan
who was armed with an armalite rifle. Vincent Cosmiano
advised Cabatulan not to report for work in the meantime and
await the arrival of respondent spouses. Cabatulan agreed.
- On May 25, 1993, respondent spouses arrived. Petitioner was
summoned to their residence and was informed that his
services were no longer needed.
- On June 11, 1993 petitioner filed a complaint for illegall
dismissal, underpayment of wages, unpaid wages,
proportionate 13th month pay and attorney’s fees against
respondent spouses.
- LA found for petitioner and granted 126K backwages; 35.7K
separation pay; 1,750 unpaid wages; 4,985.18 13th month pay,
100K moral damages and 26,843.52 attorney’s fees –totaling
P295,278.70.
- On May 28, 1997, NLRC affirmed with the modification that
monetary awards reduced to P168,435.18, deleted moral
damages and attorney’s fees reduced. Petitioner didn’t file
MFR, spouses did. NLRC granted.
- On Dec 12, 1997, NLRC deleted backwages and accrued
salaries and awarded separation pay and indemnity in lieu
thereof. Petitioner filed MFR to reinstate decision of May 28,
1997.
- On March 14, 2000, CA granted the petition and reinstated
May 28, 1997 decision. Petitioner filed a motion for partial
reconsideration praying that he be awarded all the monetary
awards and/or benefits under Art. 279 of the Labor Code.
- On Jan 15, 2001, CA denied the motion.
ISSUE
WON petitioner can avail of all the remedies in Art. 279
A2010 - 51 - Disini
HELD
YES
Ratio Where an ironhanded application of the rules will result in
an unmistakable failure or miscarriage of justice, technicalities
should be transgressed in order to resolve the case. (Fulgencio
v NLRC)
Reasoning
- We agree with the ruling of the CA that as a rule, a party who
did not appeal from a decision of a court cannot obtain
affirmative relief other than that granted in the appealed
decision. But it is absurd for the NLRC, and for the CA for that
matter, to rule that the petitioner was dismissed without a
lawful or valid cause and yet declare that he is not entitled to
monetary benefits as provided by law.
Obiter
- Under the existing law, an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of
seniority rights. It must be emphasized, though, that the Court
has declared that there are specific circumstances obtaining
where reinstatement is not a practicable remedy, as
when the relations between the employer and the employee
have been so severely strained that it is no longer fitting to
order reinstatement or when the employee decides not to be
reinstated. It must be stressed that the petitioner was charged
by the respondent spouses with qualified theft and was even
coerced into withdrawing the labor case against them. No other
conclusion may be deduced other than the categorical fact that
antagonism already caused a severe strain in the relationship
between respondent spouses and petitioner. Separation pay is
the amount that an employee receives at the time of his
severance from the service and is designed to provide the
employee with the wherewithal during the period that he is
seeking another employment. The grant of separation pay does
not impede an award for backwages as the latter represents the
amount of earning lost by reason of unjustified dismissal. A
more equitable settlement, therefore, would be an award of
separation pay equivalent to at least one month pay for every
year of service in addition to his full backwages, allowances and
other benefits.
Dispositive the petition is PARTIALLY GRANTED. The Decision
of the Court of Appeals, affirming the Resolution of the NLRC
dated May 28, 1997, is AFFIRMED WITH MODIFICATIONS. The
respondent spouses Julio and Cecilia Cosmiano are ORDERED to
pay to the petitioner separation pay equivalent to one month’s
salary for every year of service in lieu of reinstatement, plus full
backwages, without deduction or qualification, counted fro the
date of his dismissal until the finality of this decision, and
indemnity of P2,000.00. No costs.
TRIAD SECURITY & ALLIED SERVICES INC V
ORTEGA
481 SCRA 591
CHICO-NAZARIO; February 6, 2006
NATURE
Petition seeking to set aside CA decision which denied their
petition and lifted a TRO earlier issued
FACTS
- Petitioner Triad Security and Allied services is a security
agency owned by Anthony Que.
- Respondents were formerly employed by Triad Security as
security guards
- In March, 1999, respondents filed a complaint against
petitioners and a certain Gen. Carbonell for
underpayment/nonpayment of salaries, overtime pay, premium
pay for holiday and rest day, service incentive leave pay,
holiday pay, and attorney’s fees. The complaint was amended
on 20 April 1999 to include the charges of illegal dismissal,
illegal deductions, underpayment/nonpayment of allowance,
separation pay, and claims for 13th month pay, moral and
Labor Law 1
exemplary damages as well as night shift differential.
- According to respondents: during the time that they were in
the employ of petitioners, compensation was below the
minimum wage; they were also made to render services
everyday for 12 hours but were not paid the requisite overtime
pay, nightshift differential, and holiday pay. Petitioners failed
to provide them with weekly rest period, service incentive leave
pay, and 13th month pay. So respondents filed a complaint
before the Labor Standards Enforcement Division of the
Department of Labor on 6 January 1999.
- Upon learning of the complaint, respondents’ services were
terminated without the benefit of notice and hearing.
- Petitioners denied respondents’ claim of illegal dismissal.
Petitioners explained that management policies dictate that the
security guards be rotated to different assignments to avoid
fraternization; that they be required to take refresher courses
at their headquarters. Respondents allegedly refused to
comply with these policies and instead went on leave or refused
to report at headquarters. Petitioners claim that respondents
worked for only eight hours a day, six days a week and that
they received their premium pays for services rendered during
holidays and rest day. The service incentive leave of
respondents was allegedly made payable as soon as
respondents applied for said benefit.
- Labor Arbiter Jose G. de Vera found in favor of respondents,
ordered the Triad to reinstate the guards, pay backwages,
separation pay in the event reinstatement is not feasible
- On 18 September 2000, petitioners filed a motion to
recompute money claims as decreed arguing therein that
respondents’ money claims as contained in the 28 February
2000 decision were baseless and that their former counsel was
not furnished a copy of the computation nor was he allowed to
submit comments thereon.
- On 20 May 2003, petitioners filed before the Court of Appeals
a petition for certiorari with prayer for the issuance of a
temporary restraining order and/or writ of preliminary
injunction.
- In a resolution promulgated on 12 June 2003, the Court of
Appeals issued a temporary restraining order enjoining the
execution or enforcement of the 23 April 2003 order of the
labor arbiter.
- Petitioners’ victory with the Court of Appeals was, however,
short-lived. In the decision now assailed before us, the Court of
Appeals ruled that backwages payable to respondents should
be computed from the date of their termination from their jobs
until actual reinstatement as provided in Article 223 of the
Labor Code. As petitioners failed to observe said pertinent
provision of the law, the labor arbiter could not be charged with
having committed a grave abuse of discretion when he issued
the assailed 23 April 2003 order.
- Moreover, the Court of Appeals took note of the “procedural
but fatal flaw” committed by petitioners when they immediately
elevated their case via petition for certiorari before the Court of
Appeals without first seeking recourse from the NLRC in
violation not only of the Rules of Procedure of said body but
also of the doctrine of exhaustion of administrative remedies.
- Petitioners’ motion for reconsideration was denied by the
Court of Appeals in a resolution dated 20 November 2003.
ISSUES
1. WON CA erred when it declared that the remedy adopted by
the petitioners is erroneous
2. WON Petitioners should be held liable to the additional
amount as contained in the April 23, 2003 order considering
that the February 28, 2000 decision has already been fully
satisfied
HELD
1. NO
Ratio It is a basic tenet of procedural rules that for a special
civil action for a petition for certiorari to prosper, the following
requisites must concur: (1) the writ is directed against a
tribunal, a board or an officer exercising judicial or quasi-judicial
functions; (2) such tribunal, board or officer has acted without
or in excess of jurisdiction, or with grave abuse of discretion
A2010 - 52 - Disini
amounting to lack or excess of jurisdiction; and (3) there is no
appeal or any plain, speedy and adequate remedy in the
ordinary course of law.
- NLRC has the authority to rule on matters involving grave
abuse of discretion that may be committed by a labor arbiter
(ART. 223. APPEAL Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter.
Reasoning
- Petitioners CLAIM (based on a limited understanding of ART
223): that based on the rules of procedure of the NLRC, the
order granting the issuance of the 2nd alias writ of execution
could not have been the proper subject of an appeal before the
NLRC neither could petitioners have sought the remedy of
certiorari from the NLRC. Petitioners argue that the rules of
procedure of the NLRC do not provide for any remedy or
procedure for challenging the order granting a writ of
execution; hence, the pertinent provision of the Revised Rules
of Court should apply which in this case is Section 1 of Rule 41.
It states:
Section 1. Subject of appeal – An appeal may be taken
from a judgment or final order that completely disposes of
the case, or of a particular matter therein when declared by
these Rules to be appealable.
- No appeal may be taken from:
(f) An order of execution;
- In all the above instances where the judgment or final order is
not appealable, the aggrieved party may file an appropriate
special civil action under Rule 65.
- Moreover, Rule III, Section 4 of the Rules of Procedure of the
NLRC expressly proscribes the filing of a petition for certiorari –
SECTION 4. PROHIBITED PLEADINGS & MOTIONS. The following
pleadings, motions or petitions shall not be allowed in the cases
covered by these Rules:
c) Petition for Certiorari, Mandamus or Prohibition.Therefore,
inasmuch as the NLRC had no authority to issue the writ of
certiorari, recourse to the Court of Appeals was only proper.
- Petitioners also maintain that the doctrine of exhaustion of
administrative remedies is not absolute as it accepts of certain
exceptions such as when an appeal would not be an adequate
remedy there being an order or execution already issued and
the implementation of said writ loomed as a great probability.
2. YES
Reasoning
- As the law now stands, an illegally dismissed employee is
entitled to two reliefs, namely: backwages and reinstatement.
These are separate and distinct from each other. However,
separation pay is granted where reinstatement is no longer
feasible because of strained relations between the employee
and the employer. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable and backwages.
- Backwages and separation pay are, therefore, distinct reliefs
granted to one who was illegally dismissed from employment.
The award of one does not preclude that of the other as this
court had, in proper cases, ordered the payment of both.
expenses and risks."
Disposition Court AFFIRMS the Decision of the Court of
Appeals dated 31 July 2003 and the Order dated 23 April 2003
of the Labor Arbiter declaring petitioners liable for additional
accrued backwages. The amount of money claims due the
respondents is, however, MODIFIED.
RATIONALE FOR REMEDIES
GLOBE MACKAY V
[PAGE 252]
Labor Law 1
14.08 REINSTATEMENT
DEFINED
UNION OF SUPERVISORS V SEC OF LABOR
128 SCRA 442
MAKASIAR; March 29, 1984
FACTS
- On November 12, 1981, the Supreme Court rendered a
decision in this case finding that "Luna's discharge was
discriminatory and constituted unfair labor practice . . . He is
therefore entitled to reinstatement with back wages ." and
accordingly ordered respondent Republic Bank (now Republic
Planters Bank.) ". . . TO IMMEDIATELY REINSTATE COMPLAINANT
NORBERTO LUNA TO HIS FORMER POSITION WITHOUT LOSS OF
SENIORITY RIGHTS AND OTHER BENEFITS AND INCREASES
RECOGNIZED BY LAW OR GRANTED BY PRIVATE RESPONDENT
DURING THE PERIOD OF HIS ILLEGAL DISMISSAL, WITH BACK
WAGES EQUIVALENT TO THREE (3) YEARS WITHOUT
QUALIFICATION . . ."
- SC even ordered that: "THIS DECISION IS HEREBY MADE
IMMEDIATELY EXECUTORY."
- On November 17, 1981, upon receipt of a copy of the said
decision, complainant Luna presented himself to the Republic
Planters Bank for reinstatement to his former position as San
Juan Branch Manager. The Republic Planters Bank refused to
take him back, claiming that the decision was still under study
by the counsel of the said bank.
- On December 1, 1981, the Republic Planters Bank sought
leave to file a motion for reconsideration and/or clarification.
- On January 15, 1982, the Republic Planters Bank begged leave
to forego the filing of a motion for reconsideration and/or
clarification, and in lieu thereof, submit manifestation and
motion.
- On May 25, 1982, the Solicitor General, in behalf of the
respondent Secretary of Labor filed a manifestation and motion
wherein it was prayed that public respondent be excused from
filing the corresponding comment referred to in the resolution
of this Court dated May 10, 1982 on the ground that "the issues
being raised therein only affect the private interest of said bank
and hence it may not be proper for public respondent to make a
comment"
- On July 8, 1982, the respondent Republic Planters Bank
submitted its sur-rejoinder to petitioner's rejoinder to private
respondent's reply to petitioner's comment. The Republic
Planters Bank in its sur-rejoinder has shown that it has already
paid the complainant Norberto Luna his backwages equivalent
to three (3) years without qualification.
ISSUE
WON Luna is entitled to reinstatement in Republic Planters Bank
(or WON Republic Planters Bank should be made to suffer the
consequences of the Unfair Labor Practice committed by
Republic Bank)
HELD
YES
- In its generally accepted sense, reinstatement is a
restoration to a state from which one has been removed or
separated. It is the return to the position from which he was
removed (San Miguel Brewery, Inc. v. Santos and CIR, 112 Phil.
986) and assuming again the functions of the office already
held (Abeto v. Rodas, 82 Phil. 67).
- Reinstatement pre-supposes that the previous position
from which one had been removed still exists, or that
there is an unfilled position more or less of a similar
A2010 - 53 - Disini
nature as the one previously occupied by the employee.
Here, in the case, there was no closure of shop notwithstanding
that the respondent Republic Bank was almost at the brink of
financial ruin. Despite the widespread restructuring and
reorganization following the substantial change in the corporate
structure of the former Republic Bank into the present Republic
Planters Bank, to offset the impending financial collapse, the
position previously held by the complainant Norberto Luna was
not abolished, but is now held by the incumbent manager who
replaced Luna. Although the position formerly held by the
herein complainant is now held by another, there is every
reason for the Republic Planters Bank to reinstate him because
there is an "unfilled position more or less of a similar nature as
the one previously occupied by the employee" (Philippine
Engineering Corporation v. CIR, supra). And, Section 4, Rule 1,
Book VI of the implementing Rules and Regulations of the Labor
Code states, to wit:
"An employee who is separated from work without just cause
should be reinstated to his former position, unless such
position no longer exists, at the time of his reinstatement, in
which case he shall be given a substantially equivalent
position in the same establishment without loss of seniority
rights"
- It must be remembered that the respondent Bank reached the
point of almost complete financial ruin were it not for the
rehabilitation progress initiated by the government
necessitating widespread restructuring and reorganization of
the Bank. At that time of economic crisis of the respondent
Bank, the herein petitioner was the manager of the San Juan
Branch. It cannot be said that he did not contribute, directly or
indirectly, to the downhill economy of the respondent Bank.
- Clearly, the respondent Bank, after surviving said crisis, and
emerging therefrom as Republic Planters Bank, should be given
the best managers. Managers who can contribute to its struggle
to survive. Managers who have not only the capacity and
efficiency but likewise they must also have the "proven" skill
that is essential for the respondent Republic Planters Bank to go
on and weather these times of economic difficulties.
- The Labor Code provision on reinstatement, to wit:
"Art. 280. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed from the time
his compensation was withheld from him up to the time of his
reinstatement."
- Reinstatement is aimed to restore the situation as nearly as
possible to status quo ante the unfair labor practice. This
requires that those deprived of a recognized and protected
interest by violations of the law should be made whole so as to
prevent the violator from profiting from his misdeeds Yet the
reinstatement remedy must always be adapted to economic-
business conditions.
- There is no question that the Republic Planters Bank is the
successor of the Republic Bank. But, in order to keep the
respondent Republic Planters Bank on its feet once again, it had
to undergo innovations to ensure recovery. The respondent
Republic Planters Bank actually changed its methods of
operation and this change was motivated by economic factors.
- Considering these "economic-business conditions" together
with the economic crisis WE are in now, it is inevitable that
these be reflected in the desire for efficient and productive
management. This honest intention can only be effectuated if
the complainant Norberto Luna is reinstated to a substantially
equivalent position without loss of seniority rights and the
incumbent manager who is now holding the position formerly
held by herein complainant be allowed to continue with his
"tested" competence and integrity in the management of the
San Juan Branch of the Republic Planters Bank.
Disposition immediately reinstate the complainant norberto
luna to an equivalent position without loss of seniority rights
from the time of his illegal dismissal up to actual reinstatement;
and Not to make any deductions from the three years
backwages already paid to norberto luna. This resolution is
hereby made immediately executory.
Labor Law 1
PHESCHEM INDUSTRIAL CORP V MOLDEZ
[PAGE 293]
EMPLOYEE RIGHT
QUIJANO V MERCURY DRUG
292 SCRA 109
PUNO; July 8, 1998
FACTS
- Petitioner DANDY QUIJANO was a warehouseman at the central
warehouse of MERCURY DRUG CORPORATION in Libis, Quezon
City, since 1983. During his 8-year stay in the company, he
received high performance ratings and a corresponding 15%
increase in salary per annum. Through the years, the company
has also recognized and commanded him for his dedication to
his work. He has actively articulated the employees' concerns
and, since 1990, has written to the management about the
malpractices committed by some officers of the company. He
exposed the existence of a "five-six" loan system in their
workplace operated by some of its officers. He incurred the ire
of the manager, Antonio Altavano, who operated the usurious
transactions.
- Then followed the harassment of Quijano. In April 1991,
Mercury Drug charged him with 4 violations of company
policies, all allegedly committed on March 19, 1991. It started
at about 11 am when he allegedly left his workplace without
permission. He was charged with loafing and abandonment of
work. Then, between 11:30 am to 12:30 pm, he allegedly
entered the warehouse employees' locker room and angrily
uttered in a loud voice: "Niloloko tayo ng kalbong yan.",
referring to the warehouse manager, Altavano. He was charged
with disrespect to his superiors. Thirty minutes later, at about
1:00 pm, he allegedly grabbed the public address system at the
central warehouse without permission and angrily announced:
"Wala kay Mrs. Azcona ang incentive natin, na kay Mr.
Concepcion. Niloloko lang tayo (ng superiors natin)." He was
charged with disrupting the work of his co-employees. Finally,
after an hour and a half, at about 2:30 pm, he allegedly saw Mr.
Simon peeping through a rack divider, and shouted: "Anong
tinitingin-tingin mo?" He was charged with using abusive
language in company premises.
- Consequently, in April 1991, 4 notices of
corrective/disciplinary action were served on him. These were
the very first disciplinary sanctions imposed on petitioner in his
8 years of service and all were allegedly committed on the
same day, March 19, 1991.
- Quijano gave a different version of the incidents. He alleged
that on said date, he had been following-up the payment of
incentives due to his co-employees. Altavano, informed him
that the incentives were already in the office of Mrs. Vivian
Azcona. However, when he inquired from Azcona about their
incentives, she referred him to the office of Mr. Concepcion and
asked him to inform his co-employees. Petitioner did as he was
told. He used the microphone for a few minutes and informed
his co-employees about the status of their incentives. His co-
employees submitted a joint written statement confirming his
allegations. They further declared that his brief use of the
microphone did not distract them in the performance of their
work. Quijano also denied uttering rude or insulting language in
referring to or communicating with his superiors. Again his co-
employees submitted statements to corroborate his denial.
Finally, he claimed that the charges against him were merely
concocted by the warehouse manager and the supervisor in
retaliation to his exposure of the latter's usurious loan scheme
in the warehouse, thereby taking undue advantage of the plight
of his co-employees. Quijano was cleared of the four charges.
- However, his employment woes did not end there. He was
served another notice of corrective action for serious
misconduct for allegedly challenging his superior to a fistfight
and uttering death threats to the manager, Altavano, on April
A2010 - 54 - Disini
25, 1991, or about 7 months earlier. The next day, a Special
Investigating Committee, found him guilty not only of
challenging his superior to a fistfight and issuing death threats
to the manager, but also guilty of the 4 charges of misbehavior
earlier hurled against him. On November 19, 1991, Mercury
Drug sent him a notice of termination of employment. The
dismissal was to take effect the next day, November 20, 1991.
- The labor arbiter ruled that Quijano was illegally dismissed
from service for lack of just cause. The NLRC affirmed. However,
it modified the labor arbiter's decision by: (1) limiting the award
of backwages to three years; (2) deleting the award of moral
and exemplary damages; and (3) ordering respondent to pay
petitioner separation pay in lieu of reinstatement. Acting on the
MFR, the NLRC modified but only as to the period of
computation of back wages. It refused to reinstate petitioner in
view of the brewing antagonism between him and his
supervisor and awarded him separation pay instead.
ISSUE
WON the NLRC committed grave abuse of discretion when it
awarded separation pay in lieu of reinstatement
HELD
YES
Ratio The doctrine of "strained relations" 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 relations", and the phrase cannot be given
an overarching interpretation, otherwise, an unjustly dismissed
employee can never be reinstated.
Reasoning
- An illegally dismissed employee is entitled to reinstatement as
a matter of right. Where reinstatement is not feasible,
expedient or practical, as where reinstatement would only
exacerbate the tension and strained relations between the
parties, or where the relationship between the employer and
employee has been unduly strained by reason of their
irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in the
company, it would be more prudent to order payment of
separation pay instead of reinstatement. Unscrupulous
employers, however, have taken advantage of the overgrowth
of this doctrine of "strained relations" by using it as a cover to
get rid of its employees and thus defeat their right to job
security. - Mercury Drug’s charges of misbehavior against
Quijano cannot serve as basis to justify his dismissal, let alone
his non-reinstatement. These charges had been found to be
baseless and both the labor arbiter and the NLRC agreed that
there was no just cause for petitioner's dismissal. It can even be
granted in arguendo that a certain antagonism may
characterize the relationship of petitioner and the respondents.
However, the antagonism was caused substantially if not solely
by the misdeeds of respondent's superiors. The arbiter found as
a fact that the false charges were filed against Quijano by two
of his superiors to punish him for exposing their usurious loan
operations. Hence, to deny his reinstatement due to the
"strained relations" with his accusers whose charges were found
to be false would result in rewarding the accusers and
penalizing the victim. This would set a bad precedent for no
employer should be allowed to profit from his own misdeed. In
addition, it is most inequitable to rule that the antagonism
engendered by Quijano’s performance of his legal right to
expose the usurious lending operations of some warehouse
officers will cause him to lose the security of his job. The expose
is work related and is intended to protect the economic welfare
of employees, and hence its exercise cannot be visited by any
punishment especially by the supreme penalty of separation
from service. Again, it bears emphasis that the State
guarantees a worker security of tenure which can well be his
most precious economic right. Thus, all efforts must be exerted
to protect him from unjust deprivation of his job.
- The alleged antagonism is a mere conclusion bereft of
evidentiary support. Mercury Drug did not raise the defense of
strained relationship before the labor arbiter. Consequently, this
Labor Law 1
issue which is factual in nature was not the subject of evidence
on the part of both the petitioner and the respondent. There is
thus no competent evidence upon which to base the conclusion
that the relationship between the petitioner and the respondent
has reached the point where it is now best to sever their
employment relationship. The NLRC's ruling on the alleged
brewing antagonism between the petitioner and the respondent
is a mere guesswork and cannot justify the non-reinstatement
of petitioner to his job.
Disposition Petition is GRANTED. MERCURY DRUG is ordered:
(1) to reinstate QUIJANO to his former or substantially
equivalent position; (2) to pay back wages from the time of his
illegal dismissal until his reinstatement (3) to pay moral and
exemplary damages in the amount of P50,000 and P25,000,
respectively, and; (4) to pay 10% of the total amount due as
attorney's fees.
ROSARIO V VICTORY RICEMILL
397 SCRA 760
CALLEJO; February 19, 2003
NATURE
Petition for review on certiorari seeking to reverse CA decision
FACTS
- Emilio Uy owned Victory Ricemill. He employed Rosario as
truck driver. Petitioner was tasked to, among others, haul palay
from various points and bring them to respondent’s ricemill. In
addition, petitioner acted as personal driver to the family of Mr.
Uy during their trips to Manila.
- Uy dismissed Rosario. According to respondent, petitioner was
guilty of insubordination when he refused to serve as driver of
Mr. Uy’s son when the latter needed a driver. Also, petitioner
was instructed to deliver 600 bags of cement to Felix Hardware.
Instead, petitioner delivered the same to one Eduardo Interior,
who had not since then paid for P60k. Because of petitioner’s
tendency to disobey the orders to him, Uy was constrained to
engage the services of another driver. Petitioner resented the
new driver and became uncooperative, disrespectful and
quarrelsome. Petitioner, armed with a dagger, fought with the
other driver and inflicted an injury on the latter. Petitioner
likewise inflicted injuries on the head of a co-employee, when
he intervened in the fight and tried to pacify petitioner.
- A complaint for illegal dismissal with money claims was filed
by petitioner
- Labor arbiter found that there were valid causes for the
termination of petitioner’s employment.
- The NLRC found that petitioner was denied due process during
the proceedings with the regional labor arbiter as petitioner was
not given the opportunity to present his additional rebuttal
evidence. On the other hand, respondent was allowed to submit
in evidence various exhibits to discredit the rebuttal testimony
of petitioner. Case was remanded.
- Petitioner submitted the affidavit of Roque, who averred that
the 600 bags of cement delivered to Eduardo Interior had been
paid as evidenced by in the sum of P58,950.00 payable to
respondent.
- Regional labor arbiter promulgated his decision stating that he
found no reason to deviate from his previous decision.
- NLRC affirmed the ruling of the regional labor arbiter
- CA found that respondent had justifiable cause to dismiss
petitioner. CA also observed that although there was no strict
compliance with the two-notice rule, it could be gleaned from
the records that petitioner was given ample opportunity to
explain his side. Moreover, even granting that respondent fell
short of the two-notice requirement, such irregularity, according
to the CA, does not militate against the legality of the dismissal.
ISSUES
1. WON petitioner’s termination was for a just and lawful cause
2. WON petitioner’s dismissal from his employment was in
accordance with the due process requirement of the law
3. WON petitioner is entitled to backwages
A2010 - 55 - Disini
HELD
1. YES
- Petitioner’s actuations clearly constituted willful disobedience
and serious misconduct justifying his dismissal under Article
282(a) of the Labor Code which provides:
Art. 282. Termination by employer. – An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
- Willful disobedience of the employer’s lawful orders, as a just
cause for the dismissal of an employee, envisages the
concurrence of at least two requisites: (1) the employee’s
assailed conduct must have been willful or intentional, the
willfulness being characterized by a "wrongful and perverse
attitude;" and (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 discharge.
2. NO
- To effect the dismissal of an employee the law requires not
only that there be just and valid cause as provided under Article
282. It likewise enjoins the employer to afford the employee the
opportunity to be heard and to defend himself. The employer is
mandated to furnish the employee with two written notices: (a)
a written notice containing a statement of the cause for the
termination to afford the employee ample opportunity to be
heard and defend himself with the assistance of his
representative, if he so desires; (b) if the employer decides to
terminate the services of the employee, the employer must
notify him in writing of the decision to dismiss him, stating
clearly the reason therefore
- While respondent furnished petitioner the written notice
informing him of his dismissal, respondent failed to furnish
petitioner the written notice apprising him of the charge or
charges against him. Consequently, petitioner was deprived of
the opportunity to respond thereto
- When the dismissal is effected for a just and valid cause, the
failure to observe procedural requirements does not invalidate
nor nullify the dismissal of an employee. The consequence of
the failure either of the employer or the employee to live up to
this precept is to make him liable in damages, not to render his
act void. The measure of damages is the amount of wages the
employee should have received were it not for the termination
of his employment without prior notice. If warranted, nominal
and moral damages may also be awarded.
3. YES
- Under the Labor Code, only the absence of a just cause for the
termination of employment can make the dismissal of an
employee illegal.
Art. 279. Security of Tenure. – In cases of regular
employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the time of his
actual reinstatement.
- Thus, only if the termination of employment is not for any of
the causes provided by law is it illegal and, therefore, the
employee should be reinstated and paid backwages.
- On the other hand, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282,
then, in accordance with that article, he should not be
reinstated. However, he must be paid backwages from the time
his employment was terminated until it is determined that the
termination of employment is for a just cause because the
failure to hear him before he is dismissed renders the
termination of his employment without legal effect. .
Labor Law 1
Disposition CA decision AFFIRMED with MODIFICATION. Uy is
ordered to pay petitioner full backwages from the time his
employment was terminated up to the time the herein decision
becomes final
EFFECT OF FAILURE TO ASK RELIEF
GENERAL BAPTIST BIBLE COLLEGE V NLRC (BASA)
219 SCRA 549
CAMPOS JR; March 5, 1993
NATURE
Petition for review of a resolution of the NLRC
FACTS
- Basa was hired by the College as the Academic Dean. He was
also appointed President by the Board of Trustees.
- In a regular meeting, the BoT voted to terminate services of
Basa as President. Basa, without aid of counsel, filed complaint
for illegal dismissal not only as President but as Dean.
- Arbiter found dismissal as President meritorious and claim for
separation pay without basis. He ordered the College and the
General Baptist Church to pay complainant.
- NLRC said reinstatement as Dean and payment of unpaid
salaries is in order.
ISSUES
1. WON Basa has right to be reinstated
2. WON Basa may be reinstated notwithstanding fact that
prayer is for payment of unpaid salaries and separation pay
only
HELD
1. YES
- Records are bereft of indication that Basa’s termination as
Dean was proven. College must inform Basa when, why and
how his term as Dean expired, since it was understood to be
indefinite.
- If the intention was to terminate Basa’s services both as
President and Dean, Basa must be heard. The College failed
here. The letter terminated his services as President.
- That nobody was appointed as Dean when Basa was appointed
President means that Basa acted concurrently as President and
Dean. These are different positions, and there is no prohibition
against holding these positions concurrently.
- Basa should have continued as Dean even after his
termination as President. His having been considered
terminated as Dean has no legal basis, though his dismissal as
President may have been legal.
2. YES
- Basa’s failure to specifically pray for reinstatement is a
procedural lapse which cannot put to naught a right which he is
entitled under a substantive law.
- But due to animosity and antagonism, College must not be
compelled to reinstate Basa but it must be given option to give
separation pay in lieu thereof.
PHESCHEM INDUSTRIAL V MOLDEZ
[PAGE 293]
RULES ON REINSTATEMENT
RATIONALE
ROQUERO V PHILIPPINE AIRLINES INC
401 SCRA 424
PUNO; April 22, 2003
A2010 - 56 - Disini
NATURE
CERTIORARI
FACTS
- Roquero, along with Rene Pabayo, were ground equipment
mechanics of PAL.
- From the evidence on record, it appears that Roquero and
Pabayo were caught red-handed possessing and using shabu in
a raid conducted by PAL security officers and NARCOM
personnel.
- The two alleged that they did not voluntarily indulge in the
said act but were instigated by a certain Jojie Alipato who was
introduced to them by Joseph Ocul, Manager of the Airport
Maintenance Division of PAL.
- Alipato was unsuccessful, until one day, he was able to
persuade Pabayo to join him in taking the drugs and who in turn
persuaded Roquero.
- Inside the company premises, they locked the door and
Alipato lost no time in preparing the drugs to be used. When
they started the procedure of taking the drugs, armed men
entered the room, arrested Roquero and Pabayo and seized the
drugs and the paraphernalia used.
- Roquero and Pabayo were subjected to a physical examination
where the results showed that they were positive of drugs.
- They were also brought to the security office of PAL where
they executed written confessions without the benefit of
counsel.
- Roquero and Pabayo received a “notice of administrative
charge” for violating the PAL Code of Discipline. They were
required to answer the charges and were placed under
preventive suspension.
- Roquero and Pabayo asserted that they were instigated by
PAL to take the drugs and that Alipato was not really a trainee
of PAL but was placed in the premises to instigate the
commission of the crime because Alipato was not arrested and
that Alipato has no record of employment with PAL.
- Roquero and Pabayo were dismissed by PAL. Thus, they filed a
case for illegal dismissal.
- LA: the dismissal of Roquero and Pabayo was upheld. The
Labor Arbiter found both parties at fault – PAL for applying
means to entice the complainants into committing the infraction
and the complainants for giving in to the temptation and
eventually indulging in the prohibited activity. Nonetheless, the
Labor Arbiter awarded separation pay and attorney’s fees to the
complainants.
- RTC: acquitted the 2 of the criminal case of conspiracy for
possession and use of a regulated drug in violation of Section
16, Article III of Republic Act 6425 on the ground of instigation.
- NLRC: ruled in favor of complainants as it likewise found PAL
guilty of instigation; ordered reinstatement to their former
positions but without backwages.
- Complainants did not appeal from the decision but filed a
motion for a writ of execution of the order of reinstatement.
- LA granted the motion but PAL refused to execute the said
order on the ground that they have this petition pending which
was eventually referred to the CA.
- CA: reversed the decision of the NLRC and reinstated the
decision of the LA insofar as it upheld the dismissal of Roquero.
ISSUES
1. WON the instigated employee shall be solely responsible for
an action arising from the instigation perpetrated by the
employer
2. WON the executory nature of the decision, more so the
reinstatement aspect of a labor tribunal’s order can be halted
by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered
in the meantime
3. WON the employer who refused to reinstate an employee
despite a writ duly issued can be held liable to pay the salary of
the subject employee from the time that he was ordered
reinstated up to the time that the reversed decision was handed
down
Labor Law 1
HELD
1. YES
- Instigation is only a defense against criminal liability. It
cannot be used as a shield against dismissal from employment
especially when the position involves the safety of human lives.
- It is of public knowledge that drugs can damage the mental
faculties of the user. Roquero was tasked with the repair and
maintenance of PAL’s airplanes. He cannot discharge that duty
if he is a drug user. His failure to do his job can mean great loss
of lives and properties. Hence, even if he was instigated to take
drugs he has no right to be reinstated to his position. He took
the drugs fully knowing that he was on duty and more so that it
is prohibited by company rules
- There is no question that petitioner Roquero is guilty of serious
misconduct for possessing and using shabu. He violated
Chapter 2, Article VII, section 4 of the PAL Code of Discipline
which states:
“Any employee who, while on company premises or on duty,
takes or is under the influence of prohibited or controlled
drugs, or hallucinogenic substances or narcotics shall be
dismissed.”
- Philippine Aeolus Automotive United Corporation vs. NLRC
(2000): Serious misconduct is defined as “the transgression of
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment.” For serious misconduct
to warrant the dismissal of an employee, it (1) must be serious;
(2) must relate to the performance of the employee’s duty; and
(3) must show that the employee has become unfit to continue
working for the employer
- PAL complied with the twin-notice requirement before
dismissing the petitioner. The twin-notice rule requires (1) the
notice which apprises the employee of the particular acts or
omissions for which his dismissal is being sought along with the
opportunity for the employee to air his side, and (2) the
subsequent notice of the employer’s decision to dismiss him.
2. NO
- The order of reinstatement is immediately executory
- Philippine Rabbit Bus Lines, Inc. vs. NLRC, (1999): The
unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective from
the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining
order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL to
actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is
entitled to, as if he was reinstated, from the time of the decision
of the NLRC until the finality of the decision of this Court.
- Article 223 (3rd paragraph) of the Labor Code, as amended by
Section 12 of RA No. 6715, and Sec 2 of the NLRC Interim Rules
on Appeals under RA No. 6715, Amending the Labor Code,
provide that an order of reinstatement by the Labor Arbiter is
immediately executory even pending appeal.
- The rationale of the law has been explained in Aris (Phil.)
Inc. vs. NLRC:
“In authorizing execution pending appeal of the
reinstatement aspect of a decision of the Labor Arbiter
reinstating a dismissed or separated employee, the law itself
has laid down a compassionate policy which, once more,
vivifies and enhances the provisions of the 1987 Constitution
on labor and the working man.
xxx xxx xxx
These duties and responsibilities of the State are imposed not
so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary
social and economic force, which the Constitution also
expressly affirms with equal intensity. Labor is an
indispensable partner for the nation’s progress and stability.
xxx xxx xxx
x x x In short, with respect to decisions reinstating
employees, the law itself has determined a sufficiently
overwhelming reason for its execution pending appeal.
A2010 - 57 - Disini
xxx xxx xxx
x x x Then, by and pursuant to the same power (police
power), the State may authorize an immediate
implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is
designed to stop, although temporarily since the appeal may
be decided in favor of the appellant, a continuing threat or
danger to the survival or even the life of the dismissed or
separated employee and his family.”
3. YES.
- Even if the order of reinstatement of the LA is reversed on
appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period
of appeal until reversal by the higher court.
- If the employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually
rendered services during the period.
Disposition The dismissal of petitioner Roquero is AFFIRMED,
but PAL is ordered to pay the wages to which Roquero is
entitled from the time the reinstatement order was issued until
the finality of this decision.
PNOC-EDP V ABELLA
448 SCRA 549
CHICO-NAZARIO; January 17, 2005
NATURE
Petition for review on certiorari
FACTS
- Private respondent Frederick V. Abella started working with
herein petitioner Philippine National Oil Company - Energy
Development Corporation (PNOC-EDC) as a probationary
Security Assistant at its SNGP in Ticala, Valencia, Negros
Oriental. Subsequently, he became a regular employee.
- Less than one year later, Abella was informed that his
employment with PNOC-EDC would be terminated effective 21
May 1990, allegedly due to a company-wide reorganization
pursuant to its Manpower Reduction Program, wherein the
position of Security Assistant at PNOC-EDC SNGP had been
abolished.
- Aggrieved, Abella filed a case of illegal dismissal, and for
actual, moral, and exemplary damages with the NLRC, Regional
Arbitration Branch No. VII at Dumaguete City, against the PNOC-
EDC and its officers. After hearing the parties, Labor Arbiter
Villahermosa rendered a Decision, holding that Abella was
illegally dismissed as the company and its officers failed to
show a “clear scheme and convincing proof of reorganization.
- An appeal was timely filed with the NLRC. Meanwhile, with
said appeal still pending in the NLRC, the labor arbiter issued an
order, directing the company to “admit back to work or
reinstate the complainant under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll.”
- Pursuant to the above order, Abella was reinstated in the
payroll as a General Services Assistant (PAL II), his original
position of Security Assistant having been abolished by virtue of
the company-wide reorganization. According to the company,
“the position is of the same level as Assistant Security and had
the same salary rate and benefits.”
- Abella, through counsel, wrote Quevenco, Resident Manager
at the SNGP, to protest his assignment in the payroll as General
Services Assistant (PAL II). Subsequently, he was again re-
slotted in the payroll as a Pipeline Maintenance Foreman, which,
according to the petitioners, is another “position with the same
salary and benefits” as another Security Assistant. This
“change” of position was classified as a lateral transfer.
- Abella wrote petitioner Quevenco, to request that he (Abella)
be physically reinstated and allowed to perform security
functions. Said request was granted. Abella was temporarily
detailed as Security Assistant at SNGP’s PAL II Development
Labor Law 1
Project, Northern Cotabato. However, he was also
concomitantly designated as Acting Security Officer for the
entire SNGP due to the reassignment of the incumbent Security
Officer to the Northern Negros Geothermal Project of the
company. Abella wrote a letter, this time addressed to
Vasquez, then Vice-President of the company, to confirm that
he had assumed his security functions; that he was open for
negotiations regarding his case; and, that he hoped that his
appointment/work status would be normalized.
- In a telegraphic message, Tongco informed Abella to
immediately report to Mindanao I Geothermal Plant (MIGP),
Kidapawan, North Cotabato. Tongco defined private
respondent’s duties and functions and delimited the duration of
his stay at MIGP as temporary, or for about 3 months only.
- Shortly thereafter, Abella and the company agreed to
settle. Abella consequently received the amount of P124,824.31
as settlement of the said case and by virtue of the said
agreement, both parties filed a Joint Motion to Dismiss before
the NLRC.
- Acting on the Joint Motion to Dismiss, the NLRC issued a
Resolution, granting the above motion dismissing the appeal
earlier filed before it. At this time, while carrying out security
functions at MIGP, Kidapawan, North Cotabato, Abella’s official
item or position in the payroll was Maintenance Foreman, SNGP,
Valencia, Negros Oriental. Said state of affairs prompted the
late Susas to write Tongco about it and to recommend that
“proper action be made in order to harmonize security-related
support services at MIGP.”
- Abella filed a motion for the issuance of a writ of execution of
the decision of the labor arbiter. Corollary to the said motion,
he informed Quevenco of his intention to report back to SNGP,
Ticala, Valencia, Negros Oriental, his original assignment prior
to the filing of the 1991 case or illegal dismissal. Abella received
a show cause memorandum for his alleged absence without
official leave (AWOL) and insubordination. Responding to the
above, Abella explained in a letter that his position as SGS
Maintenance is in complete contravention of the decision of the
labor arbiter.
- Despite the above response, Abella was nevertheless
transferred to PNOC-EDC Leyte-A Geothermal Project, as a
Security Assistant, a position that was vacant at that time. Said
transfer was accompanied by a Transfer or Change of Position
Form showing Abella’s change of official position from Pipeline
Maintenance Foreman to Security Assistant to be a lateral
transfer.
- Tongco sent Abella a radiogram message instructing him to
present himself, this time at the Mt. Labo Geothermal Project,
Camarines Norte, as a Security Assistant. A second message
followed emphasizing the need for Abella to report at the said
site not later than 25 May 1994. On 01 June 1994, Abella was
once more instructed to report to the petitioner company’s Mt.
Labo Geothermal Project. Said order was again accompanied
by a Transfer or Change of Position Form stating the transfer of
Abella as a Security Assistant from Leyte to Mt. Labo to be a
lateral transfer.
- All the above-mentioned directives were disregarded or
ignored.
- In the intervening time, the labor arbiter ruled on the motion
for execution filed by the complainant by issuing a Writ of
Execution directing the Sheriff, NLRC, Cebu City, to proceed to
the premises of the company at Ticala, Valencia, Negros
Oriental, to effect and to cause the reinstatement of Abella
either by physical or by payroll reinstatement. Sheriff Cornelio
issued a certification that per attached pay slip, private
respondent had been reinstated in the payroll with PNOC-EDC.
- For failing to heed the directives of his supervisors, Abella
received another “show cause” memorandum from Tongco,
ordering him to explain in writing why no disciplinary action
should be taken against him for insubordination and for being
AWOL.
- Abella, in his reply countered that “he is not guilty of
insubordination since he was not reinstated to his former
position as Security Assistant at Ticala, Valencia, Negros
Oriental, per Writ of Execution issued by the labor arbiter.”
A2010 - 58 - Disini
- Claiming unfair and prejudicial treatment, Abella filed a
complaint before the NLRC, Sub-Regional Arbitration Branch No.
VII, Dumaguete City, for unfair labor practice, illegal suspension,
nonpayment of mid-year bonus and 13th month pay for 1990
and 1991, claim for hazard pay, and annual salary increase
against the company and its officers.
- Several months later, Abella received a notice of disciplinary
action of Grave Suspension with Final Warning against him.
Abella filed another complaint with the NLRC, against the
company and its officers, for unfair labor practice, illegal
suspension, and nonpayment of wages with damages.
Nevertheless, Abella continued working at SNGP, Ticala,
Valencia, Negros Oriental, until he was accordingly notified of
his termination for cause. Thereafter, he filed a third complaint
with the NLRC against the company and its officers, this time
for unfair labor practice, illegal dismissal, and nonpayment of
wages, with prayer for reinstatement and payment of moral and
exemplary damages as well as attorney’s fees docketed.
- After hearing the parties, Labor Arbiter Villahermosa
rendered a consolidated Decision. In maintaining that Abella
was not illegally dismissed, the labor arbiter opined that the
records of the case show that Abella was “reassigned from his
position in Ticala, Valencia, Negros Oriental, to that in
Cotabato province by virtue of a memorandum issued by
Tongco which Abella readily accepted and agreed to said
transfer,” therefore there is no valid basis for the claim that
he was not validly reinstated. Thus, the charges of
insubordination and AWOL committed by Abella fall squarely
within the provision of Rule 26 of the petitioner company’s
rules and regulations as contained in the “PNOC Rules and
Regulations on Discipline.” Said rules provide for a penalty
ranging up to dismissal even for the first offense.
- On appeal, the NLRC reversed and set aside the Decision of
the labor arbiter and entered a new one. The NLRC found that
Abella was illegally dismissed “considering that at bar, the
parties had reached a settlement without vacating the decision
(of the labor arbiter dated 27 August 1991), then the decision
should be given its full force and effect,” and as the “[r]ecords
show that he was never reinstated to his former position as
admitted by the correspondence of J.T. Susas dated 25 March
1993, memorandum of complainant dated 17 September 1993
and letter of complainant’s counsel to Engr. Quevenco, dated 03
January 1994.” “The assignments of the complainants (sic) to
the various positions could not equate to full enforcement of the
decision of 27 August 1991 considering that these positions
were not his former position and his assumption to these
positions were under protest.”
- There being a timely motion for reconsideration, the
Honorable Commission, in a Resolution, reversed itself insofar
as the order for reinstatement and computation of backwages
were concerned. Instead, the Commission held that since Abella
had already reached the retirement age of 60 years,
reinstatement would no longer be possible. Abella should be
given all the benefits due him under the retirement provision of
the collective bargaining agreement of the company.
- With the denial of their motion for reconsideration, the
company and its officers came to the Court of Appeals via a
petition for certiorari under Rule 65 of the Revised Rules of
Court and sought to nullify the above-stated NLRC Decision and
Resolution.
- The appellate court dismissed the petition for lack of merit.
The company and its officers’ motion for reconsideration having
been denied, the instant petition was filed.
ISSUE
WON the reinstatement of private respondent was valid
HELD
YES
- The issue of reinstatement is addressed by paragraph three of
Article 223 of the Labor Code, to wit:
ART. 223. Appeal . . . .
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
Labor Law 1
executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option
of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for
reinstatement provided herein.
- The above-stated provision of the Labor Code, however, must
be read in conjunction with the implementing rules and
regulations of the said law. Sec. 4(a) of Rule 1, Book VI of the
Rules and Regulations Implementing the Labor Code, provides
that:
SEC. 4. Reinstatement to former position. – (a) An employee
who is separated from work without just cause shall be
reinstated to his former position, unless such position no
longer exists at the time of his reinstatement, in which case
he shall be given a substantially equivalent position in the
same establishment without loss of seniority rights.
[Emphasis supplied.]
- Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an
unfilled position more or less of a similar nature as this
previously occupied by the employee.
- Accordingly, an employee who is separated from his
employment on a false or nonexistent cause is entitled to be
reinstated to his former position because the separation is
illegal. If the position is no longer available for any other valid
and justifiable reason, however, the reinstatement of the
illegally dismissed employee to his former position would
neither be fair nor just. The law itself can not exact compliance
with what is impossible. Ad imposible tenetur. The employer’s
remedy is to reinstate the employee to a substantially
equivalent position without loss of seniority rights as provided
for above.
- In the case at bar, strictly applying the rules provided above,
private respondent Abella should have been reinstated back to
his old position as a Security Assistant at the SNGP, Ticala,
Valencia, Negros Oriental. Or, at the very least, since the
position of Security Assistant at Ticala, Valencia, Negros
Oriental, had been abolished as claimed by the petitioners, he
should have been reinstated to another position that is
substantially equivalent to his former one. In reality, private
respondent Abella was first reinstated in the payroll, as a
General Services Assistant and subsequently, as a Pipeline
Foreman, while he was actually discharging the functions of a
Security Assistant. As insisted by the petitioners, this situation
was due to the fact that the original position of the private
respondent had already been abolished in the previous
company-wide reorganization in 1991.
- But then, the private respondent was reslotted as Security
Assistant when he was transferred to the Leyte Geothermal
Project. He was, thus, performing the functions of a Security
Assistant and at the same time occupying the official position of
a Security Assistant though in a geographically different
location, when said position became vacant.
- Be that as it may, notwithstanding the above disquisitions, the
atypical circumstances in this case capitulate against the
outright application of the said rules. Whether or not the private
respondent was validly reinstated per Order of the Labor Arbiter
dated 27 August 1991, is beside the point in view of the fact
that the Joint Motion to Dismiss filed by the parties in the earlier
case contained a clause whereby the parties agreed that “[a]ll
other claims, damages and causes of action arising out of the
instant case are waived.”
- Regrettably, the Court of Appeals and the NLRC have
overlooked this very important fact.
- The clause agreed to by the parties in the Joint Motion to
Dismiss filed before the NLRC was in the nature of a
compromise agreement, i.e., “an agreement between two or
more persons, who for preventing or putting an end to a
lawsuit, adjust their difficulties by mutual consent in the
manner which they agree on, and which everyone of them
prefers to the hope of gaining, balanced by the danger of
losing.” Settlement of disputes by way of compromise, is an
accepted, nay desirable and encouraged practice in courts of
A2010 - 59 - Disini
law and administrative tribunals. Generally favored in law, such
agreement is a bilateral act or transaction that is binding on the
contracting parties and is expressly acknowledged by the Civil
Code as a juridical agreement between them.
- Prevailing case law provides that “a compromise once
approved by final orders of the court has the force of res
judicata between the parties and should not be disturbed
except for vices of consent or forgery. Hence, ‘a decision on a
compromise agreement is final and executory.’ Such agreement
has the force of law and is conclusive on the parties. It
transcends its identity as a mere contract binding only upon the
parties thereto, as it becomes a judgment that is subject to
execution in accordance with the Rules. Judges therefore have
the ministerial and mandatory duty to implement and enforce
it.” (Underlining supplied.) Hence, compromise agreements
duly approved by the courts are considered the decisions in the
particular cases they involve.
- In the case at bar, when both parties agreed to waive “all
other claims, damages and causes of action,” a compromise
they entered into in good faith absent any allegation otherwise,
they did not only agree to dismiss the appeal pending before
the NLRC. Particularly, the private respondent also agreed to
receive P124,824.31, thus, relinquishing his claim to the
Decision dated 27 August 1991, rendered by the labor arbiter in
his favor. In return, the petitioner company, to put an end to
the labor dispute, acquiesced to have its appeal before the
NLRC dismissed.
- The waiver was approved and considered by the NLRC when it
promulgated its Order dated 22 February 1993, dismissing the
appeal of the petitioners. Conformably, to cite jurisprudence,
the Compromise Agreement approved by the proper authority
became the decision in this particular case. Settlements of this
kind not only are recognized to be proper agreements but so
encouraged as well.
- Undoubtedly, the allegations of invalid reinstatement on the
part of the petitioners are a mere afterthought on private
respondent’s part in a fascinating attempt to extricate himself
from an assignment that brought him to a far away place and
caused him to be separated from his family.
Disposition Petition granted
EXCEPTIONS
BUSINESS CONDITIONS
UNION OF SUPERVISORS V SEC OF LABOR
[PAGE]
ESPEJO V NLRC (COOP INSURANCE SYSTEM OF
THE PHILS)
255 SCRA 430
BELLOSILLO; March 29, 1996
FACTS
- Espejo was GM of Cooperative Insurance System of the
Philippines (CISP). Aside from salary, he had certain privileges
such as company car with driver.
- They had to raise capital so to satisfy the requirement of the
Insurance Commission. The CISP Board of Directors resolved to
sell the company car that Espejo was using to help raise the
money. Espejo didn’t like this idea and tendered his resignation.
He even said that if the Board really sells his car, his resignation
would be irrevocable.
- The Board did resolve to sell his car; but Espejo said he won’t
resign anymore. But they dismissed him anyway.
- He filed with the LA for illegal dismissal. LA ordered
reinstatement and payment of backwages. NLRC ordered
payment of backwages, without reinstatement. This was
because by the time the case reached the NLRC, Espejo was
Labor Law 1
already 60 years old, so the NLRC said he can’t be reinstated
anymore.
ISSUE
WON (60+ yr old) Espejo can be reinstated
HELD
NO
- The law recognizes as valid any retirement plan, agreement or
management policy regarding retirement at an earlier or older
age.
- In the case of petitioner, CISP did not have any retirement plan
for its employees. In such situation, Sec. 13, Book IV, of the
Omnibus Rules Implementing the Labor Code provides that in
the absence of a retirement plan, agreement or policy an
employee may be retired upon reaching the age of sixty (60)
years. Construing this provision, an employee may retire, or
may be retired by his employer, upon reaching sixty (60). Thus,
an employee held to be illegally dismissed cannot be reinstated
if he had already reached the age of sixty (60) years at the time
of his complaint. NLRC therefore did not err in denying the
reinstatement of petitioner.
- Generally, an illegally dismissed employee who cannot be
reinstated is granted separation pay and back wages. However
considering that petitioner has already reached the statutory
retirement age of sixty (60), NLRC is correct that petitioner is
entitled only to back wages. The payment of back wages is a
form of relief that restores the income lost by reason of the
unlawful dismissal; separation pay, in contrast, is oriented
towards the immediate future, the transitional period the
dismissed employee must undergo before locating a
replacement job.
Disposition Petition denied. Pay backwages from termination
until he turned 60 yrs old.
STRAINED RELATIONS
PEARL S. BUCK FOUNDATION INC V NLRC
[PAGE 235]
COMMERCIAL MOTORS CORP V NLRC (UMLAS)
192 SCRA 191
NARVASA; December 10, 1990
FACTS
- CMC is engaged in the sale, marketing and distribution of
Mercedes Benz vehicles and spare parts, as well as in the
servicing, repair and maintenance of said vehicles. It has
branches in various parts of the country, including one in
Davao. Pedro Umlas had been working with CMC, first as Spare
Parts Checker at the Manila Office; later, as Warehouse-in-
Charge in the Davao Branch; and still later, Spare Parts
Supervisor in the same Branch. Then there was the discovery
of the missing parts valued at around 200,000. Umanlas was
thereafter dismissed. The LA ruled against Umanlas but the
NLRC reversed.
ISSUES
1. WON NLRC committed grave abuse of discretion
2. WON reinstatement is the appropriate relief
HELD
1. NO
- The dismissal was not based on substantial facts. There wasn’t
even due process in terminating petitioner
2. NO
A2010 - 60 - Disini
- It would seem, however, that the circumstances of this case
render inapproriate Umlas' reinstatement to his former position,
as an item of relief. A more equitable disposition is that which
this Court has more than once made in other cases of the same
nature: the award, in lieu of reinstatement, of separation pay at
the rate of one month's salary for every year of service, "so that
. . . (the employee) can be spared the agony of having to work
anew with . . . (the employer) under an atmosphere of antipathy
and antagonism, and the . . . (latter) does not have to endure
the continued service of . . . (the former) in whom it has lost
confidence."
Disposition NLRC decision AFFIRMED.
SENTINEL SECURITY AGENCY INC V NLRC
[PAGE 140]
SIBAL V NOTRE DAME OF GREATER MANILA
182 SCRA 538
PARAS; February 23, 1990
NATURE
Petition for certiorari seeking to reverse a decision of the NLRC
FACTS
- Petitioner Delia R. Sibal was employed as school nurse by
private respondent Notre Dame of Greater Manila starting
January 1973.
- She was compensated on a 12-month basis, although she
worked only during the ten-month period of classes.
- On March 10, 1976, respondent's director, Fr. Gonzales,
requested her to shorten her summer vacation, from two weeks
after the last day of classes to two weeks before the first day of
classes of the next school year. Petitioner acceded to the
request
- In April 1980, Fr. Gonzales required petitioner to report during
that summer to help in the library.
- Petitioner contested the order, stating that it will necessitate a
change in the terms and conditions of her employment and that
library work is alien to her profession as nurse. Fr. Gonzales
relented.
- Fr. Gonzales was replaced by Fr. Pablo Garcia, an American, as
new director.
- Fr. Garcia required petitioner to report for work during the
summer before the beginning of school year 1981-1982.
- Petitioner informed him that her contract does not require her
to report for work during the summer vacation.
- Fr. Garcia promised to verify her allegation. However, he failed
to inform petitioner of his findings. Thus, in order that her
failure to report for work may not be misinterpreted, petitioner
filed leaves of absence extending from April 1, 1981 to June 14,
1981. Petitioner failed to receive her vacation pay.
- During school year 1981-1982, petitioner was assigned to
teach health subjects to 900 students (19 sections), without
being compensated
- In December 1981, petitioner received her 13th month pay
computed on the basis of a 10-month period only.
- On April 5, 1982, Fr. Garcia again required petitioner to work
during that summer to update all the clinical records of the
students.
- Petitioner objected and reiterated that her contract does not
require her to report for work during summer. She also
reminded Fr. Garcia that she had not received any
compensation for teaching health subjects
- Fr. Garcia replied that it was imperative for her to report for
work during the summer because it is the best time to update
the clinical records, and that petitioner was not entitled to extra
compensation for teaching because teaching was allegedly part
of her regular working program as a school nurse.
- Petitioner, apart from reiterating her objection to the order,
called the attention of Fr. Garcia to the school's failure to pay
her salary for the summer of 1981 and of the deficiency in her
13th month pay for that year.
Labor Law 1
- Fr. Garcia adamantly refused to consider petitioner's demands
and threatened to take drastic measures against her if she
remains obstinate in her refusal to follow his order to report for
work that summer
- Petitioner, for the fourth time, informed Fr. Garcia that her
contract does not require her to report for work during summer,
and she does not intend to do so that summer of 1982.
- Petitioner filed a complaint for non-payment of the following;
(1) vacation pay for four (4) summer months; (2) compensation
for teaching health subjects; and (3) deficiency in the 13th
month pay for 1981.
- Summons was served on respondent on the opening day of
classes. That very day, respondent school served petitioner her
letter of termination effective immediately and it also submitted
a copy of the termination paper to the Ministry of Labor and
Employment.
- The following day, petitioner filed an amended complaint,
adding two more charges: illegal dismissal and unfair labor
practice
- For the next four to five weeks, more than 20 teachers and
personnel, backed up by the Faculty Association of respondent
school, pressed for the ouster of Fr. Garcia with the Ministry of
Education, Culture, and Sports (MECS) by virtue of PD 176 and
the following charges: oppressive behavior, arrogance,
contempt for Filipinos in general and Filipino teachers in
particular; unfairness in dealing with personnel; dictatorial
conduct; and use of abusive Fr. Garcia was eventually replaced
on September 8, 1983.
- The Labor Arbiter rendered a decision awarding to petitioner
separation pay but denying her claim (1) for compensation for
teaching Health subject to 19 sections; (2) for moral damages;
and (3) negating the existence of unfair labor practice
- Petitioner filed a memorandum of partial appeal
- Petitioner informed the NLRC that Fr. Pablo Garcia had been
replaced by Fr. Jose Arong, a Filipino, as new director effective
September 8, 1983.
- On April 11, 1986, public respondent NLRC rendered the
questioned decision which affirmed the decision of the Labor
Arbiter
ISSUES
1. WON the award of separation pay instead of reinstatement is
the proper remedy under the circumstances
2. WON petitioner is entitled to compensation for teaching
health subjects
3. WON unfair labor practice existed which would entitle
petitioner to moral damages
HELD
1. NO
- The LA had found that the termination of petitioner was not
supported by any just cause or reason. Yet, she erroneously
ordered separation pay instead of reinstatement with
backwages based on the alleged reason that petitioner's
working relations with the former director, Father Garcia, had
become so strained and deteriorated that it became impossible
for them to work harmoniously again. And the NLRC affirmed
such finding which is untrue and merely speculative.
- It should be noted that the alleged conflict between the
petitioner and the director was strictly official in nature, the
cause of which was the violation of the terms of employment by
the latter. Petitioner's assertion of her right to unpaid salaries
and bonus differential was not motivated by any personal
consideration. Rather, she simply claimed benefits which, under
the law, she was entitled to and legally due her. In her act of
asserting these money claims, petitioner observed utmost tact,
courtesy and civility.
- Significantly, about a month after petitioner's termination on
June 14, 1982, more than twenty teachers and personnel of
respondent school, backed by the Faculty Association,
petitioned for the ouster of Director Fr. Garcia for serious
charges under P.D. 176. Consequently, Fr. Garcia was replaced
on September 8, 1983. Clearly, therefore, when the assailed
NLRC decision was rendered on April 11, 1986, the alleged
A2010 - 61 - Disini
"strained relations" or "irritant factors" which the Labor Arbiter
capitalized on had been totally eliminated. Respondent NLRC
obviously failed to consider this and thus perpetuated the error
committed by the Labor Arbiter in her prior decision.
- The dissenting NLRC Commissioner aptly observed thus:
- Moreover, it should be emphasized, that no strained relations
should arise from a valid and legal act of asserting ones right,
such as in the instant case, for otherwise, an employee who
shall assert his/ her right could be easily separated from the
service by merely paying his/her separation pay on the pretext
that his/her relationship with his/her employer had already
become strained.
- To Our mind, strained relations in order that it may justify the
award of separation pay in lieu of reinstatement with
backwages, should be such, that they are so compelling and so
serious in character, that the continued employment of an
employee is so obnoxious to the person or business of the
employer, and that the continuation of such employment has
become inconsistent with peace and tranquility which is an
Ideal atmosphere in every workplace.
2. YES
- Petitioner is entitled to compensation for teaching health
subjects. Although the subject taught is Health and allied to her
profession, and is taught during regular working hours,
petitioner's teaching the subject in the classroom and her
administering to the health needs of students in the clinic
involve two different and distinct jobs
- It must be noted that petitioner has established that in
several precedents, non-teaching personnel of respondent
school who were made to handle teaching jobs were actually
paid actual compensation. Besides, justice and equity demand
that since the principle of equal work has long been observed in
this jurisdiction, then it should follow that an extra pay for extra
work should also be applied.
3. YES
- The records show that when summons with attached
complaint of petitioner for money claims was served on
respondent school on June 14, 1982, said respondent, on the
very day, gave petitioner her walking papers. Respondent did
not waste any time in dismissing her in brazen violation of
these provisions of the Labor Code
- The series of discriminatory and oppressive acts of respondent
school against petitioner invariably makes respondent liable for
moral damages under Art. 1701, which prohibits acts of capital
or labor against each other, and Art. 21 on human relations in
relation to Art. 2219 No. 10 and Art. 2220, all of the Civil Code
Disposition The appealed decision of respondent NLRC is set
aside. Private respondent is ordered to REINSTATE petitioner to
her former position without loss of seniority rights and with
backwages for three (3) years from the time of her illegal
dismissal; to pay her the regular extra compensation relative to
her teaching health subjects; and to pay her moral damages.
NAGA COLLEGE FOUNDATION EDUCATION
WORKERS ORG V BOSE
289 SCRA 274
MENDOZA; April 20, 1998
NATURE
Special civil action of certiorari
FACTS
- Petitioners were employees of the Naga College Foundation.
They filed a complaint with the Regional Arbitration Branch of
the NLRC in Naga City for unfair labor practice, reinstatement,
back wages, and damages against private respondents, alleging
illegal dismissal. On the other hand, private respondents filed a
complaint against petitioners for conducting an illegal strike.
- Executive Labor Arbiter ordered the reinstatement of
petitioners and the payment of back wages to them
- Private respondents appealed. While the appeal was pending,
petitioners moved for the execution of the portion of the
Labor Law 1
decision insofar as it granted reinstatement.
- The parties then entered into a compromise agreement
whereby private respondents agreed to reinstate petitioners in
the payroll effective Sept 21, 1992, the date of receipt by them
of the ELA’s decision. The agreement was approved by the ELA.
- However, after paying three installments of the accrued
salaries, private respondents failed to make further payments
to petitioners. Petitioners asked the ELA for assistance and, as
no action was taken on their request, they filed a motion for
execution directly with the NLRC in Manila.
- Petitioners again moved for the execution of the decision
before ELA. Petitioners insisted on execution according to the
tenor of the original decision, without need of determining how
much they might have earned during the period of their
dismissal.
- ELA denied execution on the ground that by filing a motion for
execution in the NLRC in Manila, petitioners had abandoned
their motions in the Legaspi office.
- Petitioners contended that the reinstatement portion of the
decision had already been the subject of a compromise
agreement and, therefore, the order deleting the order of
reinstatement and awarding separation pay in lieu thereof in
effect amended a final and executory order. Petitioners
claimed that they had been forced to file a motion directly in
the NLRC because of the ELA’s failure to act upon their motions,
but that they had no intention at all of abandoning their motion
in the ELA’s office.
ISSUE
WON petitioners abandoned the agreement when they moved
for the execution of the decision (WON the Executive Labor
Arbiter could freely consider supervening events)
HELD
NO
Reasoning
- The Solicitor General contends that by asking for the
execution of the decision of the NLRC, petitioner in effect
abandoned or rescinded the compromise agreement, leaving
the ELA free to consider supervening events, such as the strain
in relations of the parties, in the resolution of the motion for
execution. There is no basis in the record for supposing that
petitioners gave up their claim for reinstatement. The subject
of the compromise agreement was their reinstatement as
ordered in the decision of the ELA. The subject of the NLRC
decision, which they sought to enforce in the motion for
execution, was also their reinstatement. Whichever one it is, no
supervening event rendering execution unjust can be
considered:
1) Petitioners did not occupy any managerial or confidential
position in the Naga College Foundation which might be
affected by any bad feeling which might have been
engendered as a result of the execution of the decision.
2) It was private respondents who appear to have caused a
strain in the relation of the parties. Any bad feeling was
caused by its failure to comply in good faith with their
undertaking under the compromise agreement.
- Principle of Strained Relations: This cannot be applied
indiscriminately. Otherwise, reinstatement can never be
possible simply because some hostility is invariably engendered
between the parties as a result of litigation. That is human
nature. Besides, no strained relations should arise from a valid
and legal act of asserting one’s right; otherwise an employee
who shall assert his right could be easily separated from the
service, by merely paying his separation pay on the pretext that
his relationship with his employer had already become strained.
(Globe-Mackay Cable and Radio Corp. v. NLRC)
3) Petitioners were frustrated at the undue delay in the
resolution of their motions by the ELA and they thought of
turning to the NLRC in Manila in the hope of obtaining
assistance. Abandonment was far from their intention.
Disposition Petition is granted, and the orders of ELA are
hereby annulled and set aside. Private respondents are hereby
ordered to reinstate petitioners to their former positions without
A2010 - 62 - Disini
loss of seniority and to pay them full backwages, subject
however to any agreement the parties may have entered into.
BASCON V CA
[PAGE 215]
CABATULAN V BUAT
[PAGE 294]
ACESITE CORP V NLRC
CARPIO-MORALES; January 26, 2005
NATURE
Two consolidated petitions for review on certiorari challenging
CA decision
FACTS
- Leo Gonzales was hired as Chief of Security of Holiday Inn
Manila. On March 25, 1998, Gonzales took a 4-day sick leave
and took emergency leave on March 30, 1998. On April 16-29,
1998, he again took a 12-day vacation leave. Before the
expiration of his 12-day vacation leave, Gonzales filed an
application for emergency leave for 10 days. The application
was not approved. He received a telegram from Acesite
advising him that he was on unauthorized leave and asking him
to provide a written explanation within the next 24 hours why
he was not reporting for work and was required to report for
work the following day. On May 2, 1998, Gonzales’ father
Anacleto sent a telegram to Acesite stating that he was still
recovering from severe stomach disorder and would report back
for work on May 4, 1998, attaching a medical certificate.
- On May 4, 1998, Gonzales reported for work and presented
himself to Johann Angerbauer, then Resident Manager of the
hotel. He requested for leave without pay from May 5-9, 1998
which was provisionally approved on condition that he
(Gonzales) would be sending his explanation re his absences
that same day through e-mail, which he did. In the evening
Gonzales left for Abra.
- Also on May 4, 1998 Angerbauer sent an inter-office memo to
Gonzales, stating that his presence was needed at a meeting
scheduled on the following day. Gonzales claims that he got
hold of a copy of the above-quoted memo only on May 8, 1998.
- Not having reported for work, Angerbauer sent Gozales a
telegram on May 5, 1998 stating that Gozales should report for
work upon receipt of notice due to very urgent matters.
Gonzales, who claims to have received the telegram only in the
afternoon of May 7, 1998, immediately went back to Manila on
May 8, 1998 only to be “humiliatingly and ignominiously barred
by the guard from entering the premises.” It appears that on
May 7, 1998, Angerbauer issued a Notice of Termination
through an inter-office memo.
- Gonzales thus filed a complaint against Acesite, Angerbauer
and Kennedy for illegal dismissal with prayer for reinstatement
and payment of full backwages, service incentive leave, 13th
month pay, moral and exemplary damages and attorney’s fees.
Gonzales, however, failed to appear in 2 consecutive hearings
despite notice, meriting the dismissal by the Labor Arbiter of his
complaint.
- Gonzales refiled his complaint for illegal dismissal. The Labor
Arbiter dismissed the complaint for lack of merit. The NLRC
reversed the decision. The CA affirmed the NLRC decision.
ISSUES
1. WON Gonzales was illegally dismissed
2. WON Gonzales should be reinstated
HELD
1. YES
- There appears to have been no just cause to dismiss Gonzales
from employment. As correctly ruled by the Court of Appeals,
Gonzales cannot be considered to have willfully disobeyed his
employer. Willful disobedience entails the concurrence of at
Labor Law 1 A2010 - 63 - Disini
least 2 requisites: the employee’s assailed conduct has been management advised Union and Uy that they would terminate
willful or intentional, the willfulness being characterized by a Uy, which they later did.
“wrongful and perverse attitude;” and the order violated must - Uy filed case for illegal transfer and termination.
have been reasonable, lawful, made known to the employee - LA: Uy was illegally dismissed, reinstatement with full
and must pertain to the duties which he had been engaged to backwages and 10% attorney’s fees – BPI appealed to NLRC
discharge. - NLRC: set aside LA’s Decision for lack of jurisdiction, case
- In Gonzales’ case, his assailed conduct has not been shown to under Voluntary Arbitrator (VA)
have been characterized by a perverse attitude, hence, the first - VA: Uy illegally dismissed, reinstatement without loss of
requisite is wanting. His receipt of the telegram disapproving seniority rights and with full backwages from time she was
his application for emergency leave starting April 30, 1998 has dismissed until she is actually reinstated, including other
not been shown. And it cannot be said that he disobeyed the benefits under CBA, plus 10% attorney’s fees – MFR of BPI
May 5, 1998 telegram since he received it only on May 7, 1998. denied, filed petition for review in CA
On the contrary, that he immediately went back to Manila upon - CA: affirmed deci with modification – NO REINSTATEMENT
receipt thereof negates a perverse attitude. because of strained relations, instead pay back salaries not
2. NO exceeding 3 years and separation pay of one month for every
- In illegal dismissal cases, reinstatement to an illegally year of service.
dismissed employee’s former position may be excused on the - so here, partial reconsideration on both side, but BPI’s petition
ground of “strained relations.” This may be invoked against denied because of technicality so only entertain BPI Union’s
employees whose positions demand trust and confidence, or Petition for review.
whose differences with their employer are of such nature or
degree as to preclude reinstatement. In the case at bar, ISSUES
Gonzales was Chief of Security, whose duty was to “manage 1. WON decision to limit award of backwages to 3 years
the operation of the security areas of the hotel to provide and contrary to law and jurisprudence
ensure the safety and security of the hotel guests, visitors, 2. WON UY should be reinstated
management, staff and their properties according to company
policies and local laws.” It cannot be gainsaid that Gonzales’ HELD
position is one of trust and confidence, he being in charge of 1. YES
the over-all security of said hotel. Thus, reinstatement is no - The Mercury Drug Rule used by CA already abandoned with
longer possible. In lieu thereof, Acesite is liable to pay the promulgation of RA 6715 in 1989, amending Article 279, LC
separation pay of 1 month for every year of service. Ratio. Absent any exceptional circumstance, it is now settled
that an employee who is unjustly dismissed from work shall be
entitled to full backwages, inclusive of allowances, and to his
BPI EMPLOYEES UNION V BPI
other benefits or their monetary equivalent from the time his
454 SCRA 357 compensation was withheld from him up to the time of his
CHICO-NAZARIO; March 31, 2005 actual reinstatement.
Reasoning
NATURE - Mercury Drug Rule [Mercury Drug, Co., Inc. vs. CIR]: an
Petition for review on certiorari under Rule 45, ROC, seeks to employee whose illegal termination had lasted some years was
partially reverse the Decision and Resolution of the Court of entitled to backwages for a fixed period “without further
Appeals which affirmed with modification the Decision rendered qualifications,” i.e., without need of taking account of whatever
by the Accredited Voluntary Arbitrator dated 31 December he might have earned during such period, and deducting it from
1997, in VA Case No. 08-001-97. the amount of recovery, by providing a base period of three
years.
FACTS - In the case, the illegal dismissal of Uy took effect on 1995
- October 1995: Because Zenaida Uy shouted at her Senior when RA 6715 already was in effect.
Manager Delfin Santos (Santos), she was told to report to AVP - Verily, the evident legislative intent as expressed in Rep. Act
Carlos Fragante (AVP), who later told her to transfer from the No. 6715 is that the backwages to be awarded to an illegally
Escolta Branch to Plaza Cervantes Branch to defuse the tense dismissed employee, should not, as a general rule, be
situation in their branch. The next day, AVP received the report diminished or reduced by the earnings derived by him
of Santos regarding the incident and so he ordered Uy to elsewhere during the period of his illegal dismissal. The
transfer. Uy resisted, awaiting the result of the grievance underlying reason for this ruling is that the employee, while
meeting initiated by the BPI Union against BPI, where no litigating the legality (illegality) of his dismissal, must still earn
agreement was reached. a living to support himself and his family. Corollary thereto, full
- BPI initially sent 2 letters (before and after the grievance backwages have to be paid by the employer as part of the price
meeting) to Uy ordering her to explain why no disciplinary or penalty he has to pay for illegally dismissing his employee.
action should be taken against her for insubordination, then Thus, a closer adherence to the legislative policy behind Rep.
later for uttering disrespectful, discourteous, insulting and Act. No. 6715 points to “full backwages” as meaning exactly
unbecoming language to her superior, Santos. In her first reply, that, i.e., without deducting from backwages the earnings
she explained that there was no proper turnover of her derived elsewhere by the concerned employee during the
accountabilities and she could not enter the bank premises to period of his illegal dismissal. In other words, the provision
do so. On the second reply, Uy reiterated her first reply and she calling for “full backwages” to illegally dismissed employees is
requested to be considered on leave starting November. BPI clear, plain and free from ambiguity and, therefore, must be
wrote another letter directing her to show cause, now also for applied without attempted or strained interpretation
going AWOL. Now Uy asked for particulars regarding the alleged - Consequently, in accordance with Section 34, Rep. Act No.
“highly disrespectful, discourteous, insulting, threatening, and 6715, employees illegally dismissed after 21 March 1989 are
unbecoming language and behavior” towards her manager and entitled to their “full backwages,” inclusive of other benefits or
her alleged past quarrels with her co-employees, and alleged their monetary equivalent, from the time their actual
that she was sexually harassed by Santos6. Union asked for compensation was withheld from them up to the time of their
investigation on the “sexual harassment charge”. actual reinstatement.
- Late November, 2 meetings were held between the union and 2. YES
the management where no agreement was reached, and the - Mere allegation of strained relations to bar reinstatement is
frowned upon. Besides, the members of the management
6 Santos allegedly told Uy “Dito ka na lang, marami and [ang] lalaki dito”, and when she answered “Hindi ako mahilig sa lalaki”, he retorted, “Maski
involved in the case are no longer in the Escolta branch so no
dito ka na lang sa kuwarto ko”
more reason for strained relations.
Labor Law 1
Ratio. The strained relations doctrine should be strictly applied
so as not to deprive an illegally dismissed employee of his right
to reinstatement.
- Well-entrenched is the rule that an illegally dismissed
employee is entitled to reinstatement as a matter of right. Over
the years, however, the case law developed that where
reinstatement is not feasible, expedient or practical, as where
reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship
between the employer and employee has been unduly strained
by reason of their irreconcilable differences, particularly where
the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement. Some
unscrupulous employers, however, have taken advantage of the
overgrowth of this doctrine of “strained relations” by using it as
a cover to get rid of its employees and thus defeat their right to
job security.
-To protect labor’s security of tenure, we emphasize that the
doctrine of “strained relations” 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 relations” and the phrase cannot be given an
overarching interpretation, otherwise, an unjustly dismissed
employee can never be reinstated.
- This Court is cognizant of management’s right to select the
people who will manage its business as well as its right to
dismiss them. However, this right cannot be abused. Its
exercise must always be tempered with compassion and
understanding.
-Where penalty less severe would suffice, whatever missteps
may be committed by labor ought not to be visited with
consequence so severe. It is not only because of the law’s
concern for the workingmen. There is, in addition, his family to
consider. Unemployment brings untold hardships and sorrows
on those dependent on the wage-earner. The misery and pain
attendant on the loss of jobs then could be avoided if there be
acceptance of the view that under all the circumstances of a
case, the workers should not be deprived of their means of
livelihood. Nor is this to condone what has been done by them.
Disposition the instant petition is GRANTED. The assailed 28
October 1998 Decision and 8 March 1999 Resolution of the
Court of Appeals are hereby MODIFIED as follows: 1) respondent
BPI is DIRECTED to pay petitioner Uy backwages from the time
of her illegal dismissal until her actual reinstatement; and 2)
respondent BPI is ORDERED to reinstate petitioner Uy to her
former position, or to a substantially equivalent one, without
loss of seniority right and other benefits attendant to the
position.
SAGUM V CA (INST OF INTEGRATED ELECTRICAL
ENGINEERS)
459 SCRA 223
PUNO; May 26, 2005
FACTS
- petitioner Sagum was appointed as Officer Manager and OIC
for the Executive Director in concurrent capacity as Executive
Secretary of respondent institute. She was a member of the
permanent staff for 16 years and, as executive secretary,
served 11 National Presidents.
- Private respondents allege that Sagum abused her power in
consistently awarding printing jobs to DBR Prints, despite
having the lowest bids. Petitioner was preventively suspended
for 30 days and served 2 written notices demanding
explanations for the imputed offenses to which she denied the
charges. She was later dismissed for gross negligence and loss
of trust and confidence.
- The Labor Arbiter ruled the dismissal was illegal, ordering the
payment of backwages and separation pay. Petitioner argued
that the decision did not show a case of irretrievable
estrangement between her and private respondents, thus
A2010 - 64 - Disini
seeking reinstatement. NLRC reversed the decision upon appeal
by respondents. Her MFR denied, petitioner filed a petition for
review with the CA which again reversed the decision but still
denying reinstatement due to strained relations.
ISSUE
WON the CA erred in its factual finding of strained relations
without citing specific evidence and denying reinstatement thus
contradicting Article 279
HELD
YES
- Article 279 and Sec. 2 of the Omnibus Rules Implementing the
Labor Code both provide that a regular employee may not be
terminated without just cause. Article 279 and Sec. 3 of the
Omnibus further that an employee unjustly dismissed is entitled
to reinstatement. However, it has been held that where
reinstatement would only exacerbate tension and strained
relations between the parties by reason of irreconcilable
differences, especially where the employee held a managerial
or key position, it would be more prudent to order payment of
separation pay instead of reinstatement.
- Some employers have abused the doctrine of “strained
relations” to defeat their employees security of tenure. To
protect the latter, the doctrine must be strictly applied and
cannot be given an overarching interpretation. Since almost
every labor dispute results in some strain, a liberal
interpretation of the doctrine would mean an unjustly dismissed
employee could never be reinstated.
- The existence of strained relations is a factual finding and
should be initially raised, argued and proven before the Labor
Arbiter. In the instant case, the defense was not raised by
respondents before the Labor Arbiter and was not subject of the
evidence raised by either party. There is thus no evidentiary
support to the parties’ strained relations and NLRC’s ruling on
the alleged antagonism between them was mere guesswork.
There is no hard evidence to prove that the parties’ relationship
has reached the point where it is best to sever their
employment relationship.
Disposition the assailed Decision of the CA is AFFIRMED, with
the MODIFICATION that petitioner is entitled to REINSTATEMENT
IMPLEMENTATION – OPTIONS AND
RATIONALE
OPTIONS AND RATIONALE
JARDINE DAVIES V NLRC (SALUTIN)
225 SCRA 757
VITUG; August 31, 1983
NATURE
Petition for review on certiorari resolution of NLRC (declaring
Salutin not having abandoned his work)
FACTS
- Salutin was employed by Jardine Davies as a demonstrator/
agronomist to provide services WRT to the promotion and use
of JD’s pesticides and other products.
- This case involves 2 special civil actions for certiorari (instant
case is the latter one). The issue began when Salutin filed a
complaint fro illegal dismissal, which the LA ruled in his favor,
ordering JD to reinstate him and pay backwages. JD appealed to
the NLRC, and reinstated Salutin “on payroll only”, in
compliance with the write of execution issued by the LA. Appeal
to NLRC was dismissed.
Labor Law 1 A2010 - 65 - Disini
- JD then filed with the SC the 1st petition for certiorari, assailing FRANCISCO; October 16, 1997
the NLRC denial of its appeal. This was dismissed for failure to
comply with the SC Circular on forum shopping.
FACTS
However, while the appeal to the NLRC was still pending, and
- Lourdes A. de Jesus is Pioneer’s reviser/trimmer since 1980
shortly after the reinstatement of Salutin “on payroll only”, JD
and as such she based her assigned work on a paper note
directed Salutin to report for work to their Bacolod Branch
posted by petitioners. The posted paper which contains the
Manager. He in fact reported to work, but did not stay long, and
corresponding price for the work to be accomplished by a
was reported never to have returned to work. JD stopped
worker is identified by its P.O. Number. On August 15, 1992, de
further payment of wages.
Jesus worked on P.O. No. 3853 by trimming the cloths' ribs. She
- JD then filed with the NLRC a “Manifestation and Motion”,
thereafter submitted tickets corresponding to the work done to
stating that Salutin should be considered as having abandoned
her supervisor. Three days later, de Jesus received from
his work considering his continuous absence of more than 3
petitioners' personnel manager a memorandum requiring her to
weeks. JD also contended that Salutin has been gainfully
explain why no disciplinary action should be taken against her
employed in another company already. Salutin opposed motion,
for dishonesty and tampering of official records and documents
claiming that he was forced to leave because he was then
with the intention of cheating as P.O. No. 3853 allegedly
suffering from a serious ailment (peptic ulcer), and presented a
required no trimming. The memorandum also placed her under
medical certificate to support his claim. He in turn filed his own
preventive suspension for thirty days starting from August 19,
motion (that JD be ordered to release his withheld salary), which
1992, In her handwritten explanation, de Jesus maintained that
the NLRC granted. From this decision the instant petition for
she merely committed a mistake in trimming P.O. No. 3853 as it
certiorari was filed.
has the same style and design as P.O. No. 3824 which has an
attached price list for trimming the ribs and admitted that she
ISSUE
may have been negligent in presuming that the same work was
WON Salutin should be considered as having abandoned his
to be done with P.O. No. 3853, but not for dishonesty or
work when he failed to report for work pending JD’s appeal,
tampering. Petitioners' personnel department, nonetheless,
considering that at the time he was on reinstatement on payroll
terminated her from employment and sent her a notice of
termination dated September 18, 1992.
HELD
- De Jesus filed a complaint for illegal dismissal against
NO
petitioners. The Labor Arbiter who heard the case noted that de
Ratio For abandonment to constitute a valid cause for
Jesus was amply accorded procedural due process in her
termination of employment there must be a deliberate
termination from service. Nevertheless, after observing that de
unjustified refusal of the employee to resume his employment.
Jesus made some further trimming on P.O. No. 3853 and that
Reasoning
her dismissal was not Justified, the Labor Arbiter held
- When JD filed its first petition for certiorari, it also raised, as an
petitioners guilty of illegal dismissal and ordered her
added argument on the alleged abandonment of work by
reinstatement without loss of seniority rights and with full
Salutin, the fact that he was gainfully employed elsewhere.
backwages from the time of her suspension.
Considering that this matter was thus already taken up by JD in
- Petitioners appealed to the public respondent National Labor
its first petition for certiorari, which this Court dismissed with
Relations Commission (NLRC). The NLRC declared that the
finality, JD should really now be barred from invoking anew that
status quo between them Should be maintained and affirmed
issue in this present (second) petition.
the Labor Arbiter's order of reinstatement, but without
- JD’s basis for the declaration of abandonment of work is the
backwages.
unauthorized absences of Salutin.
- The NLRC further "directed petitioner to pay de Jesus her back
- For abandonment to constitute a valid cause for termination of
salaries from the date she filed her motion for execution on
employment, there must be a deliberate unjustified refusal of
September 21, 1993 up to the date of the promulgation of [the]
the employee to resume his employment. This refusal must be
decision."
clearly shown. Mere absence is not sufficient; it must be
- Petitioners filed their motion for reconsideration which the
accompanied by overt acts pointing to the fact that the
NLRC denied, hence this petition anchored substantially on the
employee does not want to work anymore.
alleged NLRC's error in holding that de Jesus is entitled to
- Abandonment of position is a matter of intention expressed in
reinstatement and back salaries.
dearly certain and unequivocal acts. In this instance, however,
- Petitioners' theory is that an order for reinstatement is not
uncontroverted facts show just exactly the opposite. Hence,
self-executory and that there must be a writ of execution which
Salutin did report, as directed, on 24 September 1991, but that
may be issued by the NLRC or by the Labor Arbiter motu proprio
he could not stay long because he was ailing at that time; he,
or on motion of an interested party. And that even if a writ of
although perhaps belatedly made, did seek medical
execution was issued, their timely appeal coupled by the
consultation for "peptic ulcer”; and later on, he did, in fact,
posting of appropriate supersedes a bond, effectively
manifest his desire to assume his work with JD.
forestalled and stayed execution of the reinstatement order of
- The order of immediate reinstatement pending appeal, in
the Labor Arbiter.
cases of illegal dismissal is an ancillary relief under R.A. 67157
granted to a dismissed employee to cushion him and his family
ISSUE
against the impact of economic dislocation or abrupt loss of
WON an order for reinstatement needs a writ of execution
earnings. If the employee chooses not to report for work
pending resolution of the case on appeal, he foregoes such a
HELD
temporary relief and is not paid of his salary.
NO. An award or order for reinstatement is selfexecutory.
** underlined portion really obiter, but most relevant to our
- Article 223 of the Labor Code, as amended by R.A. No. 67 15
topic.
which took effect on March 2 1, 1989, pertinently provides:
Disposition Petition dismissed. NLRC resolutions AFFIRMED.
223. Appeal. - Decisions, awards. or orders of the Labor
Arbiter are final and executory unless appealed to the
PIONEER TEXTURIZING CORP V NLRC (PTWU & DE Commission by any or both parties within ten (10) calendar
JESUS) days from receipt of such decisions, awards, or orders. Such
appeal maybe entertained only on any of' the following
280 SCRA 806
grounds:
"In any event, the decision of' the Labor Arbiter reinstating a
7
No mention as to what this RA does, but it amends certain articles of the LC to
dismissed or separated employee insofar as the
“extend protection to labor, strengthen constitutional rights of workers, foster reinstatement aspect v. concerned. shall Immediately be
inductrial peace and harmony, xxx and reorganize the NLRC.”
Labor Law 1
executory, even pending appeal. The employee shall either
he admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or at
the option of' the employer, merely reinstated in the payroll.
The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
- In Zamboanga City Water District v. Buat, the Court
construed Article 223 to mean exactly what it says. We said:
"Under the said provision of law, the decision of the Labor
Arbiter reinstating a dismissed or separated employee insofar
as the reinstatement aspect is concerned, shall be
immediately executory, even pending appeal. The employer
shall reinstate the employee concerned either by: (a) actually
admitting him back to work under the same terms and
conditions prevailing prior to his dismissal or separation; or
(b) at the option of the employer, merely reinstating him in
the payroll. Immediate reinstatement is mandated and is not
stayed by the fact that the employer has appealed, or has
posted a cash or surety bond pending appeal."
- We note that prior to the enactment of R.A. No. 67 15, Article
223 24 of the Labor Code contains no provision dealing with the
reinstatement of' an illegally dismissed employee. The
amendment introduced by R.A. No. 67 15 is an innovation and a
far departure from the old law indicating thereby the
legislature's unequivocal intent to insert a new rule that will
govern the reinstatement aspect of a decision or resolution in
any given labor dispute, In fact, the law as now worded employs
the phrase "shall immediately be executory" without
qualification emphasizing the need for prompt compliance. As a
rule, "shall" in a statute commonly denotes an imperative
obligation and is inconsistent with the idea of discretion and
that the presumption is that the word "shall," when used in a
statute, is mandatory. An appeal or posting of bond, by plain
mandate of the law, could not even forestall nor stay the
executory nature of an order of reinstatement. The law,
moreover, is unambiguous and clear, Thus, it must be applied
according to its plain and obvious meaning, according to its
express terms.
- And in conformity with the executory nature of the
reinstatement order, Rule V, Section 16 (3) of the New Rules
of Procedure of the NLRC strictly requires the Labor Arbiter to
direct the employer to immediately reinstate the dismissed
employee.
- Thus:"In case the decision includes an order of' reinstatement
the Labor Arbiter shall direct the employer to immediately
reinstate the dismissed or separated employee even pending
appeal. The order of reinstatement shall indicate that the
employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated
in the payroll.
- A closer examination, however, shows that the necessity for a
writ of execution under Article 224 applies only to final and
executory decisions which are not within the coverage of Article
223.
- Article 224 states that the need for a writ of execution applies
only within five (5)years from the date a decision, an order or
award becomes final and executory. It can not relate to an
award or order of reinstatement still to be appealed or pending
appeal which Article 223 contemplates. The provision of Article
223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of
a bond by the employer shall not stay the execution for
reinstatement.
- The legislative intent is quite obvious, i.e., to make an award
of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object
and intent of Article 223, i. e., the immediate execution of a
reinstatement order. The reason is simple. An application for a
writ of execution and its issuance Could be delayed for
numerous reasons. A mere continuance or postponement of a
scheduled hearing, for instance, or an inaction on the part of
A2010 - 66 - Disini
the Labor Arbiter or the NLRC could easily delay the issuance of
the writ thereby setting at naught the strict mandate and noble
put-pose envisioned by Article 223. In other words, if the
requirements of Article 224 were to govern, as we so declared
in Maranaw, then the executory nature of a reinstatement order
or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual.
INTERNATIONAL CONTAINER SERVICES V NLRC
(TANPEINGCO)
300 SCRA 335
BELLOSILLO; December 21, 1998
NATURE
Special civil action for certiorari for the modification of the
decision of the NLRC deleting therefrom the portion which
orders to pay the private respondent Tanpiengco backwages
despite valid dismissal.
FACTS
- Petitioner ICTSI is a corporation engaged in stevedoring,
operating the Manila International Container Terminal (MICT). It
employed private respondent Tanpiengco as a CFS Priority
pursuant to a CBA with private respondent's labor union, the
Associated Ports Checkers Services and Workers Union
(APCSWU). Tanpiengco has since then become a regular
employee assigned either to a shipping line or bodega to strip
and examine cargoes from abroad with usual working schedule
from 8:00 a.m. to 5:00 p.m. although in actual practice cleaning
time would start at 4:30 p.m.
- On 7 March 1990 Tanpiengco was assigned at Bodega I. When
it was time for him to clean himself he took his T-shirt which
was hanging from a post, tucked it at his waist and proceeded
to the washroom. He was accosted by a security guard
allegedly for behaving suspiciously. Tanpiengco was haled to
the comfort room and frisked but nothing of value was found in
his person. Nonetheless he was taken to the security office for
further questioning; he was accused of taking a T-shirt marked
"Gesim Corp." from one of the balikbayan boxes inside the
container yard.
- Tanpiengco was referred to petitioner's personnel department
for investigation. According to petitioner, he admitted to the
investigating officer that he took the "Gesim Corp." T-shirt
valued at P100.00, but Tanpiengco insisted on his innocence
claiming that he was coerced at knifepoint into admitting the
theft. After a brief suspension, Tanpiengco was dismissed for
pilferage which petitioner considered as breach of trust,
dishonesty and theft of property.
- Tanpiengco sued the stevedoring firm for illegal dismissal,
reinstatement and backwages. The Labor Arbiter found the
dismissal to be totally unjustified as neither theft nor pilferage
was committed by Tanpiengco. Accordingly, petitioner was
ordered to reinstate Tanpiengco with full back wages with
temporary adjustments as the need would arise until his actual
reinstatement.
- On appeal, the NLRC reversed the decision of the Labor Arbiter
and dismissed the complaint of Tanpiengco, in effect holding
that his termination was legal, but ordered petitioner to pay him
his wages from (date of filing of appeal with the NLRC) up to
(promulgation of NLRC decision) pursuant to Art. 223 of the
Labor Code. Both parties moved for reconsideration but were
denied.
ISSUE
WON NLRC committed grave abuse of discretion when awarding
backwages in spite of valid dismissal
HELD
NO
- Art. 224 states that the need for a writ of execution applies
only within (5) years from the date a decision, an order or
award becomes final and executory. It cannot relate to an
Labor Law 1
award or order of reinstatement still to be appealed or pending
appeal which Art. 223 contemplates. The provision is clear that
an award for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement. The legislative
intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for an issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of
Art. 223, i.e., the immediate execution of a reinstatement order.
An application for a writ of execution and its issuance could be
delayed for numerous reasons. In other words, if the
requirements of Art. 224 were to govern, then the executory
nature of a reinstatement order or order contemplated by Art.
223 will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have ordained
a valid and sensible law, one which operates no further than
may be necessary to achieve a specific purpose x x x x In
introducing a new rule on the reinstatement aspect of a labor
decision under R. A. No. 6715, Congress should not be
considered to be indulging in mere semantic exercise. On
appeal, however, the appellate tribunal concerned may enjoin
or suspend the reinstatement order in the exercise of its sound
discretion.
- Furthermore, the rule is that all doubts in the interpretation
and implementation of labor laws should be resolved in favor of
labor. In ruling that an order or award for reinstatement does
not require a writ of execution the Court is simply adhering and
giving meaning to this rule. Henceforth, we rule that an award
or order for reinstatement is self-executory. After receipt of the
decision or resolution ordering the employee's reinstatement,
the employer has the right to choose whether to re-admit the
employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in
the payroll. In either instance, the employer has to inform the
employee of his choice. The notification is based on practical
considerations for without notice, the employee has no way of
knowing if he has to report for work or not.
- Thus, in the light of the Pioneer ruling, we hold that the NLRC
did not commit grave abuse of discretion in ordering petitioner
to pay Tanpiengco his wages from 25 January 1991 when he
appealed to the NLRC, up to 23 September 1993 when the
NLRC decision finding his dismissal valid was promulgated.
That portion of the decision, which is the sole issue in this
petition, should stand. Under Art. 223 as presently construed,
the reinstatement aspect of the Labor Arbiter's decision, albeit
under appeal, was immediately enforceable as a consequence
of which, petitioner, as the employer, was duty-bound to choose
forthwith whether to re-admit Tanpiengco or to reinstate him in
the payroll and to inform Tanpiengco of its choice to enable the
latter to act accordingly. Failing to exercise the options in the
alternative, petitioner must pay the salary of Tanpiengco which
automatically accrued from notice of the Labor Arbiter's order
of reinstatement until its ultimate reversal by the NLRC.
- In the instant case, the NLRC failed to act on Tanpiengco's
motion for the issuance of a writ to execute the Labor Arbiter's
reinstatement order. It did not even mention the fact of its filing
in its assailed Decision. The Commission's inaction is a serious
oversight for which it should be admonished. While it is
incumbent upon the party to take an active role in his case and
not adopt a wait-and-see attitude, the adjudicating body has
the corresponding obligation to act promptly on all incidents
brought before it.
Disposition the instant petition is DENIED. The Decision of
the NLRC directing petitioner to pay private respondent Gabriel
Tanpiengco his wages from 25 January 1991 to 23 September
1993 is SUSTAINED.
KIAMCO V NLRC
[PAGE 85]
A2010 - 67 - Disini
14.09 BACKWAGES
DEFINITION
EQUITABLE BANKING CORP V SADAC
[PAGE 149]
ST. THERESA’S SCHOOL OF NOVALICHES
FOUNDATION V NLRC (ESTHER REYES)
289 SCRA 110
PURISIMA; April 15, 1998
NATURE
Petition to modify the Resolution issued by the NLRC
FACTS
- Adoracion Roxas is the president of St. Theresa’s School of
Novaliches Foundation. She hired Esther Reyes on a contract
basis, for the period from June 1, 1991- March 31, 1992. But
she commenced work on May 2, 1991, during which period of
employment, she became ill. She went on leave (Feb. 17-21 NS
24-28) which were approved y Roxas. She went back to work
on March 2, 1992 but only stayed from 6:48-9:38am and never
returned.
- St. Theresa claims that Reyes abandoned her work, while
Reyes maintains that she was replaced by Annie Roxas,
daughter of Adoracion Roxas. She tried to contact her
employer but the latter could not be found within the school
premises. St. Theresa then sent her a mail, telling her that her
contract will not be renewed anymore. But a few weeks before
this, Reyes has filed a case against St. Theresa’s for, unfair
labor practice based on harassment, illegal dismissal, 13th
month pay, allowances, removal of desk and chair form place of
work, and refusal to communicate, moral and exemplary
damages. The Labor arbiter ruled in favour of Reyes, ordering
St. Theresa’s to reinstate her and to pay for full backwages
from the time of dismissal to her actual reinstatement in the
amount of P76,701.00. NLRC reversed the decision, declaring
the separation of Esther Reyes from service legal and valid.
However, it directed to pay backwages from Nov. 12, 1993 up
to the date of the resolution. St. Theresa’s now questions the
award of backwages for Reyes.
ISSUE
WON NLRC erred in awarding backwages to Reyes in the light of
the finding that her dismissal was valid
HELD
NO
- The term “backwages” has been defined as that for earnings
lost by a worker due to his illegal dismissal. Backwages are
generally granted on grounds of equity. Payment thereof is a
form of relief that restores the income lost by reason of such
unlawful dismissal. It is not private compensation or damages,
but is awarded in furtherance and effectuation of the public
objectives 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 dismissing an employee, either due
to the former’s unlawful act or bad faith.
- Jurisprudence is filled to the brim with cases wherein
backwages were awarded to an employee illegally dismissed.
But where, as in this case of a pitiful employee rendered
hapless by her lawyer’s inaction or ignorance, the dismissal has
been adjudged valid and lawful, the challenged award of
backwages is decidedly improper and contrary to law and
jurisprudence.
Disposition Petition is GRANTED; the Decision of the
respondent NLRC rendered on November 29, 1995 in NLRC NCR
is hereby MODIFIED by deleting therefrom the award of
backwages in question.
Labor Law 1
GENERAL BAPTIST BIBLE COLLEGE V NLRC
[PAGE 298]
VIERNES V NLRC
[PAGE 94]
NATURE-PURPOSE
CLAUDIO V CA (NATIVIDAD)
423 SCRA 122
CALLEJO; February 16, 2004
NATURE
Petition for review on certiorari under Rule 45 of the Rules of
Court
FACTS
- Natividad worked with petitioner Tomas Claudio Memorial
College (TCMC) in Morong, Rizal. In time, he was promoted as
“Liason Officer” of the school with the Department of Education,
Culture and Sports (DECS) and with the Commission on Higher
Education (CHED) with the rank of Assistant Registrar.
- Natividad was arrested by the Morong police authorities,
without any warrant therefore, for violation of the Dangerous
Drugs Act (Republic Act NO. 6425). A criminal complaint was
later filed against him. A preliminary investigation was
conducted by the Municipal Court of Morong, Rizal which found
probable cause to hold him for trial. The court, on the said
date, issued a warrant for the private respondent’s arrest. The
records were elevated to the Office of the Provincial Prosecutor
of Rizal.
- TCMC sent a Memorandum to Natividad informing him
that his employment was already terminated. He was
thenceforth barred from entering the school.
- Natividad posted a bail bond in Criminal Case No. 5137
and was released from his detention cell. He did not,
however, file any complaint against the petitioner with the
NLRC on account of his dismissal.
- State Prosecutor issued a Resolution dismissing the
criminal complaint filed against the Natividad for lack of
merit.
- Natividad was arrested anew by police authorities. The
Morong Chief of Police filed a criminal complaint against him for
violation of Section 27, Article III of Rep. Act No. 6425, as
amended. An Information therefore was filed with the Regional
Trial Court of Morong. On said date, Natividad posted a bail
bond and was released from detention.
- Natividad filed a complaint with the NLRC against the
petitioner for illegal dismissal.
ISSUE
WON CA committed a grave abuse of discretion amounting to
excess or lack of jurisdiction when it modified the decision of
the NLRC and ordered the petitioner to pay backwages to the
private respondent
HELD
NO
- The normal consequences of a finding that an employee has
been illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of
seniority rights and secondly, the payment of backwages
corresponding to the period from his illegal dismissal up to
actual reinstatement. The statutory intent on this matter is
clearly discernible. Reinstatement restores the employee who
was unjustly dismissed to the position from which he was
removed, that is, to his status quo ante dismissal, while the
A2010 - 68 - Disini
grant of backwages allows the same employee to recover from
the employer that which he had lost by way of wages as a result
of his dismissal. These twin remedies-reinstatement and
payment of backwages – make the dismissed employee whole
who can then look forward to continued employment. Thus do
these two remedies give meaning and substance to the
constitutional right of labor to security of tenure. The two forms
of relief are distinct and separate, one from the other. Though
the grant of reinstatement commonly carries with it an award of
backwages, the inappropriateness or non-availability of one
does not carry with it the inappropriateness or non-availability
of the other. . . .
- The payment of backwages is generally granted on the ground
of equity. It is a form of relief that restores the income that was
lost by reason of the unlawful dismissal; the grant thereof is
intended to restore the earnings that would have accrued to the
dismissed employee during the period of dismissal until it is
determined that the termination of employment is for a just
cause. It is not private compensation or damages but is
awarded in furtherance and effectuation 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 dismissing an employee either due to the
former’s unlawful act or bad faith.
- The award of backwages is not conditioned on the employee’s
ability or inability to, in the interim, earn any income. While it
may be true that on June 11, 1996, Natividad was detained in
Criminal Case, the State Prosecutor found no probable cause for
the detention of him and resolved to dismiss the case.
Natividad has not yet been convicted by final judgment.
Indeed, he is presumed innocent until his guilt is proved beyond
reasonable doubt.
Disposition Petition is DISMISSED.
EFFECT FAILURE TO CLAIM
DELA CRUZ V NLRC (LO)
290 SCRA 1
DAVIDE JR; November 20, 1998
NATURE
Special Civil Action.Certiorari
FACTS
- Petitioner started working for Emmanuel Lo as a crew hand in
the latter’s fishing boat. He was over several years promoted to
be the Patron of the boat until he was dismissed. From the case,
it was shown that respondent was the one who hired, paid
salary to, and eventually fired dela Cruz.
- Respondent claims that he was in joint venture with the
petitioner and hence there was no employer-employee
relationship between them. As pointed out by the Labor Arbiter,
however, Lo exercised the control in the activities and that
therefore there was in fact an employer-employee relationship.
- The Labor arbiter found the dismissal not to be justified and
ordered Lo to pay separation pay bu not back wages as the
same, he opines ws not prayed for. Petitioner was however
found to be a managerial employee and hence was hence
excluded from the coverage of the law as regards conditions of
employment.
- Both parties appealed the decision.
ISSUE
WON NLRC committed rave abuse of discretion amounting to
lack or excess of jurisdiction in dismissing petitioner’s claim for
separation pay, back wages, allowances, and damages
HELD
YES
- Article 279 of the Labor Code mandates that petitioner who
was unjustly dismissed from work is entitled to reinstatement
without loss of seniority rights and other privileges and to full
Labor Law 1
back pay, inclusive of allowances, and to other benefits or their
monetary equivalent computed from the time compensation
was withheld up to time of actual reinstatement. The grant of
back wages allows the unjustly and illegally dismissed
employee to recover from the employer that which the former
lost by way of wages as a result of his dismissal from
employment.
Reasoning
- Apparently, the form used in filing the case did not include a
box for back wages and hence the petitioner had to particular
item to tick off. The court ruled that award of back wages
resulting from the illegal dismissal of an employee is a
substantial right. Thus, the failure to claim back wages in a
complaint is a mere procedural lapse which cannot defeat a
right granted under substantive law.
Disposition Petition granted with modification as to back
wages.
EFFECT FAILURE TO ORDER
AURORA LAND PROJECTS CORP V NLRC (DAGUL)
266 SCRA 48
HERMOSISIMA; January 2, 1997
NATURE
petition for certiorari for reversal of NLRC Resolution dated
March 16, 1994 affirming the modification the Labor Arbiter
decision, dated May 25, 1992, finding petitioners liable to pay
private respondent the total amount P195, 624.00 as separation
pay and attorney's fees.
FACTS
- Private respondent Honorio Dagui was hired by Doña Aurora
Suntay Tanjangco in 1953 to take charge of the maintenance
and repair of the Tanjangco apartments and residential
building. He was to perform carpentry, plumbing electrical and
masonry work. Upon the death of Doña Aurora Tan\jangco in
1982, her daughter, petitioner Teresita Tanjangco Quazon, took
over the administration of all Tanjangco properties.
- June 8, 1991 - Dagui received the shock of his life Mrs. Quazon
suddenly told him: "Wala nang trabaho mula ngayon." on the
alleged ground that his work was unsatisfactory.
- August 29, 1991,- Dagui, who was then already sixty-two (62)
years old, filed a complainant for illegal dismissal with the Labor
Arbiter.
- May 25, 1992, - Labor Arbiter Nora ordered Aurora/Teresita
Tanjanco Quazon to pay P195,624.00 as separation pay and
10% attorneys fees
- NLRC > affirmed, with modification (P88, 920.00 instead of
P177, 840.00), the Labor arbiter’s decision
ISSUES
1. WON Honorio Dagui was an employee of petitioner
2. If he were, WON he was illegally dismissed
HELD
1. YES
- Aurora insisted that Daqui had never been their employee.
Since the establishment of Aurora Plaza, Dagui served therein
as a job contractor. Dagui had control and supervision of
whatever task he would perform. On occasion, Dagui was hired
only as a 'tubero" or plumber as the need arises in order to
unclog sewerage pipe. Every time his services were needed, he
was paid accordingly. It was understood that his job was limited
to the specific undertaking of unclogging the pipes. BUT SC IS
NOT PERSUADED
- Section 8, Rule VIII, Book III of the Implementing Rules
Regulations of the Labor Code provides in part:
"There is job contracting permissible under the Code if the
following conditions are met:
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(2) the contractor has substantial capital or investment in the
form of tools, equipment machinries work premises, and
other materials which are necessary in the condcut of his
business."
- Honorio Dagui erns a measly sum of P180.00 a day (latest
salary).7 Ostensibly, and no stretch of the imagination can
Dagui qualify as a job contractor. No proof was adduced by the
petitioners to show that Dagui was merely a job contractor, and
it is absurd to expect that private respondent, with such humble
resources, would have substantial capital or investment in the
form of tools, equipment, and machineries, with which to
conduct the business of supplying Aurora Plaza with manpower
and services for the exclusive purpose of maintaining the
apartment houses owned by the petitioners herein.
- Dagui was not compensated in terms of profits for his labor or
service like an independent contactor. Rather, he was paid on a
daily wage basis at the rate of P180.00. Employees are those
who are compensated for their labor or services by wage rather
than by profits.
- Finally, the records unmistakably show that the most
important requisites of control is likewise extant in this case. It
should be bone in mind that the power of control referees
merely to the existence of the power and not to the actual
exercise thereof. It is not essential for the employer to actually
supervise the performance of duties of the employee. it is
enough that the former has a right wield the power.
- Dagui shoulld be considered a regular employee by the mere
fact he rendered service for the Tanjancos for more one year,
that is, beginning 1953 until 1982, under Doña Aurora; and then
from 1982 up to June 8, 1991 under the petitioners, for a total
of twenty-nine (29) and nine (9) years respectively.
2. YES
Ratio Jurisprudence abound as to the twin requirements of
due process, substantive and procedural, must be complied
with, before a valid dismissal exists. Without which the
dismissal become void.
Reasoning
- The twin requirements of notice and hearing constitute the
essential elements of due process. This simply that the
employer shall afford the worker ample opportunity to be heard
and to defend himself with the assistance of his representative,
if he so desires.
- Pepsi Cola Bottling Co. v. NLRC
"The law requires that the employer must furnish the worker
sought to be dismissed with two written notice before
termination of employee can be legally effected: (1) notice
which apprise the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the
subsequent notice which informs the employee of the
employers decision to dismiss him (section 13, BP 130;
Sections 2-6, Rule XIV, Book V Rules and Regulations
Implementing the Labor code as amended). failure to comply
with the requirements taints the dismissal with illegality. This
procedure is mandatory, in the absence of which, any
judgment by judgment by management is void and
inexistent.“
- These mandatory requirements were undeniably absent.
Quazon dismissed Dagui on June 8, 1991, without giving him
any written notice informing the worker herein of the cause for
his termination. Neither was there any hearing conducted i
order to give Dagui the opportunity to be heard and defend
himself he was simply told: "Wala ka nang trabaho mula
ngayon" allegedly because pf poor workmanship on a previous
job. The undignified manner by which private respondent's
services were terminated smacks of absolute denial of the
employee's right to due process and betrays petitioner
Quazon's utter lack of respect for labor. Such an attitude indeed
deserves condemnation.
- It must be remembered that backwages and reinstatement are
two reliefs should be given to an illegally dismissed employee.
They are separate and distinct from each other. In the event
that reinstatement is no longer possible, as in this case,
separation pay is awarded to the employee. The award
separation pay is lieu of reinstatement and not of backwages. In
Labor Law 1
other words, an illegally dismissed employee is entitled to (1)
either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and (2) backwages. Payment
of backwages is specifically designed to restore an employee's
that was lost because of his unjust dismissal. On the other
hand, payment of separation pay is intended to provide the
employee money during the period in which he will be looking
for another employment
Disposition instant petition is partly GRANTED and the
Resolution of NLRC dated march 16, 1994 is hereby MODIFIED
in that the award of separation pay against the petitioners shall
be reckoned from the date Dagui’s was re-employment by the
petitioners in 1982, until June 8, 1991. In additional to
separation pay, full backwages are likewise awarded to Dagui,
inclusive of allowances, and other benefits of their monetary
equivalent
PERIOD – COMPUTATION
ITOGON-SUYOC MINES INC V
SAÑGILOITOGON WORKERS’ UNION
24 SCRA 873
SANCHEZ; August 30, 1968
NATURE
petition for review by certiorari decision of CIR (directing the
reinstatement of 15 individual respondents “to their former
positions with backwages from time of dismissal to actual
reinstatement”)
FACTS
- Itogon-Suyoc Mines, Inc., through its superintendent Fertig,
had been dismissing from its employ members of the Sañgilo-
Itogon Worker’s Union. On May 28, 1958, sensing that its
members were being eased out of employment one by one,
Sañgilo called a strike, accompanied by picketing carried out at
or near petitioner's mine premises in Itogon. Work was
paralyzed.
- Cases were filed with the CIR for unfair labor practice, for the
arbitrary dismissal of employees allegedly because of affiliation
with the union and for testifying against the company in a
certification case. CIR then ruled that the 15 employees who
pushed through with the case be reinstated, with full
backwages. After denial of its MFR, the company appealed to
the SC.
ISSUE
How should the amount of total back wages be determined?
HELD
- The court restated the guidelines to be observed in
ascertainment of back wages, considering that 10 years had
passed since the terminations.
Ratio - First. To be deducted from the back wages accruing to
each of the laborers to be reinstated is the total amount of
earnings obtained by him from other employment(s) from the
date of dismissal to the date of reinstatement. Should the
laborer decide that it is preferable not to return to work, the
deduction should be made up to the time judgment becomes
final. And these, for the reason that employees should not be
permitted to enrich themselves at the expense of their
employer.
- Second. Likewise, in mitigation of the damages that the
dismissed respondents are entitled to, account should be taken
of whether in the exercise of due diligence respondents might
have obtained income from suitable remunerative employment.
We are prompted to give out this last reminder because it is
really unjust that a discharged employee should, with folded
arms, remain inactive in the expectation that a windfall would
come to him. A contrary view would breed idleness; it is
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conducive to lack of initiative on the part of a laborer. Both bear
the stamp of undesirability.
**note: the real issue in this case is really WON there was
unfair labor practice. The SC found that there was, and just
affirmed the judgment of the CIR. The topic of determination of
back wages was just obiter, with neither party raising such
issue. The court just wanted to say it.
Disposition Judgment AFFIRMED.
FEATI UNIVERSITY FACULTY CLUB V FEATI
UNIVERSITY
85 SCRA 395
TEEHANKEE; August 15, 1974
FACTS
- Jan 14 1963 – Pres of Faculty Club wrote a letter to the
president of the university informing her that the Faculty club
has been registered as a labor union
- Jan 22 1963 – Pres of Faculty Club in another letter to the
university president gave 26 demands regarding the
employment of members of the club and giving the president
10 days to act
- University President replied and asked for at least 30 days to
study their demands
- Counsel for the University demanded that that the faculty club
submit proof of their majority status and designation as
bargaining unit
- President of Faculty club denied university’s presidents
request for extension of time
- Feb 18 1963 – Feati club declared a strike for bec of unfair
labor practice due to the university’s refusal to recognize their
union and to bargain collectively
- President of the Philippines certified the dispute to the CIR
- Several cases were filed as a result of the dispute and the
orders of CIR were elevated to the SC in three cases.
- SC upheld all challenged orders and held among others that
1.CIR had jurisdiction over the parties and subject matter
2.SC recognized employee status of the Faculty club
members as ‘employees and declared RA 875 applicable to
them in their employment relations with their school’
3.SC repudiated all contentions of the university questioning
the legality of the industrial court’s return to work order
- In 1969 – 2nd case of Feati University v Feati University Faculty
Club
- Faculty club filed motions and petitions to execute and to
implement the decision as well as to hear the dispute on its
merits
- motion to execute the march 30 1963 return to work order
directing the university management to permit and effect the
return to work of the strikers plus the back salaries that accrued
- the university opposed
- the CIR issued a writ of execution for the enforcement of the
return to work order
- the CIR further ordered that the accrued backwages from july
12 1963 to the date of readmission be paid to the Faculty club
members
- CIR denied reconsideration. SC denied as well (twice).
- Nov 24 1969 – CIR made a complete turnabout and issued a
decision repudiationg and turning its back on its former decision
declaring the strike as illegal and that the members are
terminated. Holding that the university is not chargeable with
unfair labor practice. It sought to nullify the faculty member’s
finally adjudicated right to reinstatement and backwages
upheld by the SC in two judgments
- Thus the final case of certiorari
ISSUE
WON the Faculty Club members are entitled to reinstatement
and payment of backwages (and how will it be computed)
HELD
YES
- The strike was valid as the petitioners has a valid cause to go
on strike because of the unfair labor practice and discriminatory
Labor Law 1
acts aimed at aborting its union even without a notice of strike.
Thus the implementation of the return to work order with
accrued backwages should proceed without delay
- As to the amount of backwages:
Apply the ruling in Mercury Drug Co. V CIR
fixing the amount of backwages to a just and reasonable level
without qualification or deduction so as to avoid protracted
delay in the execution of the award due to extended hearings
and unavoidable delays and difficulties encountered in
determining the earnings of the laid off employees ordered to
be reinstated with backwages during the pendency of the case
for purposes of deducting the same from the gross backwages
awarded.
this formula relieves the employees from proving or
disproving their earnings during their lay off and the employees
from submitting counter proofs and obviates win evil s of
idleness on the part of the employee who would with folded
arms remain inactive in the that a windfall would come to him
and attrition and protracted delay in satisfying such award on
the part of the unscrupulous employers who have seized upon
the further proceedings which would practically render nugatory
such award and compel the employees to agree to
unconscionable settlements of backwages in order to satisfy
their dire needs.
- In this case-3 school years without qualification and deduction
MERCURY DRUG CO INC V CIR (DAYAO)
56 SCRA 694
MAKASIAR; April 30, 1974
NATURE
Petition for review on certiorari of a decision of CIR.
FACTS
- DAYAO was an assistant chief checker of MERCURY. After
criticizing their existing labor union for failing to secure
additional pay for overtime, and campaigning among his co-
employees to organize another union, MERCURY gave DAYAO a
termination pay after the latter signed a quitclaim.
- 2 years and 15 days from his separation, DAYAO filed a
complaint for unfair labor practice (ULP) against MERCURY. SC
held that the finding of fact of CIR that DAYAO was dismissed
because of his union activities and that, consequently,
MERCURY were guilty of ULP is amply substantiated by credible
evidence. SC also held that DAYAO’s complaint has been
seasonably filed. It explained that in the absence of specific
legal provision, the statute of limitations prescribed by the Civil
Code should apply. ART.1146 directs that the action upon an
injury to the rights of the plaintiff must be instituted within 4
years. All other actions whose periods are not fixed in the Civil
Code or in other laws must be brought within 5 years from the
time the right of action accrues (ART.1149). SC finally
concluded that, whether the ULP charge is based on an injury to
the rights of DAYAO or placed under the category of all other
actions for which no law prescribes the time limit for their
institution, the filing DAYAO of the ULP charge was well within
either the prescriptive period. The question remains on the
computation of DAYAO’s backwages.
ISSUE
How should the backwages to be awarded to DAYAO be
computed?
HELD
- As stated, the shortest prescriptive period for the filing of all
other actions for which the statute of limitations does not fix a
period, is four years. The period of delay in instituting this ULP
charge with claim for reinstatement and back wages, although
within the prescriptive period, should be deducted from the
liability of MERCURY to DAYAO for backwages. In order that the
employee, however, should be relieved from proving his income
during the period he was out of the service and the employer
from submitting counter-proofs, which may delay the execution
A2010 - 71 - Disini
of the decision, MERCURY is to pay DAYAO backwages
equivalent to 1 year, 11 months, and 15 days without further
disqualifications.8
Disposition Petition DISMISSED.
PINES CITY EDUCATIONAL CENTER V NLRC
(BENTREZ, PICART, ET AL)
227 SCRA 655
NOCON; November 10, 1993
NATURE
PETITION for certiorari to reverse a resolution of NLRC
FACTS
- Private respondents were all employed as teachers on
probationary basis by petitioner Pines City Educational Center
- With the exception of Bentrez who was hired as a grade school
teacher, the remaining private respondents were hired as
college instructors. All the private respondents, except Poland
Picart and Lucia Chan, signed contracts of employment with
petitioner for a fixed duration.
- due to the explanation of private respondents' contracts and
their poor performance as teacher they were notified of
petitioners' decision not to renew their contracts anymore.
- private respondents filed complaint for illegal dismissal before
the Labor Arbiter, alleging that their dismissals were without
cause and in violation of due process.
- Except for private respondent Leila Dominguez who worked
with petitioners for one semester, all the other private
respondents were employed for one to two years. They were
never informed in writing by petitioners regarding the standards
or criteria of evaluation so as to enable them to meet the
requirements for appointment as regular employees. They were
merely notified in writing by petitioners.
- Petitioners contended that private respondent separation from
employment, apart from their poor performance, was due to the
expiration of the periods stipulated in their respective contracts.
These stipulations were the laws that governed their
relationships, and there was nothing in said contracts which
was contrary to law, morals, good customs and public policy.
They argued further that they cannot be impelled to enter into
new contracts with private respondents.
- Labor Arbiter rendered judgment in favor of private
respondents, the dispositive portion of which reads:
“...BACKWAGES NOTE: Computation covers only the period
complainants were terminated up to January 31, 1990 or 10
months and does not include backwages from January 31, 1990
up to their actual reinstatement.
1)ROLAND PICART a) Latest salary per monthP2,136.00
b) Multiplied by the period covered (March 31, 1989 to January
31, 1990)x 10 months c) Equals backwages dueP21,360.00
2) LUCIA CHAN a) Latest salary per monthP1,600.00
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP16,000.00
3) LEILA DOMINGUEZ a) Latest salary per monthP1,648.24
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP16,482.40
4) RUPERTA RIBAYA a) Latest salary per monthP1,856.00
8
Mathematically speaking,
Prescribed period to file ULP complaint = 4 years 00 months 00 days
Less: Delay in filing DAYAO complaint = 2 years 00 months 15 days
Basis for DAYAO’s backwage claim = 1 year11 months 15 days
Note that the award is “without further disqualifications”. As Teehankee, J. explained
in his separate opinion, such phrase means “without having to determine and deduct
earnings from the general award of back wages from date of unlawful dismissal until
actual reinstatement heretofore customarily made in such ULP and reinstatement
cases, [which determination] led to long delays in the execution of the decision for
back wages. [By relieving] the employees from proving their earnings during their
lay-offs and the employer from submitting counter-proofs, [the formula in the
ponencia] obviate the twin evils of idleness… of the employees [who may remain
inactive during layoff in the expectation of a windfall backwages award] and… undue
delay in satisfying the award on the part of the employer[, the new formula] is… a
realistic, reasonable and mutually beneficial solution.”
Labor Law 1
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP18,560.00
5) CECILIA EMOCLING a) Latest salary per monthP1,648.00
b) Multiplied by period coveredx 10 months c) Equals
backwages dueP16,480.00
6) ROSE ANN BERMUDEZ a) Latest salary per monthP2,600.00
b) Multiplied by period coveredx 10 month c) Equals backwages
dueP26,000.00
7) DANGWA BENTREZ a) Latest salary per monthP1,700.00
Multiplied by period coveredx 10 months
c) Equals backwages dueP17,000.00
8) JANE BENTREZ a)Latest salary per monthP1,315.44
b)Multiplied by period coveredx 10 months c)Equals backwages
dueP13, 154.40
9) APOLLO RIBAYA a)Latest salary per monthP1,875.00
b)Multiplied by period coveredx 10 months c)Equals backwages
dueP18,750.00
10)VIRGINIA BOADO a)Latest salary per monthP1,648.24
b)Multiplied by period coveredx 10 months c)Equals backwages
dueP16,482.40...”
- NLRC affirmed the decision in toto
ISSUE
WON private respondents were lawfully terminated
HELD
We have to make a distinction:
1. YES
Ratio Insofar as the private respondent who knowingly and
voluntarily agreed upon fixed periods of employment are
concerned, their services were lawfully terminated by reason of
the expiration of the periods of their respective contracts.
These are Dangwa Bentrez, Apollo Ribaya,
- Sr., Ruperta Ribaya, Virginia Boado, Cecilia Emocling, Jose
Bentrez,
- Leila Dominguez and Rose Ann Bermudez. Thus, public
respondent committed grave abuse of discretion in affirming
the decision of the Labor Arbiter ordering their reinstatement
and payment of full backwages and other benefits and
privileges.
2. NO
Ratio With respect to private respondents Roland Picart and
Lucia Chan, both of whom did not sign any contract fixing the
periods of their employment nor to have knowingly and
voluntarily agreed upon fixed periods of employment,
petitioners had the burden of proving that the termination of
their services was legal. As probationary employees, they are
likewise protected by the security of tenure provision of the
Constitution. Consequently, they cannot be remooved from
their positions unless for cause.
- There is absolutely nothing in the record which will show that
the complainants were afforded even an iota of chance to
refute respondents' allegations that the complainants did not
meet the reasonable standards and criteria set by the school.
- Thus, the order for their reinstatement and payment of full
backwages and other benefits and privileges from the time they
were dismissed up to their actual reinstatement is proper.
- On Backwages However, in ascertaining the total amount of
backwages payable to them, we go back to the rule prior to the
Mercury Drug rule that the total amount derived from
employment elsewhere by the employee from the date of
dismissal up to the date of reinstatement, if any, should be
deducted therefrom. We restate the underlying reason that
employees should not be permitted to enrich themselves at the
expense of their employer. In addition, the law abhors double
compensation.
Disposition resolution of NLRC is MODIFIED. Private
respondents Roland Picart and Lucia Chan ordered reinstated
without loss of seniority rights and other privileges and then,
backwages paid in full inclusive of allowances, and to their
other benefits or their monetary equivalent subject to deduction
of income earned elsewhere during the period of dismissal, if
any, to be computed from the time they were dismissed up to
the time of their actual reinstatement.
A2010 - 72 - Disini
SEPARATE OPINION
PADILLA
- I concur in the Court's decision penned by Mr. Justice Nocon
except that I cannot see my way clear to allowing deductions
from the full backwages prescribed by law, given the language
and evident intention of RA 6715.
- Art. 279 of the Labor Code as amended by Rep. Act No. 6715
states: "...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
allowances, and to his other benefits or the monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement."
The amendment to Art. 279 of the Labor Code introduced by
Rep. Act No. 6715 inserted the qualification "full" to the word
"backwage". The intent of the law seems to be clear. The plain
words, of the statute provide that an employee who is unjustly
dismissed is entitled to FULL backwages from the time of his
dismissal to actual reinstatement. The law provides no
qualification nor does it state that income earned by the
employee during the period between his unjust dismissal and
reinstatement should be deducted from such backwages. When
the law does not provide, the Court should not improvise.
- It is further my view that the principle of unjust enrichment (if
no deduction is allowed from backwages) does not apply in this
case.
BUSTAMANTE V NLRC (EVERGREEN FARMS)
265 SCRA 1
PADILLA; March 15, 1996
NATURE
Petition for certiorari
FACTS
- Petitioners Bustamante, Bantayan, Sumunod and Lamaran
were employed as laborers, harvesters and sprayers in private
respondent company’s banana plantation in Davao del Norte.
They all signed contracts of employment for 6 months from
Jan.2, 1990 to July 2, 1990 but they had started working in Sept.
1989. They were previously hired to do the same work for
periods lasting a month or more, from 1985 to 1989. Before the
employment contracts expired on July 2, 1990, petitioners’
employments were terminated on the ground of poor
performance due to age, as none of them was allegedly below
40 years old.
- Petitioners then filed a complaint for illegal dismissal which
the Labor Arbiter decided in their favor. The judgment declared
the dismissal illegal, and ordered Evergreen Farms to reinstate
them immediately with 6 months backwages. Private
respondent company appealed to the NLRC but the appeal was
dismissed for lack of merit. A subsequent MFR filed by
respondent company was similarly disposed of with the
modification that the award for backwages was deleted, as
there was no bad faith on the part of Evergreen Farms.
- The removal of the award of backwages prompted petitioners
to file this case, alleging that public respondent NLRC gravely
abused its discretion.
ISSUE
WON petitioners are entitled to backwages
HELD
YES, because petitioners are regular employees.
Ratio Regular employees dismissed for no valid cause are
entitled to full backwages and other benefits from the time their
compensation was withheld from them up to the time of their
actual reinstatement.
Reasoning
Labor Law 1
- Petitioners were employed at various periods from 1985-1989
for the same work they were hired to perform. They were
engaged to perform activities which are necessary in the usual
business of the employer. The contract for probationary
employment was utilized by respondent company as a
chicanery to deny petitioners their status as regular employees
and to evade paying them the benefits attached to such status.
They were hired and re-hired in a span of from 2-4 years to do
the same type of work which conclusively shows the necessity
of petitioners’ services to the respondent.
- The act of hiring and re-hiring the petitioners over a period of
time without considering them as regular employees evidences
bad faith on the part of private respondent. The public
respondent made a finding to this effect when it stated that the
subsequent rehiring of petitioners on a probationary status
“clearly appears to be a convenient subterfuge on the part of
management to prevent complainants (petitioners) from
becoming regular employees.”
Disposition Resolution of NLRC is modified, the deletion of the
award for backwages is set aside. LA decision is AFFIRMED, with
modification that backwages shall be paid to petitioners from
the time of their illegal dismissal up to the date of their
reinstatement.
TORRES V NLRC (E&R SECURITY AGENCY)
330 SCRA 311
PARDO; April 12, 2000
NATURE
Petition for certiorari
FACTS
- Jan 5, 1989, E & R security agency hired Chona Torres as a
security guard.
- On Oct 27, 1989, during a routinary meeting of the security
guards of the agency assigned to the Philippine Aerospace
Development Corporation, the issue of granting a P25.00 pay
increase pursuant to RA 6727 was taken up and questions were
raised as to the date of implementation of the increase.
Petitioner Torres stood up and uttered aloud at the presiding
officer: "BAKIT ANG SASABIHIN NINYO SA OPISINA AT DITO AY
MAGKAIBA!" to which remark the presiding officer replied:
"WALA NAMAN PAGKAKAIBA, DI BA?". The presiding officer also
asked: "BAKIT AYAW MO DOON SA OPISINA?" Then petitioner
shouted: "WALA NA AKONG TIWALA SA INYO AT SA AGENCY
KASI SINUNGALING KAYO. EH, KUNG LALAKI LANG AKO, BAKA
KUNG ANO PA ANG NAGAWA KO SA INYO NGAYON!"
- On the same day, the agency sent Torres a letter saying
effective immediately, she is suspended from duty as Security
Guard for fifteen days for discourtesy, disloyalty and
insubordination while in the performance of duty.
- Torres filed with the Labor Arbiter a complaint for illegal
suspension and violation of R.A. 6727, and for having been
required to sign on a blank payroll.
- On Nov 10, 1989, Torres received a letter from the agency
informing her that she was re-assigned and required to report
at the respondent's Manila office for further instructions. On
Nov 27, the agency terminated her services for abandonment
when she failed to report for work in her new assignment.
- Torres filed with the Labor Arbiter an amended complaint
charging respondent with underpayment of wages under R.A.
No. 6640 and harassment.
- Labor Arbiter ordered agency to reinstate Torres to her former
position, pay her salary for Oct 1989, and salary differentials
under RA 6640 and RA 6727
Agency appealed to NLRC. The NLRC denied the appeal on the
ground of non-perfection due to lack of appeal bond and that
there was no reason to disturb the decision.
- The decision having become final, the Labor Arbiter issued a
writ of execution on the reinstatement aspect, but it was not
implemented because the monetary aspect of the decision
remained to be determined.
A2010 - 73 - Disini
- On Nov 8, 1991, Torres asked the Labor Arbiter to issue an
alias writ of execution based on the completed computation of
back wages of P104,396.00 worked out by NLRC's Research and
Information Unit.
- NLRC Sheriff issued a Notice of Garnishment which was served
the agency’s deposit account with PNB, in the amount of
P105,296.00 inclusive of the execution fee of P1,000.00.
- On Nov 27, 1991, Labor Arbiter directed PNB to release the
garnished amount and to make it payable to NLRC cashier for
the account of Torres pending ultimate release to her. PNB
issued a Manager's Check dated Dec 6, 1991.
- Meantime, on Dec 3, 1991, the agency filed with the Labor
Arbiter an Urgent Ex-Parte Motion to Quash the Alias Writ of
Execution on the ground that there has been a change in the
situation of the parties which makes the execution inequitable.
Respondent contended that Torres accepted employment from
another security agency without previously resigning from it.
- On Feb 2, 1992, Labor Arbiter issued an order for partial
execution directing the release of the uncontested salary
differential amounting to P15,523.48, to be deducted from the
amount of P105,396.00, and to withhold the balance, pending
resolution of the Motion to Quash the alias Writ of Execution.
- On March 19, 1992, petitioner filed with NLRC a petition for
mandamus and injunction to compel the Labor Arbiter to issue
an order directing the NLRC Cashier to release the entire
amount deposited with the latter to petitioner.
- On Aug 11, 1992, NLRC issued a resolution denying the
petition for mandamus and injunction and ordered Labor Arbiter
to immediately resolve respondent’s Urgent Motion to Quash
Writ of Execution.
- Petitioner contends that the release of the judgment award is
purely a ministerial duty of the Labor Arbiter.
ISSUE
WON NLRC committed grave abuse of discretion in ordering the
Labor Arbiter to resolve the motion to quash alias writ of
execution
HELD
YES
- Execution is the final stage of litigation, the end of the suit. It
can not be frustrated except for serious reasons demanded by
justice and equity. When a judgment becomes final and
executory, it is the ministerial duty of the court to issue a writ of
execution to enforce the judgment.
- A writ of execution may however be refused on equitable
grounds as when there was a change in the situation of the
parties that would make execution inequitable or when certain
circumstances, which transpired after judgment became final,
rendered execution of judgment unjust. The fact that the
decision has become final does not preclude a modification or
an alteration thereof because even with the finality of
judgment, when its execution becomes impossible or unjust, it
may be modified or altered to harmonize the same with justice
and the facts.
- The respondent agency's contention that there has been a
change in the situation of the parties making execution
inequitable because petitioner accepted employment from
another agency without resigning from it is patently without
merit. The rule now is that back wages awarded to an illegally
dismissed employee shall not be diminished or reduced by the
earnings derived by him elsewhere during the period of his
illegal dismissal.
- In this particular case, the decision is final and, in fact, the
amount of the salary differentials and back wages awarded to
Torres has been garnished from the account of respondent
agency with PNB with no opposition or resistance and it is the
ministerial duty of the Labor Arbiter to release the money to
petitioner.
Disposition Petition granted. Labor Arbiter directed to release
the money award to petitioner
Labor Law 1
KAY PRODUCTS INC V CA (KAY PRODUCTS
EMPLOYEES UNION, ABILA)
464 SCRA 544
CALLEJO; July 28, 1995
FACTS
- Abila, Morante, Regidor, Escuadro and del Valle were
employed by Kay Products Inc (KPI) as factory sewers. They
joined other employees in planning to form a union. When KPI
learned about the plan, it transferred the employees to an
employment agency with which it had a manpower contract,
the Gerrico Resources & Manpower Services, Inc. (GRMSI). KPI
promised that the employees would receive bigger and better
benefits as regular employees of GRMSI.
- KPI directed all employees concerned to sign resignation
letters preparatory to their employment with GRMSI. Thus, the
employees submitted handwritten letters of resignation, and KPI
took custody of their identification cards.
- The employees continued to report for work in the KPI but
received less wages/salaries. Then, KPI announced that GRMSI
had been dissolved and that there was a need for them to sign
separate contracts with RCVJ, another corporation with which
KPI had a manpower contract.
- This time, Abila, Morante, Regidor, Escuadro and Del Valle,
refused to sign any contract with RCVJ.
- Meanwhile, the employees of KPI were able to organize their
union, the Kay Products Employees Union.
- On Aug 25, 2000, 73 employees, together with the Kay
Products Employees Union-PTGWO, filed a Complaint with
Regional Arbitration Branch No. IV of the DOLE against KPI. The
employees claimed that the petitioners were guilty of unfair
labor practice (ULP), underpayment of salaries and service
incentive leave pay, and failure to classify them as regular
employees.
- On Sept 4, 2000, the employees were ordered to take a two-
week leave from work without pay. The employees complained.
When they tried to report for work after the two-week period,
they were refused entry and were told that they had ceased to
be KPI employees since they had resigned upon agreeing to be
employed by GRMSI.
- The employees and their union amended their complaint to
illegal dismissal. The complainants (respondents) alleged: 1)
that they were illegally dismissed; their dismissal was not
grounded on any just and authorized cause under the law, and
they were deprived of their right to due process; 2) that in
interfering with their right to self-organization by deceitfully
transferring them to an employment agency, KPI thereby
engaged in ULP; 3) that they were coerced and intimidated into
signing letters of resignation; 4) that they were entitled to
money claims (13th month pay, service incentive leave pay,
vacation and sick leave pay) from the time of their illegal
dismissal until their reinstatement.
- KPI: 1) employees voluntarily resigned from their work… that
aside from the typewritten resignation letter, the complainants
also wrote other letters in their own handwriting… that the
complainants voluntarily secured their clearances from KPI,
transferred to RCVJ, and never went back to work; 2) that it
never interfered with its workers’ right to self-organization or
any of their plans to form any union; 3) that the complainants
were not entitled to reinstatement, backwages, moral and
exemplary damages, and attorney’s fees.
ISSUES
1. WON the employees resigned voluntarily
2. WON they were illegally dismissed
3. WON they were entitled to backwages
HELD
1. NO
- In Molave Tours v. NLRC, resignation has been defined as “the
voluntary act of an employee who finds himself in a situation
where he believes that personal reasons cannot be sacrificed in
favor of the exigency of the service, then he has no other
A2010 - 74 - Disini
choice but to disassociate himself from his employment.” In the
context of Section II, Rule XIV, Book V of the Revised Rules
Implementing the Labor Code, resignation is a formal
pronouncement or relinquishment of an office. It must be made
with the deliberate animus or intention of relinquishing the
office accompanied by an act of relinquishment. In the same
case, it was also held that the voluntariness of a resignation is
negated by the filing of a complaint for illegal dismissal
- We are inclined to agree with the petitioners that they were
coerced, threatened or intimidated into signing blank sheets of
paper which materialized into resignation letters, the contents
of which were dictated by the Director and Personnel Manager
of the respondent company. For to us, it is inconceivable that a
worker who has already attained a regular status in his
employment would opt to be transferred to another
employment agency, there to start work anew – work that
would relegate him to a mere casual laborer or employee.
Obviously, petitioners were not given any other choice by
management, but to agree to their transfer to Gerrico
Resources, lest they lose their only means of livelihood.
Considering that petitioners are ordinary sewers of respondent
company, the fear of losing their jobs cannot but be a serious,
legitimate concern.
2. YES
- Undeniably, petitioners were regular employees at the time
they allegedly voluntarily resigned on July 14, 2000. As such
regular employees, the Labor Code grants petitioners security
of tenure, which essentially means that their employer can not
terminate their services except for just and authorized causes,
as provided for under the Labor Code. Viewed in this light,
private respondents’ act or action in transferring petitioners to
a manpower agency (Gerrico Resources then later on to RCVJ)
with the promise that they would receive the same benefits as
regular employees, puts in question private respondents’ real
motive. If anything, it gives currency to the belief that
petitioners had been illegally terminated or dismissed from
employment.
3. YES
- As regular employees, the private respondents are entitled to
security of tenure provided under the labor laws and may only
be validly terminated from service upon compliance with the
legal requisites for dismissal and considering that they were
illegally dismissed, the private respondents should be
reinstated, in accordance with the provision of the Labor Code,
as amended, particularly Article 279, to wit:
Article 279. Security of Tenure. – In cases of regular
employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement
- Thus, the said provision provides that illegally dismissed
employees are entitled to backwages plus other benefits
computed from the time compensation was withheld up to the
time of actual reinstatement. An illegally dismissed employee
who, in contemplation of the law, never left his office, should be
granted the compensation which rightfully belongs to him from
the moment he was unduly deprived of it up to the time it was
restored to him; the backwages to be awarded should not be
diminished or reduced by earnings derived by the illegally
dismissed employee elsewhere during the term of his illegal
dismissal.
STANDARD ELECTRIC MANUFACTURING CORP V
STANDARD ELECTRIC EMPLOYEES UNION
[PAGE 227]
BPI EMPLOYEES UNION V BPI
[PAGE 303]
Labor Law 1
FILIPINO PRE-FABRICATED BUILDING SYSTEMS INC
V PUENTE
[PAGE 92]
INTERCONTINENTAL BROADCASTING CORP V
BENEDICTO
495 SCRA 561
CORONA; July 20, 2006
NATURE
Petition for review on certiorari
FACTS
- Intercontinental Broadcasting Corporation is a government-
owned and controlled corporation. It is engaged in the business
of mass media communications including, among others, the
operation of television IBC 13.
- In 1993, Reynaldo Benedicto was appointed by Ceferino
Basilio, the general manager of IBC 13, as marketing manager.
He received P20,000 with commission of 1% from advertising
collections.
- An October 11, 1994 letter terminated Benedicto. Benedicto
then filed a complaint for illegal termination on December 3,
1996. The Labor Arbiter ruled in his favor and ordered for
reinstatement with payment of backwages from the time of his
dismissal up to his actual reinstatement (amounting to
P920,000 at the time of promulgation of the decision).
Petitioners’ Claim
- IBC 13 complained that the award of backwages was
excessive and asked for reconsideration from NLRC. The NLRC
did not grant the motion because non-payment of appeal bond
within the reglementary period.
- Petitioner insists that the award should be limited to what
Benedicto was entitled to as of the compulsory retirement age
of 65 years. When the labor arbiter promulgated his decision
(wherein he awarded the amount of P920,000 as backwages),
Benedicto was already 68 years old. In an order dated August
10, 1999, he further increased the backwages by P180,000.
Respondents’ Comments
- Benedicto alleged that after his appointment, he was able to
increase the televiewing, listening and audience ratings of
petitioner which resulted in its improved competitive financial
strength.
- He claimed that he successfully initiated, pursued and
consummated an advertising contract with VTV Corporation for
a period of five years involving the amount of P600 million
ISSUE
WON the computation of the backwages was correct
HELD
NO
Reasoning
- The Labor Arbiter found that Benedicto’s termination was
illegal because of absence of just cause. The reinstatement of
Benedicto has been rendered moot and academic because of is
death in 2002.
- Benedicto was entitled to backwages only up to the time he
reached 65 years old, the compulsory retirement age under the
law. When Benedicto was illegally dismissed on October 11,
1994, he was already 64 years old. He turned 65 years old on
December 1, 1994 at which age he was deemed to have retired.
Since backwages are granted on grounds of equity for earnings
lost by an employee due to his illegal dismissal, Benedicto was
entitled to backwages only for the period he could have worked
had he not been illegally dismissed, i.e. from October 11, 1994
to December 1, 1994.
- As for the issue of Benedicto’s 1% commission, the court held
that there should be a recomputation with the following in
mind:
A2010 - 75 - Disini
1. Because Benedicto was entitled to backwages only from
October 11 to December 1, 1994 when he turned 65 years
old, petitioner should pay his commission only for this period.
2. By nature, commissions are given to employees only if the
employer receives income. Employees, as a reward, receive a
percentage of the earnings of the employer, which they,
through their efforts, helped produce. Commissions are also
given in the form of incentives or encouragement so that
employees will be inspired to put a little more industry into
their tasks. Commissions can also be considered as direct
remunerations for services rendered. All these different
concepts of commissions are incongruent with the claim that
an employee can continue to receive them indefinitely after
reaching his mandatory retirement age.
- Benedicto’s right to the commissions was coterminous with
his employment with petitioner and this ended when he
reached the compulsory retirement age.
3. Lastly, the stipulation providing for commissions (which did
not specify the period of entitlement) would be too
burdensome if interpreted to mean that Benedicto had a right
to it even after his employment with petitioner. Doubts in
contracts should be settled in favor of the greatest reciprocity
of interests. A lopsided and open-minded construction could
not have been the parties’ contemplation. Had that been their
intent, then they should have spelled it out in no uncertain
terms
Disposition The assailed decision of the Court of Appeals is
set aside.
TPI PHIL CEMENT CORP V CAJUCOM VII
483 SCRA 494
SANDOVAL-GUTIERREZ; February 28, 2006
NATURE
Review on certiorari
FACTS
- Petitioners TP Cement and TP Vinyl employed Atty. Benedicto
A. Cajucom VII, respondent, as Vice-President for Legal Affairs.
- As a result of the economic slowdown then experienced in this
country, petitioner TP Cement, having no viable projects,
shortened its corporate term from 50 years to 2 years and 7
months. It was dissolved on January 27, 1998. With respect to
petitioner TP Vinyl, it shifted its business from production to
marketing and trading of Thai Petrochemical products.
- Thus, petitioners implemented cost-cutting measures resulting
in the termination from the service of their employees,
including respondent.
- Petitioners sent respondent a notice terminating his services
effective December 30, 1998. Simultaneously, petitioners, on
the same day, filed with the Department of Labor and
Employment (DOLE) an “Establishment Termination Report” of
respondent’s separation from the service.
- Respondent contested petitioners’ action, claiming that the
termination of his services was based erroneously on
petitioners’ probable losses, instead of their actual, substantial
and imminent losses.
- Respondent further claimed that petitioners were motivated
by revenge in terminating his services.
- The Labor Arbiter rendered a Decision holding that petitioners
failed to adduce sufficient evidence to show that their alleged
losses are substantial and imminent, and concluded that
respondent was illegally dismissed from employment.
- Upon appeal, the National Labor Relations Commission (NLRC)
reversed the Labor Arbiter’s Decision.
- The Court of Appeals rendered the assailed Decision affirming
with modification the NLRC Decision in the sense that aside
from paying respondent separation pay, petitioners are also
ordered to pay him his backwages.
ISSUES
1. WON petitioner was validly terminated (i.e. there was valid
retrenchment)
Labor Law 1
2. WON the termination followed due process
3. WON respondent is entitled to backwages
HELD
1. YES
- Retrenchment, under Article 2839 of the Labor Code, as
amended, is recognized as an authorized cause for the
dismissal of an employee from the service.
- For a valid retrenchment, three requisites must concur, as
provided in Article 283 of the Labor Code, as amended, namely:
(1) The retrenchment is necessary to prevent losses and the
same is proven; (2) Written notice to the employees and to
the DOLE at least one month prior to the intended date
thereof; and (3) Payment of separation pay equivalent to
one month pay or at least ½ month pay for every year of
service, whichever is higher.
- We observe that the Court of Appeals, in finding that
petitioners suffered from financial losses and justifying the
separation of respondent from the service, relied on the audited
reports prepared by Sycip Gorres Velayo & Co. Such reliance is
in order.
- But respondent insists that actual, not probable losses, justify
retrenchment. Article 283 entails, among others, only a
situation where there is “retrenchment to prevent
losses.” The phrase “to prevent losses” means that
retrenchment or termination from the service of some
employees is authorized to be undertaken by the employer
sometime before the losses anticipated are actually
sustained or realized. This is the situation in the case at bar.
Evidently, actual losses need not set in prior to retrenchment.
2. NO
- Records show that on December 3, 1998, petitioners sent
respondent and the DOLE separate notices of retrenchment
effective December 30, 1998. Following the provision of Article
283, these notices should have been served one month
before, or on November 30, 1998. Clearly, petitioners
failed to comply with the one-month notice requirement
- Due process was not observed as the required notices were
not sent to respondent and the DOLE one month prior to the
effectivity of his termination. Thus, petitioners should be liable
for violation of his right to due process and should pay him
indemnity in the form of nominal damages, pursuant to our
ruling in Agabon, which we fix at P20,000.00.
3. YES
Reasoning
- It bears reiterating that under Article 283, in case of
retrenchment to prevent losses, respondent is entitled to an
award of separation pay equivalent to one-half (1/2) month’s
pay for every year of service.
Disposition AFFIRMED.
EFFECT INFLATION
LANTION V NLRC (MENESES)
181 SCRA 513
MELENCIO-HERRERA; January 29, 1990
NATURE
Petition for certiorari
9
Art. 283. Closure of Establishment and Reduction of Personnel. – The employer may
also terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operations of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the worker and the Department of Labor and Employment, at least one (1) month
before the intended date thereof. x x x. In case of retrenchment to prevent
losses and in cases of closure or cessation of operations of the establishment or
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year.
A2010 - 76 - Disini
FACTS
- Filomeno Lantion, Clarita C. Lantion, and Juana C. Fuentes
were Acting Vice President and Executive Officer, Dean of the
Institute of Business and Agricultural Administration and
concurrently Head and Professor of the Department of Business
and Finance, and Secretary of the Chief Legal Officer
respectively when Gregorio Araneta University Foundation
dismissed them in line with the university’s retrenchment and
reorganization program.
- Petitioners, who had served respondent university from 16 to
32 years, claim to have been terminated from service
discriminatorily, arbitrarily and illegally and had not been
rehired by private respondents contrary to their own guidelines
and those set forth by MOLE in the implementation of GAUF
RRR program.
- The labor arbiter and the nlrc found that retrenchment was
not illegal but ordered payment of retirement and other
benefits.
ISSUE
WON petitioners were illegally dismissed
HELD
YES
- That retrenchment was proper, therefore, there can be no
question. The conditions laid down, however, were not
religiously followed. Petitioners were not rehired although they
fall outside the exception provided. Their positions were not
affected by the re-organizational changes envisioned in the
retrenchment program. The position of Vice-President continued
to exist. And as far as Filomeno and Clarita Lantion are
concerned, their temporary appointment to other positions
could not have affected their permanent status pursuant to the
ruling in the First GAUF Case. Clarita's position was neither
abolished. She was replaced by another faculty member.
- It may be that petitioners Filomeno and Clarita Lantion had
expressed their conformity to their termination, while Fuentes
had tendered her courtesy resignation. As is obvious, however,
those steps were but in administrative compliance with the
Memorandum Circular of 14 October 1983 of the University,
ante. As a matter of fact, courtesy resignations could have been
dispensed with as all personnel were deemed resigned.
Besides, such compliance had placed them in a better position
than the Complainants in the First GAUF Case considering the
proviso in the Memo-Circular of the University that "those who
submit courtesy resignations may be re-appointed while those
who would fail to submit may be retrenched."
ON INFLATION…
- In respect of the argument that the inflation that has
supervened justifies the imposition of interest, this Court has
held that the effects of extraordinary inflation are not to be
applied without an agreement between the parties and without
an official declaration thereof by competent authorities
Disposition Decision of respondent National Labor Relations
Commission is REVERSED in so far as it holds that the dismissal
of petitioners was not illegal and hereby ORDERS respondent
Gregorio Araneta University Foundation to REINSTATE
petitioners to their former positions with three (3) years
backwages under the new terms and conditions of employment
in the University as reorganized.
14.10 FINANCIAL ASSISTANCE
ALLOWED FINANCIAL ASSISTANCE
PHIL LONG DISTANCE TELEPHONE CO V NLRC
[PAGE 18]
Labor Law 1
SALAVARRIA V LETRAN COLLEGE
296 SCRA 184
ROMERO; September 25, 1998
NATURE
Appeal from the decision of the NLRC reversing the decision of
the labor arbiter and dismissing the complaint for illegal
dismissal.
FACTS
- Petitioner Anita Y. Salavarria was employed by respondent
Colegio de San Juan de Letran as a teacher in its High School
Department. She was dismissed from her employment because
she allegedly collected money from her student which is in
violation of the school’s rules and regulations. The students of
the petitioner explained that the project consisted in collecting
contributions from each of them, which amount shall be used to
purchase religious articles such as bibles, chalice, crucifix and
similar items to be distributed among the several churches in
Metro Manila and nearby rural areas. Furthermore, they
claimed that in doing so, it would involve them in charity work
in connection with their lesson on “Love of God and Neighbor”
and that such activity would entail a much lesser expense than
the completion of the term papers. After continuous prodding,
petitioner was finally prevailed upon to accede to her students’
proposal. This fact was later on discovered by the
Administration.
- She filed a complaint for illegal dismissal. The labor arbiter
ruled in her favor but upon appeal by Letran the said decision of
the labor arbiter was reversed by the respondent NLRC.
Although the complaint for illegal termination was dismissed,
NLRC ordered respondent school to pay the complainant
severance compensation in the amount of Forty Five Thousand
Pesos (P45,000.00), equivalent to her salary for one month for
every year of her nine (9) years service in consideration of the
equities of the case.
ISSUE
WON the award of financial assistance or severance
compensation was proper
HELD
YES
- The award is proper based on equity and on the provisions of
the Constitution regarding the promotion of social justice and
protection of the rights of the workers.
Ratio We rule that the NLRC correctly awarded to petitioner
the amount of P45,000.00 as “severance pay” which is
synonymous with “separation pay.” As a general rule, an
employee who is dismissed for cause is not entitled to any
financial assistance. However, equity considerations provide an
exception. In PLDT v. NLRC, equity has been defined as justice
outside law, being ethical rather than jural and belonging to the
sphere of morals than of law. It is grounded on the precepts of
conscience and not on any sanction of positive law, for equity
finds no room for application where there is law. Further, it was
held that the grant of separation pay is not merely based on
equity but on the provisions of the Constitution regarding the
promotion of social justice and protection of the rights of the
workers.
- As stressed in the recent cases of Santos v. NLRC and Camua
v. NLRC, the Court therein laid down the guidelines in the grant
of separation pay to lawfully dismissed employees, thus:
"We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where
the reason for the valid dismissal is, for example, habitual
A2010 - 77 - Disini
intoxication or an offense involving moral turpitude, like theft
or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other
name it is called, on the ground of social justice.”
- As applied to the case at bar, we find that petitioner’s
infraction of the school policy neither amounted to serious
misconduct nor reflected that of a morally depraved person as
may warrant the denial of separation pay to her. While the
Court is not oblivious of the fact that petitioner was already
warned in a previous offense, certain circumstances, however,
impel us to award her separation pay equivalent to one month
salary for every year of service in respondent school.
GUSTILO V WYETH PHILIPPINES INC
[PAGE 10]
PINERO V NLRC
437 SCRA 112
YNARES-SANTIAGO; August 20, 2004
NATURE
Petition for review on certiorari
FACTS
- Private respondent Dumaguete Cathedral College, Inc., an
educational institution, is the employer of the faculty and staff
members comprising the labor union DUCACOFSA-NAFTEU. On
December 19, 1986, DUCACOFSA (then affiliated with the
National Alliance of Teachers and Allied Workers – NATAW) and
private respondent entered into a Collective Bargaining
Agreement (CBA) effective for 3 years. Upon the expiration of
their CBA in 1989, the parties failed to conclude another CBA
which led DUCACOFSA (now affiliated with NAFTEU) to file a
notice of strike with the Department of Labor and Employment
(DOLE) on the ground of refusal to bargain.
- On November 4, 1991, DUCACOFSA-NAFTEU conducted a
strike in the premises of private respondent without submitting
to the DOLE the required results of the strike vote obtained
from the members of the union. Consequently, on November
21, 1991, private respondent filed with the DOLE a complaint to
declare the strike illegal and to dismiss some of its officers. On
October 28, 1994, the Labor Arbiter rendered a decision
declaring the strike as illegal and declaring the respondent
union officers to have lost their employment status effective on
the date of this decision. The union officers appealed to the
NLRC. Meanwhile, on November 29, 1991, the said officers
returned to work by virtue of a Memorandum of Agreement
entered into by DUCACOFSA-NAFTEU and private respondent
allowing them to resume service without prejudice to the
outcome of the instant case then pending appeal with the
NLRC.
- On December 19, 1995, the NLRC affirmed the decision of the
Labor Arbiter.In addition to the failure to comply with strike vote
requirements, the NLRC ratiocinated that the strike was illegal
because DUCACOFSA-NAFTEU, not being a legitimate labor
organization, has no personality to hold a strike. The union
officers filed a Motion for Reconsideration but the same was
denied.
- Petitioner Rosendo U. Piñero filed with this Court a petition for
certiorari which was referred to the Court of Appeals. On March
25, 2001, the Court of Appeals affirmed the decision of the
NLRC dismissing the petition. On August 29, 2001, Piñero’s
Motion for Reconsideration was denied. Hence, the instant
petition.
Labor Law 1
ISSUES
1. WON the strike should be declared illegal
2. WON Pinero is entitled to financial assistance
HELD
1. YES
- the strike staged by DUCACOFSA-NAFTEU is illegal for non-
compliance with the strike-vote requirements. The relevant
provisions of Article 263 of the Labor Code read:
Article 263.
c.) the duly certified or recognized bargaining agent may file
a notice of strike or the employer may file a notice of lockout
with the Department at least 30 days before the intended
date thereof. In cases of unfair labor practice, the period of
notice shall be 15 days and in the absence of a duly certified
or recognized bargaining agent, the notice of strike may be
filed by any legitimate labor organization in behalf of its
members. However, in case of dismissal from employment of
union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting
where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take
action immediately.
(f) A decision to declare a strike must be approved by a
majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda
called for that purpose. A decision to declare a lockout must
be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership,
obtained by secret ballot in a meeting called for the purpose.
The decision shall be valid for the duration of the dispute
based on substantially the same grounds considered when
the strike or lockout vote was taken. The Department may, at
its own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case,
the union or the employer shall furnish the Department the
results of the voting at least seven days before the intended
strike or lock-out, subject to the cooling-off period herein
provided.
- Under the aforequoted provisions, the requisites for a valid
strike are as follows: (a) a notice of strike filed with the DOLE
thirty days before the intended date thereof or fifteen days in
case of unfair labor practice; (b) strike vote approved by a
majority of the total union membership in the bargaining unit
concerned obtained by secret ballot in a meeting called for that
purpose; (c) notice given to the DOLE of the results of the
voting at least seven days before the intended strike. These
requirements are mandatory and failure of a union to comply
therewith renders the strike illegal.
- Pursuant to Article 264 of the Labor Code, any union officer
who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his
employment status. In the case at bar, DUCACOFSA-NAFTEU
failed to prove that it obtained the required strike-vote among
its members and that the results thereof were submitted to the
DOLE. The strike was therefore correctly declared illegal, for
non-compliance with the procedural requirements of Article 263
of the Labor Code, and Piñero properly dismissed from service.
2. YES
- The Court notes that petitioner Piñero turned 60 years old and
retired on March 1, 1996 after 29 years of service, rendering his
dismissal from service moot and academic. However, in view of
the propriety of his termination as a consequence of the illegal
strike, he is no longer entitled to payment of retirement
benefits because he lost his employment status effective as of
the date of the decision of the Labor Arbiter – October 28, 1994.
An employee who is dismissed for cause is generally not
entitled to any financial assistance. Equity considerations,
however, provide an exception. Equity has been defined as
justice outside law, being ethical rather than jural and belonging
to the sphere of morals than of law. It is grounded on the
precepts of conscience and not on any sanction of positive law,
A2010 - 78 - Disini
for equity finds no room for application where there is law.
Although meriting termination of employment, Piñero’s
infraction is not so reprehensible nor unscrupulous as to
warrant complete disregard of his long years of service.
Moreover, he has no previous derogatory records. Weighed on
the scales of justice, conscience and reason tip in favor of
granting financial assistance to support him in the twilight of his
life after long years of service.
Under the circumstances, social and compassionate justice
dictate that petitioner Piñero be awarded financial assistance
equivalent to one-half (1/2) month’s pay for every year of
service computed from his date of employment up to October
28, 1994 when he was declared to have lost his employment
status. Indeed, equities of this case should be accorded due
weight because labor law determinations are not only
secundum rationem but also secundum caritatem.
Disposition The petition is partially granted. As modified,
Rosendo U. Piñero is awarded financial assistance equivalent to
one-half (1/2) month’s pay for every year of service computed
from his date of employment up to October 28, 1994.
EASTERN SHIPPING LINES INC V SEDAN
486 SCRA 565
QUISUMBING; April 7, 2006
NATURE
CERTIORARI
FACTS
- EASTERN hired on a per-voyage basis Sedan as 3rd marine
engineer and oiler in one of the vessels it owned
- IN 1997, Sedan sent a letter to EASTERN applying for optional
retirement, citing as reason the death of his only daughter,
hence the retirement benefits he would receive would ease his
financial burden.
- However, EASTERN deferred action on his application for
optional retirement since his services on board ship were still
needed.
- Nonetheless, the company expressed intention to extend him
a loan in order to defray the costs incurred for the burial and
funeral expenses of his daughter.
- But still Sedan insisted that he no longer wanted to continue
working on board a vessel for reasons of health.
- Sedan sent another letter to petitioners threatening to file a
complaint if his application was not granted.
- EASTERN ,in reply, sent a telegram on December 9, 1997
informing Sedan that his services were needed on board a
vessel and that he should report immediately for work as there
was no available replacement.
- Sedan claims he did not receive the telegram, nor was this
fact proved by the company before the LA or the NLRC.
- Sedan proceeded to file a complaint with the LA against
EASTERN, demanding payment of his retirement benefits, leave
pay, 13th month pay and attorney’s fees.
- LA ruled in favor of Sedan; NLRC affirmed and dismissed for
lack of merit the MR.
- CA ruled that the retirement gratuity and attorney’s fees
awarded by the LA and the NLRC had no basis in fact or law
since pursuant to the Agreement between the company and the
employees, the granting of optional retirement is the exclusive
prerogative of the employer. Unless such prerogative was
exercised arbitrarily or capriciously, private respondent cannot
demand it as a right.
- CA ordered EASTERN to pay SEDAN P200,000 as financial
assistance. Denied E’s MR.
ISSUE
WON the court of appeals erred in giving the respondent
php200,000.00 as financial assistance when in fact it was the
respondent who refused to report for work
HELD
NO
Labor Law 1
- SEDAN IS NOT ENTITLED TO RETIREMENT BENEFITS but is
entitled to financial assistance as an equitable concession under
the special circumstances of this case.
EASTERN’S CLAIM:
- SEDAN’s refusing to report for work and insisting on applying
for optional retirement-> TANTAMOUNT TO VOLUNTARY
RESIGNATION. Therefore, petitioners contend, the respondent
should not be entitled to any financial assistance.
- Granting arguendo that SEDAN was entitled to financial
assistance, they protest the amount of the financial assistance
awarded by the CA for being disproportionately excessive.
Reasoning
- PERTINENT LAW IN LC:
ART. 287. Retirement. – Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to receive
such retirement benefits as he may have earned under existing
laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee’s
retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing
for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more,
but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five
(5) years in the said establishment may retire and shall be
entitled to retirement pay equivalent to at least one half (1/2)
month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
xxx
The age of retirement is primarily determined by the existing
agreement between the employer and the employees.
However, in the absence of such agreement, the retirement
age shall be fixed by law. Under the aforecited article of the
Labor Code, the legally mandated age for compulsory
retirement is 65 years, while the set minimum age for
optional retirement is 60 years.
- In this case there was an agreement between EASTERN and its
employees.
- The agreement states the retirement under the LC and the
optional retirement where the eligibility age for optional
retirement is set at 60 years. However, employees of herein
petitioners who are under the age of 60 years, but have
rendered at least 3650 days (10 years) on board ship or fifteen
(15) years of service for land-based employees may also avail
of optional retirement, subject to the exclusive prerogative and
sole option of petitioner company.
- Records show that private respondent was only 48 years old
when he applied for optional retirement. Thus he cannot claim
optional retirement benefits as a matter of right.
- His application for optional retirement was subject to the
exclusive prerogative and sole option of the shipping company
pursuant to the abovecited agreement between the workers
and the company
AS REGARDS THE CA’S GRANT of FINANCIAL ASSISTANCE
- Telefunken Semiconductors Employees Union-FFW v. Court of
Appeals (2000): financial assistance is allowed only in instances
where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character.
- Arc-Men Food Industries Corporation v. NLRC, and Lemery
Savings and Loan Bank v. NLRC: when there is no dismissal to
speak of, an award of financial assistance is not in order.
- Justice Sabino de Leon, Jr. IN TELEFUNKEN: financial assistance
may be allowed as a measure of social justice and exceptional
circumstances, and as an equitable concession.
- The instant case 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.
- In this instance, our attention has been called to the following
circumstances:
A2010 - 79 - Disini
that Sedan joined the company when he was a young man of
25 years and stayed on until he was 48 years old; that he had
given to the company the best years of his youth, working on
board ship for almost 24 years; that in those years there was
not a single report of him transgressing any of the company
rules and regulations; that he applied for optional retirement
under the company’s non-contributory plan when his
daughter died and for his own health reasons; and that it
would appear that he had served the company well, since
even the company said that the reason it refused his
application for optional retirement was that it still needed his
services; that he denies receiving the telegram asking him to
report back to work; but that considering his age and health,
he preferred to stay home rather than risk further working in
a ship at sea.
- These circumstances indubitably merit equitable concessions,
via the principle of “compassionate justice” for the working
class.
- AS REGARDS WON the Php 200k granted him is
“arbitrary and excessive”.
- Philippine Long Distance Telephone Co. v. NLRC: separation
pay shall be allowed as a measure of social justice only in the
instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral
character. A contrary rule, we said would have the effect of
rewarding rather than punishing an erring employee.
- Cited doctrines in NLRC cases, the SC found that the grant of
P200,000 was neither arbitrary nor excessive.
- Sedan has no derogatory record in his 23 years of service
should be granted equitable assistance equal to one-half
month’s pay for each of his 23 years of service.
Disposition PETITION is DENIED. CA’s DECISION is
AFFIRMED.
NOT ALLOWED
PHILIPPINE NATIONAL CONSTRUCTION CORP V
NLRC (MANREZA)
170 SCRA 207
GRINO-AQUINO; February 9, 1989
NATURE
Petition for review on certiorari of the decision of NLRC
FACTS
- Manreza was hired by CDCP. The North Luzon Expressway
Security Services Investigation and Intelligence Unit discovered
flexbeams in the house of Eusebio and Enriquez, who declared
that Manreza deposited them there. Memo was sent to
Manreza asking him to explain within 48 hrs. Manreza said they
were just temporarily deposited there.
- Case was referred to Union which concluded that Manreza was
merely negligent, and recommended suspension. Another
investigation was conducted. NLE administrative officer found
Manreza guilty of stealing or unauthorized taking of company
property. Manreza was placed under preventive suspension
and later terminated. Manreza filed complaint.
- Labor Arbiter ordered reinstatement. Petitioner appealed to
NLRC, which said dismissal was valid, but ordered payment of 1
month pay for every year of service, in spirit of compassionate
justice.
- Petition for certiorari was filed by PNCC, alleging abuse in
discretion in awarding separation pay despite finding of guilt of
Manreza and just cause in dismissal.
ISSUES
WON award of separation pay is proper
HELD
NO
Labor Law 1
- While it is true that in earlier cases, We held that employees
dismissed for cause are nevertheless entitled to separation pay
on the ground of social and compassionate justice, that doctrine
was abandoned in Philippine Long Distance Telephone Co. vs.
NLRC and Marilyn Bucay.
- Separation pay shall be allowed as measure of social justice
only in instances where employee is validly dismissed for
causes other than serious misconduct or those reflecting on his
moral character. Where reason for valid dismissal is, for
example, habitual intoxication or offense involving moral
turpitude, employer may not be required to give separation pay
or financial assistance, or whatever other name it is called, on
the ground of social justice.
- Social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged. At best
it may mitigate the penalty but it certainly will not condone the
offense. Social justice cannot be permitted to be the refuge of
scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may
do so only if their hands are clean and their motives blameless
and not simply because they happen to be poor.
- Since Manreza was found guilty of dishonesty for having stolen
company property and was dismissed for cause, he is not
entitled to separation pay.
EASTERN PAPER MILLS INC V NLRC (MALABANAN)
170 SCRA 595
GRINO-AQUINO; February 24, 1989
NATURE
Petition for certiorari
FACTS
- Eduardo Malabanan, an accounts payable clerk, was dismissed
on Jan 10, 1983 by Eastern Paper Mills Inc after due notice,
investigation, and hearing. He was dismissed for having
physically assaulted and verbally abused, within full view and
hearing of the other employees, Mariano Lopingco, who was
then the personnel and administrative manager of the
company.
- The reason for the assault was Malabanan's resentment at
being suspected of having stolen an ash tray from Lopingco's
office and being questioned about the matter by the security
office.
- Malabanan filed a complaint for illegal dismissal in the Ministry
of Labor and Employment. Labor Arbiter dismissed Malabanan's
complaint and found that his dismissal from employment was
for just and valid cause. However, the Labor Arbiter awarded
him P10,000 as "financial assistance".
- On appeal by petitioner, NLRC affirmed the Labor Arbiter's
decision with modification. It awarded Malabanan separation or
termination pay amounting to P10,780, in lieu of financial
assistance.
ISSUE
WON the lower court erred in granting separation pay to
Malabanan.
HELD
YES
- Philippine Long Distance Telephone Company vs. NLRC:
"Separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed
A2010 - 80 - Disini
for cause other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is,
for example habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow
worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice. x x x A
contrary rule would have the effect of rewarding rather than
punishing the erring employee for his offense."
- An award of separation pay to an employee who was
dismissed for a valid cause is legally indefensible. It
contravenes Rule 1, Sec. 7, Book VI of the Omnibus Rules
Implementing the Labor Code:
"Sec. 7. Termination of Employment by Employer.— The
just causes for terminating the services of an employee
shall be those provided in Article 282 of this Code. The
separation from work of an employee for a just cause does
not entitle him to the termination pay, provided in the
Code, without prejudice, however, to whatever rights,
benefits, and privileges he may have under the applicable
individual or collective agreement with the employer or
voluntary employer policy or practice."
- The only cases when separation pay shall be paid, although
the employee was lawfully dismissed, are when the cause of
termination was not attributable to the employee's fault but due
to: (1) the installation of labor-saving devices, (2) redundancy,
(3) retrenchment, (4) cessation of the employer's business, or
(5) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to
his health and to the health of his co-employees. (Articles 283
and 284, Labor Code.) Other than these cases, an employee
who is dismissed for a just and lawful cause is not entitled to
separation pay even if the award were to be called by another
name.
Disposition petition for certiorari is granted. NLRC decision
dismissing Malabanan’s complaint for illegal dismissal is
affirmed, but the award of separation pay or financial
assistance is set aside for lack of legal basis.
CHUA V NLRC
[PAGE 242]
14.11 SEPARATION PAY
WHEN – ALTERNATIVE
COCA-COLA BOTTLERS PHILS V VITAL
438 SCRA 278
SANDOVAL-GUTIERREZ; September 13, 2004
NATURE
Petition for review on certiorari
FACTS
- June 1, 1980 - Dominic Vital was employed by Coca-Cola
Bottlers Philippines, Inc. as route driver/helper at its Antipolo
Plant, with a monthly salary of P12,860.00. He was also
assigned to perform the duties of a salesman.
- In October 1995 – Coca-Cola implemented a local marketing
campaign called “Operation Rurok.” This was a campaign that
allows its trusted wholesaler outlets to retrieve foreign empties
Labor Law 1
and/or bottles of petitioner’s competitors, such as Pepsi Cola
and Cosmos, from regular customer outlets, in exchange for
Coca-Cola containers and products.
- February 6, 1996 – District Sales Supervisor Lagula authorized
Vital to deliver, in exchange for retrieved Pepsi-Cola and
Cosmos empties or bottles, 57 cases of 12 oz. Coca-Cola
products to AMC Viray Store situated in Tambunting Street,
Blumentritt. The same went on in two other instances: to
deliver to Cora’s Store in Quezon City and John Uy in La Loma.
- October 10, 1996, - Petitioner sent respondent a notice of an
investigation of its complaint against him for forgery, fictitious
sales transactions, falsification of company documents, and
unauthorized retrieval of empties. He was then placed on
preventive suspension. He was eventually terminated for lack
of trust.
- Vital filed a complaint for illegal dismissal with the Labor
Arbiter which was dismissed for being devoid of merit. An
appeal with the NLRC reversed the decision in Vital’s favor.
ISSUE
WON Vital is entitled to separation pay
HELD
YES
Ratio Respondent who was illegally dismissed from work is
entitled to reinstatement without loss of seniority rights, full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual
reinstatement
Reasoning
- The circumstances obtaining in this case do not warrant the
reinstatement of respondent. Antagonism caused a severe
strain in the relationship between him and petitioner company.
A more equitable disposition would be an award of separation
pay equivalent to at least one month pay, or one month pay for
every year of service, whichever is higher, (with a fraction of at
least six (6) months being considered as one (1) whole year), in
addition to his full backwages, allowances and other benefits.
- Records show that respondent was employed from June 1,
1980 to February 8, 1997, or for sixteen (16) years and eight (8)
months, with a monthly salary of P12,860.00. Hence, he is
entitled to a separation pay of P218,620.00.
Disposition The decision of the Court of Appeals is affirmed
with modification.
GUSTILO V WYETH PHILIPPINES INC
[PAGE 10]
NATIONAL FEDERATION OF LABOR V CA
CALLEJO SR; October 19, 2004
NATURE
Petition for review of the Decision of the CA
FACTS
- National Federation of Labor (NFL) was the duly registered
bargaining agent of the daily-and-monthly-paid rank-and-file
employees of Sime Darby Pilipinas, Inc. (SDPI) in the Latuan
rubber plantation. SDPI and NFL executed a CBA in which they
agreed that in case of permanent or temporary lay-off, workers
affected would be entitled to termination pay as provided by
the Labor Code.
- RA 6657, otherwise known as the Comprehensive Agrarian
Reform Law, took effect. SDPI decided to cease operation of the
rubber plantation, and served formal notices of termination to
all the employees of the plantation. Separation pay for the
employees was computed pursuant to the provisions of the
CBA. The NFL informed SDPI that the union members would
refuse to receive the computed separation pay if less than that
previously given to employees whose employment had been
terminated by SDPI on prior dates pursuant to the company
A2010 - 81 - Disini
policy, more specifically separation pay equivalent to 1 month
for every year of employment of the employees.
- Each of the petitioners received his separation pay equivalent
to ½ month pay for every year of service, and other benefits
which were all lumped in one check. They simultaneously
executed individual “Release and Quitclaim” following the
explanation to them by the Labor Arbiter of the nature and legal
effects of the said quitclaims. The Labor Arbiter also assured
that each of the petitioners executed his respected deed of
quitclaim voluntarily.
- Petitioners filed a complaint for illegal dismissal, deficiency in
separation pay, backwages, reinstatement, legal interest, moral
damages, exemplary damages, attorney’s fees, and cost of
litigation before the NLRC. The Labor Arbiter dismissed the
complaints for lack of merit. The NLRC and CA subsequently
affirmed.
ISSUE
WON petitioners are only entitled to separation pay equivalent
to ½ month pay for every year of employment with the private
respondent
HELD
YES
Ratio While it is true that quitclaims are frowned upon the in
labor claims, this holds true only when the consideration
therefor is unconscionably low. Where the consideration is
substantial, the efficacy and validity thereof has been upheld,
more so where the quitclaim was voluntarily and willingly
executed.
Reasoning
- The parties did not incorporate in the CBA a specific provision
providing that employees terminated from employment due to
the closure of business operations would be entitled to
separation pay equivalent to 1 month pay for every year of
service. The parties opted to be bound by the provisions of the
Labor Code and not by company policy. Had the rank-and-file
employees deemed the same to be a diminution of their
benefits, they should have rejected the CBA. Art. 283 should
apply.
Obiter
- In cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses
or financial reverses, the separation pay of employees shall be
equivalent to 1 month pay or to at least ½ month pay for every
year of service, whichever is higher. In no case will an employee
get less than 1 month separation pay if the separation from the
service is due to the above stated causes, provided that he has
already served for at least 6 months. Thus, if an employee had
been in the service for at least 6 months, he is entitled to a full
month’s pay as his termination pay if his separation from the
job is due to any of the causes enumerated above. However, if
he has to his credit 10 years of service, he is entitled to 5
months pay, this being higher than one-month pay. Stated
differently, the computation of termination pay should be based
on either 1 month or ½ month pay, whichever will yield to the
employees’ higher separation pay, taking into consideration his
length of service.
Disposition The petition is DENIED. The decision and
resolution of the CA are AFFIRMED.
PHESCHEM INDUSTRIAL CORP V MOLDEZ
[PAGE 293]
ETCUBAN V SULPICIO LINES
448 SCRA 516
CALLEJO; January 17, 2005
NATURE
Petition for certiorari
FACTS
Labor Law 1
- Etcuban was the chief purser of M/V Surigao Princess. It was
his responsibility, among other things, to issue passage tickets
and to receive payments from the customers of the respondent,
as well as to issue the corresponding official receipts therefore.
- IN a surprise examination, it was discovered that several
yellow passenger’s duplicate original of yet to be sold or
unissued passage tickets already contained the amount of
P88.00 – the fare for adult passengers for the Cagayan de Oro
to Jagna, Bohol route. He noticed that three other original
copies which made up the full set did not bear the same
impression, although they were supposed to have been
prepared at the same time. Acting on what appeared to be a
strong evidence of short-changing the company, the jefe de
viaje dug deeper on what he uncovered. As expected, he found
inordinate amount of ticket issuances for children at half the
fare of P44.00 in Voyage 434 of the vessel.
- A memorandum was issued to Etcuban, asking him to explain
the alleged anomalies. He refused to acknowledge the memo.
He was put under preventive suspension and an investigation
was conducted. He also was replaced.
- Etcuban filed a complaint for illegal dismissal and payment of
benefits before the NLRC. The latter ruled for the Etcuban. The
CA reversed.
ISSUES
1. WON the petitioner was validly dismissed
2. WON he should be granted separation pay
HELD
1. YES
- The degree of proof required in labor cases is not as stringent
as in other types of cases. It must be noted, however, that
recent decisions of this Court have distinguished the treatment
of managerial employees from that of rank-and-file personnel,
insofar as the application of the doctrine of loss of trust and
confidence is concerned. Thus, with respect to rank-and-file
personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as
regards a managerial employee, the mere existence of a basis
for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of
managerial employees, proof beyond reasonable doubt is not
required, it being sufficient that there is some basis for such
loss of confidence, such as when the employer has reasonable
ground to believe that the employee concerned is responsible
for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and
confidence demanded by his position.
- In the case at bar, the petitioner is not a rank and file
employee. While, indeed, it was not proved that he was the one
who made the irregular entries on the tickets, the fact that he
did not lift a finger at all to determine who it was is a sad
reflection of his job. In fact, even if the petitioner had no actual
and direct participation in the alleged anomalies, his failure to
detect any anomaly in the passage tickets amounts to gross
negligence and incompetence, which are, likewise, justifiable
grounds for his dismissal. Be that as it may, to our mind, it is no
longer necessary to prove the petitioner’s direct participation in
the irregularity, for what is material is that his actuations were
more than sufficient to sow in his employer the seed of mistrust
and loss of confidence.
2. NO
- Anent the petitioner’s request for separation pay, the Court is
constrained to deny the same. Well-settled is the rule that
separation pay shall be allowed only in those instances where
the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Inasmuch
as reason for which the petitioner was validly separated
involves his integrity, which is especially required for the
position of purser, he is not worthy of compassion as to deserve
at least separation pay for his length of service
Disposition Petition denied
A2010 - 82 - Disini
HANFORD PHIL INC V JOSEPH
454 SCRA 773
SANDOVAL-GUTIERREZ; March 31, 2005
NATURE
Petition for review on certiorari
FACTS
- Hanford Philippines, Inc. (Hanford - petitioner) hired Shirley
Joseph as a sewer. Joseph voluntarily tendered her resignation
which petitioner accepted the day after. Petitioner then paid
respondent her last salary, 13th month pay and the cash
conversion of her unused vacation and sick leave.
- Respondent (Joseph) sent a letter to petitioner requesting
payment of her separation pay pursuant to Section 1, Article IV
of the Collective Bargaining Agreement (CBA) quoted as follows:
SECTION 1. Regular employees or workers separated by the
COMPANY because of reduction of personnel and employees
or workers who may be separated without cause, or those
whose services are terminated or are separated from work
due to suspension or cessation of operation shall be entitled
to a termination pay in accordance with law. The COMPANY
shall give termination pay to those who voluntarily resign due
to the reasons heretofore stated subject to the following
terms and conditions: a) 1 to 30 years of service shall be
paid 20 days for every year of service; b) 16 to 20 years of
service to the COMPANY shall be paid 15 days pay for every
year of service; c) 11 to 15 years of service to the
COMPANY shall be paid 10 days pay for every year of service;
and d) 5 to 10 years of service to the COMPANY shall be
paid 5 days pay for every year of service.
- Labor Arbiter granted respondent’s petition and ordering
petitioners to pay her separation pay. NLRC affirmed. CA
affirmed.
ISSUE
WON Joseph should be awarded separation pay
HELD
YES
- due to the stipulation of the CBA. As held in Hinatuan Mining
Corporation and/or the Manager versus National Labor Relations
and Margo Batister, we held that while it is true that under the
Labor Code, an employee who voluntarily resigns may not be
granted separation pay, as in fact, the general rule is that an
employee who voluntarily resigns is not entitled to separation
pay, however, there is an exception, that is, when it is
stipulated in the employment contract or CBA or such payment
is authorized by the employer’s practice or policy, as in this
case. As aptly held by the Labor Arbiter, the NLRC and the CA, it
is very clear from the CBA that when an employee or worker
voluntarily resigns due to, among others, “separation from the
company without cause,” such as voluntary resignation, then he
is entitled to a separation pay. Moreover, records show that
petitioners granted the employees mentioned earlier their
separation pay upon their separation by reason of their
retirement. Under the Labor Code, retirement is not also a
ground for the grant of separation pay. If petitioners could be
liberal to those employees who retired, there is no reason why
they should not also extend such liberality to respondent
considering that she served petitioner for twenty one years.
Philippine National Construction vs. NLRC finds application:
“In the interpretation of an employer’s program providing for
separation benefits, all doubts should be construed in favor of
labor. After all, workers are the intended beneficiaries of
such program and our Constitution mandates a clear bias in
favor of the working class.”
Disposition petition is hereby DENIED
WHEN NOT ALLOWED
Labor Law 1 A2010 - 83 - Disini
business losses or financial reverses." Said provision does not
obligate an employer to pay separation benefits when the
NORTH DAVAO MINING CORPORATION V NLRC closure is due to losses.
254 SCRA 721 Reasoning
PANGANIBAN; March 13, 1996 [a] Where the closure was due to business losses as in the
instant case, in which the aggregate losses amounted to over
P20 billion the Labor Code does not impose any obligation upon
NATURE
the employer to pay separation benefits, for obvious reasons.
Petition for certiorari
The company's practice of giving one month's pay for every
year of service could no longer be continued precisely because
FACTS
the company could not afford it anymore. It was forced to close
- In May 1992, petitioner North Davao completely ceased
down on account of accumulated losses of over P20 billion
operations due to serious business reverses. From 1988 until its
[b] In this case, the basis for the claim of the additional
closure in 1992, North Davao suffered net losses averaging P3B
separation benefit of 17.5 days is alleged discrimination, i.e.,
per year, for each of the five years prior to its closure. It was
unequal treatment of employees, which is proscribed as an
found that 5 months prior to its closure, its total liabilities had
unfair labor practice by Art. 248 (e) of said Code. Under the
exceeded its assets by P20.4B, as shown by its financial
facts and circumstances of the present case, the grant of a
statements audited by the COA. When it ceased operations, its
lesser amount of separation pay to private respondent was
remaining employees were separated and given the equivalent
done, not by reason of discrimination, but rather, out of sheer
of 12.5 days' pay for every year of service, computed on their
financial bankruptcy, a fact that is not controlled by
basic monthly pay, in addition to the commutation to cash of
management prerogatives. Stated differently, the total
their unused vacation and sick leaves. However, it appears that,
cessation of operation due to mind-boggling losses was a
during the life of the petitioner corporation, from the beginning
supervening fact that prevented the company from continuing
of its operations in 1981 until its closure in 1992, it had been
to grant the more generous amount of separation pay. The fact
giving separation pay equivalent to 30 days' pay for every year
that North Davao at the point of its forced closure voluntarily
of service. Moreover, inasmuch as the region where North
paid any separation benefits at all although not required by law
Davao operated was plagued by insurgency and other peace
and 12.5-days worth at that, should have elicited admiration
and order problems, the employees had to collect their salaries
instead of condemnation.
at a bank in Tagum, Davao del Norte, some 58 km from their
2. YES
workplace and about 2.5 hours' travel time by public
- The award of back wages and transportation allowance and
transportation; this arrangement lasted from 1981 to 1990.
the issued connected therewith are factual, the determination
- A complaint was filed with respondent Labor Arbiter by
of which is best left to the respondent NLRC. It is well settled
respondent Wilfredo Guillema and 271 other separated
that this Court is bound by the findings of fact of the NLRC, so
employees for: (1) additional separation pay of 17.5 days for
long as said findings are supported by substantial evidence
every year of service; (2) back wages equivalent to two days a
- From the evidence on record, Court finds that the hours spent
month; (3) transportation allowance; (4) hazard pay; (5)
by complainants in collecting salaries at a bank in Tagum,
housing allowance; (6) food allowance; (7) post-employment
Davao del Norte shall be considered compensable hours
medical clearance; and (8) future medical allowance, all of
worked. Considering further the distance between Amacan,
which amounted to P58M as computed by private respondent.
Maco to Tagum which is 2.5 hours by travel and the risks in
- LA ruled in favor of private respondents. On appeal,
commuting all the time in collecting complainants' salaries,
respondent NLRC affirmed the decision in toto. Petitioner North
would justify the granting of backwages equivalent to 2 days in
Davao's motion for reconsideration was likewise denied. Hence,
a month as prayed for. Corollary to the above findings, and for
this petition.
equitable reasons, we likewise hold respondents liable for the
Respondent’s Main Contentions: That the award of
transportation expenses incurred by complainants at P40 round
separation pay should be given, based solely on petitioner
trip fare during pay days.
North Davao's long-standing policy of giving separation pay
- It is petitioners' burden or duty to present evidence of
benefits equivalent to 30-days' pay, which policy had been in
compliance of the law on labor standards, rather than for
force in the years prior to its closure. That by denying the same
private respondents to prove that they were not paid/provided
separation benefits to private respondent and the others
by petitioners of their backwages and transportation expenses.
similarly situated, petitioners discriminated against them.
Disposition Judgment MODIFYING assailed Resolution by
SETTING ASIDE and deleting the award for "additional
ISSUES
separation pay of 17.5 days for every year of service", and
1. WON an employer whose business operations ceased due to
AFFIRMING it in all other aspects.
serious business losses or financial reverses is obliged to pay
separation pay to its employees separated by reason of such
closure
2. WON the award of back wages and transportation allowance
COMPUTATION
was proper
HELD MILLARES V NLRC
1. NO
Ratio The underscored portion of Art. 28310 governs the grant
[PAGE 79]
of separation benefits "in case of closures or cessation of
operation" of business establishments "NOT due to serious EFFECT OF ACCEPTANCE
10
Art. 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of labor ANINO V NLRC
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for [PAGE 9]
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least 1 month before
the intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his 1 month pay or to at least 1 month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall be
equivalent to 1 month pay or at least 1/2 month pay for every year of service,
whichever is higher. A fraction of at least 6 months shall be considered 1 whole year.
Labor Law 1
LIABILITY OF CORPORATE OFFICERS
LIABILITY RULE
BOGO-MEDELLIN SUGARCANE PLANTERS ASSN
INC V NLRC
[PAGE 273]
NYK INDUSTRIAL V NLRC (PUBLICO)
397 SCRA 489
QUISUMBING; February 17, 2003
FACTS
- petitioner NYK hired respondent Virginia Publico as a sewer.
Under the terms and conditions of her employment, Publico was
paid on a piece-rate basis, but required to work from 8:00 A.M.
to 12:00 midnight. On the average, she earned P185.00 daily
- Publico requested that she be allowed to leave the work place
early, as she was not feeling well due to a bout of influenza.
Permission was refused but nonetheless, Publico went home.
- The following day, Publico called up her employer and notified
management that she was still recovering from her ailment.
When she came back to work, she was prevented from entering
the gates on manager’s orders. When she was finally allowed
to, she sought to talk to the owner Stephen Ng. she was asked
to return the following day
- upon meeting him, she was informed that she was dismissed
due to her refusal to do overtime work. She filed a case for
illegal dismissal. Corporation countered by saying that her
husband did not allow her to work at night. As night work is a
must in their line of business, particularly when there are rush
orders, petitioners claimed that given Publico’s failure to render
overtime work, they were left with no other recourse but to fire
her. LA held dismissal as illegal. This was affirmed by the NLRC.
- Appeal before the CA was outright dismissed. Court of Appeals
pointed out that there was non-compliance with Section 1 of
Rule 65 of the 1997 Rules of Civil Procedure as the petition was
merely accompanied by a certified xerox copy of the assailed
NLRC decision, instead of a certified true copy thereof as
required by the Rules of Court
ISSUE
1. WON CA commit a reversible error in dismissing appeal on
purely technical grounds, i.e., that the attached copy of the
NLRC decision is a mere photocopy of the original decision
2. WON Cathy Ng should be held liable for payment of
backwages
HELD
1. NO
- Section 1 of Rule 65, 1997 Rules of Civil Procedure, requires
that the petition shall be accompanied by a certified true copy
of the judgment or order subject thereof, together with copies
of all pleadings and documents relevant and pertinent thereto.
In the present case, the disputed document although stamped
as “certified true copy” is not an authenticated original of such
certified true copy, but only a xerox copy thereof, in
contravention of paragraph 3 of the guidelines
- paragraph 5 of Administrative Circular No. 3-96, which
provides:
5. It shall be the duty and responsibility of the party using
the documents required by Paragraph (3) of Circular No. 1-88
to verify and ensure compliance with all the requirements
therefor as detailed in the preceding paragraphs. Failure to
do so shall result in the rejection of such annexes and
the dismissal of the case
- Petitioners are hereby reminded that the right to file a special
civil action of certiorari is neither a natural right nor a part of
due process. A writ of certiorari is a prerogative writ, never
demandable as a matter of right, never issued except in the
A2010 - 84 - Disini
exercise of judicial discretion. Hence, he who seeks a writ of
certiorari must apply for it only in the manner and strictly in
accordance with the provisions of the law and the Rules
2. YES
- In A.C. Ransom Labor Union-CCLU v. NLRC, which held that
since a corporation is an artificial person, it must have an officer
who can be presumed to be the employer, being the “person
acting in the interest of the employer.”
- In other words the corporation, in the technical sense only, is
the employer. In a subsequent case, we ordered the corporate
officers of the employer corporation to pay jointly and solidarily
the private respondents’ monetary award. More recently, a
corporation and its president were directed by this Court to
jointly and severally reinstate the illegally dismissed employees
to their former positions and to pay the monetary awards.
- In this case Cathy Ng, admittedly, is the manager of NYK.
Conformably with our ruling in A. C. Ransom, she falls within the
meaning of an “employer” as contemplated by the Labor Code,
who may be held jointly and severally liable for the obligations
of the corporation to its dismissed employees. Pursuant to
prevailing jurisprudence, Cathy Ng, in her capacity as manager
and responsible officer of NYK, cannot be exonerated from her
joint and several liability in the payment of monetary award to
private respondent
TAN V TIMBAL, JR.
434 SCRA 381
CALLEJO SR; July 14, 2004
NATURE
CERTIORARI
FACTS
- Restituto Timbal, Jr. and Ernesto Valenciano received a letter
from their employer, Nationwide Steel Corporation (NSC),
through Conrado Tan, its general manager, informing them that
they were found to be among those employees who filed a
complaint with the Social Security System (SSS) in which they
claimed that NSC was not remitting its employees’ SSS
premiums.
- Tan required the two to explain their side on the matter within
24 hours.
- After submitting their explanation, Timbal, Jr. and Valenciano
were instructed by Tan to report the following day for the
resolution of the matter.
- However, when Timbal, Jr. and Valenciano were then
suspended indefinitely.
- Aggrieved, Timbal, Jr. and Valenciano filed a complaint for
illegal dismissal with the NLRC, against NSC, and impleaded
Conrado Tan as respondent, in his capacity as general manager
of the said corporation
- NSC claims: both complainants were indefinitely suspended as
a result of the criminal case filed by Benny Sy against them for
their false charge.
- LA rendered judgment in favor of the complainants; ordered
reinstatement.
- The decision became final and executory as no appeal from
the decision was filed by any of the parties.
- 1990, the LA issued a Writ of Execution directing the sheriff to
effect the complainants’ reinstatement and to collect from the
respondent NSC the accrued backwages, and remit the same to
the complainants.
- The sheriff served a notice of garnishment on the Philippine
Banking Corporation. However, the Bank did not respond to the
notice, and the decision of the labor arbiter remained
unsatisfied.
- Timbal et al filed an omnibus motion, praying that they be
paid separation pay instead of being reinstated, as part of the
monetary award in their favor.
- They also prayed for the issuance of an alias writ of execution
enforceable against the NSC and its officers/stockholders.
- LA granted the motion ordered Tan et al to pay to the NSC,
through the Office of the Labor Arbiter, their unpaid subscribed
Labor Law 1
capital stock that the same may be applied to satisfy the
complainants’ backwages, failing which, an alias writ of
execution would be issued by his Office against their assets.
- LA issued an alias writ of execution. Denied NSC’s motion to
set aside writ.
- Conrado Tan and William Ang filed with the NLRC a petition for
the issuance of a writ of preliminary injunction and a TRO to
enjoin the implementation of the alias writ of execution issued
by the Labor Arbiter.
- They alleged that they were never furnished copies of the
omnibus motion filed by Timbal, Jr. and Valenciano; that they
were not notified of any hearing on the matter; and, that the
Labor Arbiter acted in excess or lack of jurisdiction when he
issued an alias writ of execution ordering the sheriff to collect
from the respondent NSC their unpaid subscriptions.
- NLRC rendered a Decision granting the motion of Tan and Ang
and set aside the assailed order and alias writ of execution of
the Labor Arbiter; denied Timbal’s MR.
- CA: relied onSt. Martin Funeral Homes vs. NLRC, affirmed the
decision of the NLRC as far as William Ang was concerned,but
granted as to Tan; denied Tan’s MR.
ISSUE
WON TAN is liable, either jointly or severally with the NSC, for
the monetary award in favor of the Timbal
HELD
NO
- Only the NSC was found liable for the monetary awards in
favor of the complainants therein, including the herein
respondent. The petitioner, although the general manager of
NSC, was not ordered to pay for the monetary award in favor of
the complainants, jointly or severally, with the NSC.
- The decision of the Labor Arbiter had become final and
executory; hence, immutable.
- Industrial Management International Development Corporation
vs. NLRC:
It is an elementary principle of procedure that the resolution
of the court in a given issue as embodied in the dispositive
part of a decision or order is the controlling factor as to
settlement of rights of the parties. Once a decision or order
becomes final and executory, it is removed from the power or
jurisdiction of the court which rendered it to further alter or
amend it. It thereby becomes immutable and unalterable and
any amendment or alteration which substantially affects a
final and executory judgment is null and void for lack of
jurisdiction, including the entire proceedings held for that
purpose. An order of execution which varies the tenor of the
judgment or exceeds the terms thereof is a nullity.
- None of the parties in the case before the Labor Arbiter
appealed the decision; hence the same became final and
executory.
- It was, therefore, removed from the jurisdiction of the Labor
Arbiter or the NLRC to further alter or amend it.
- Thus, the proceedings held for the purpose of amending or
altering the dispositive portion of the said decision are null and
void for lack of jurisdiction.
- Not even the NLRC, the Court of Appeals and this Court has
any appellate jurisdiction to alter or reverse the decision of the
Labor Arbiter.
- CA correctly cited ruling in MAM Realty Development
Corporation vs. NLRC, that in labor cases, corporate directors
and officers are solidarily liable with the corporation for the
termination of employment of corporate employees committed
with malice or bad faith. The ruling applies in a case where a
corporate officer acts with malice or bad faith in suspending an
employee. Whether or not the petitioner acted with malice or
bad faith in ordering the suspension of the respondent is a
question of fact submitted by the parties to the Labor Arbiter for
resolution.
- In the instant case, the Labor Arbiter did not make any finding
in his decision that the petitioner acted with malice or bad faith
in ordering the suspension of the respondent.
A2010 - 85 - Disini
- Neither did he hold the petitioner liable, either jointly or
severally with the NSC, for the monetary award in favor of the
complainants therein including the respondent herein.
- CA had no jurisdiction to delve into and resolve an issue
already passed upon by the Labor Arbiter with finality.
Disposition Petition is GRANTED. NLRC’S DECISION is
AFFIRMED.
ACESITE CORP V NLRC
[PAGE 303]
14.12 DAMAGES
MORAL/EXEMPLARY
COLEGIO SAN JUAN DE LETRAN-CALAMBA V
VILLAS
[PAGE 285]
ASIA PACIFIC CHARTERING (PHILS) INC V FAROLAN
[PAGE 119]
VIERNES V NLRC
[PAGE 94]
TOLOSA V NLRC (QWANA KAIUN)
401 SCRA 391
PANGANIBAN; April 10, 2003
NATURE
Petition for certiorari assailing the CA decision denying
petitioner’s motion without prejudice to the right of herein
petitioner to file a suit before the proper court, if she so desires
and the resolution denying MFR.
FACTS
- Evelyn Tolosa (hereafter EVELYN), was the widow of Captain
Virgilio Tolosa (hereafter CAPT. TOLOSA) who was hired by
Qwana-Kaiun, through its manning agent, Asia Bulk Transport
Phils. Inc., (ASIA BULK for brevity), to be the master of the
Vessel named M/V Lady Dona. CAPT. TOLOSA had a monthly
compensation of US$1700, plus US$400.00 monthly overtime
allowance. His contract officially began on November 1, 1992,
as supported by his contract of employment when he assumed
command of the vessel in Yokohama, Japan. The vessel
departed for Long Beach California, passing by Hawaii in the
middle of the voyage. At the time of embarkation, CAPT.
TOLOSA was allegedly shown to be in good health.
- During 'channeling activities' upon the vessel's departure from
Yokohama sometime on November 6, 1992, CAPT. TOLOSA was
drenched with rainwater. The following day, November 7, 1992,
he had a slight fever and in the succeeding twelve (12) days,
his health rapidly deteriorated resulting in his death on
November 18, 1992.
- Because of the death of CAPT. TOLOSA, his wife, EVELYN, as
petitioner, filed a Complaint/Position Paper before the POEA
(POEA Case No. 93-06-1080) against Qwana-Kaiun, thru its
resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate
and Mario Asis, as respondents.
- After initial hearings and submissions of pleadings, the case
was however transferred to the Department of Labor and
Employment.
- Labor Arbiter granted all the damages, (plus legal interest), as
prayed for by the petitioner:
1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or
P4,586,400.00 (at P26.00 per US$1.00) by way of lost
income;
Labor Law 1
2. interest at the legal rate of six percent (6%) per annum or
P1,238,328.00 (from November 1992 to May 1997 or 4 ½
years);
3. moral damages of P200,000.00;
4. exemplary damages of P100,000.00; and
5. 10% of the total award, or P612,472.80, as attorney's fees.'
xxx xxx xxx
- NLRC set aside the decision and dismissed due to lack of
jurisdiction. CA affirmed saying that the cause of action is
based on quasi-delict.
ISSUES
1. WON the NLRC has jurisdiction over the case.
2. WON the monetary awards have reached finality
HELD
1. NO
Ratio Not every dispute between an employer and employee
involves matters that only labor arbiters and the NLRC can
resolve in the exercise of their adjudicatory or quasi-judicial
powers. The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising from
an employer-employee relationship which can only be resolved
by reference to the Labor Code, other labor statutes, or their
collective bargaining agreement. (Georg Grotjahn GMBH & Co.
v. Isnani)
Reasoning
- The pivotal question is whether the Labor Code has any
relevance to the relief sought by petitioner. From her paper, it is
evident that the primary reliefs she seeks are as follows: (a)
loss of earning capacity denominated therein as "actual
damages" or "lost income" and (b) blacklisting. The loss she
claims does not refer to the actual earnings of the deceased,
but to his earning capacity based on a life expectancy of 65
years. This amount is recoverable if the action is based on a
quasi delict as provided for in Article 2206 of the Civil Code, but
not in the Labor Code.
- Claims for damages under paragraph 4 of Article 217 must
have a reasonable causal connection with any of the claims
provided for in the article in order to be cognizable by the labor
arbiter. Only if there is such a connection with the other claims
can the claim for damages be considered as arising from
employer-employee relations. In the present case, petitioner's
claim for damages is not related to any other claim under
Article 217, other labor statutes, or collective bargaining
agreements.
2. NO
Reasoning
- Petitioner contends that the labor arbiter's monetary award
has already reached finality, since private respondents were not
able to file a timely appeal before the NLRC.
- Whether respondents were able to appeal on time is a
question of fact that cannot be entertained in a petition for
review under Rule 45 of the Rules of Court. In general, the
jurisdiction of this Court in cases brought before it from the
Court of Appeals is limited to a review of errors of law allegedly
committed by the court a quo.
Disposition the Petition is hereby DENIED, and the assailed
Decision and Resolution AFFIRMED.
MAQUILING V PHILIPPINE TUBERCULOSIS SOCIETY
INC
450 SCRA 465
TINGA; February 4, 2005
NATURE
Petition for Review on Certiorari of CA Decision of March 28,
2000 and its Resolution of May 22, 2000, which reversed the
decision of the NLRC dated December 15, 1997, and that of
Labor Arbiter of September 1993, which both found the
dismissal from service of Dr. Maquiling illegal
A2010 - 86 - Disini
FACTS
- April 16, 1968: Dr. Maquiling (Dr. M) was employed by
respondent Philippine Tuberculosis Society (PTS)
- June 8, 1991- Dr. M was dismissed from service as Deputy
Executive Director after serving PTS for 23 years. He was then
earning P13,900 monthly salary
- Dr. M filed complaint for reinstatement or for payment of full
backwages and separation pay in accordance with A279 of the
LC, plus moral and exemplary damages
- Records show that Dr. M received a memo April 2, 1991 from
PTS directing him to submit written explanation for 1. Delayed
GSIS remittances; 2. Reported deficit of P7.3 m appearing in
their financial statement for 1990; 3. Expenses incurred in
connection with the Dale Carnegie and Silva Mind Control
Seminar; 4. P3.7 m misc. expenses; 5. reasons for renewing
their service contract with Ultra
- Dr. M submitted his explanatory letter, and had a 30 minute
conversation with OIC-executive director Soriano.
- No further related proceedings were undertaken before Dr. M
received a letter on June 8, 1991 calling for his dismissal
effective immediately, without any retirement benefits
Dr. M continued reporting for work despite his dismissal
- July 17, 1991- Dr. M protested non-payment of his salary
- September 1991- Dr. M stopped reporting for work, filed his
complaint with Labor Arbiter the next month.
- the Labor Arbiter rendered a decision ordering PTS to
immediately reinstate Dr. Maquiling to the position of Deputy
Executive Director or its equivalent in rank and pay, without
loss of seniority rights inclusive of all benefits attached to said
position at the time of his dismissal, and to pay Dr. Maquiling
backwages computed from the time of his dismissal on 7 June
1991 until his actual reinstatement
- Upon appeal by PTS to the NLRC, the Commission upheld the
decision of the labor arbiter and dismissed the appeal.However,
PTS appealed the decision to the Court of Appeals which
reversed the decisions of the NLRC and Labor Arbiter by
ordering the dismissal of the complaint and declaring that his
dismissal from employment as legal and valid. It, however,
ordered PTS to pay Dr. Maquiling the amount of ten thousand
pesos (P10,000.00) as damages or indemnity for violation of his
right to procedural due process and separation pay in the
amount of one hundred fifty-nine thousand eight hundred fifty
pesos (P159,850.00) in the interest of social justice.
ISSUES
1. WON Dr. M was dismissed for just cause
2. WON procedural due process was observed in effecting Dr.
M’s dismissal
HELD
1. YES
Reasoning
- Maquiling was dismissed from employment for just cause
consisting of loss of trust and confidence. The records reveal
that he was Deputy Executive Director of PTS, a responsible
position, at the time of his dismissal.
- PTS imputes the delayed GSIS remittances to Dr. Maquiling’s
failure to follow his duties as prescribed by law. The records
disclose that Dr. Maquiling was aware of the problem but he
failed to give priority thereto.
- SC attributes the P7.3 million deficit in PTS’ 1990 financial
statements to Dr. Maquiling’s failure to consider the realities of
the financial condition of the institution. Dr. Maquiling even
aggravated such omission by insisting on the salary increase of
both managerial and non-managerial personnel despite the
financial conundrum that puzzles the future fiscal stability of
PTS. The records show that he made representations during the
Board meeting that sufficient funds existed to meet the salary
upgrading despite the presence of financial strains. Such a
course of action falls short of his responsibility to safeguard the
financial stability of the institution he leads.
2. NO
Reasoning
Labor Law 1
- two notices must be sent to the employee who is the subject
of an investigation for acts which may warrant his eventual
dismissal from employment. The notices required before an
employee may be validly dismissed are: (a) a written notice
served on the employee specifying the grounds for termination
and giving the employee reasonable opportunity to explain
his/her side; (b) a hearing or conference wherein the employee,
with the assistance of counsel if so desired, is given opportunity
to respond to the charge, present his evidence or rebut
evidence presented against him/her; and (c) written notice of
termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been
established to justify termination. The requirement of notice is
intended to inform the employee concerned of the employer’s
intent to dismiss and the reason for the proposed dismissal;
upon the other hand the requirement of hearing affords the
employee an opportunity to answer his employer’s charges
against him and accordingly to defend himself therefrom before
dismissal is effected.
- The first notice must inform outright the employee that an
investigation will be conducted on the charges particularized
therein which, if proven, will result to his dismissal. Such notice
must not only contain a plain statement of the charges of
malfeasance or misfeasance but must categorically state the
effect on his employment if the charges are proven to be true.
- This notice will afford the employee an opportunity to avail all
defenses and exhaust all remedies to refute the allegations
hurled against him for what is at stake is his very life and limb
his employment. Otherwise, the employee may just disregard
the notice as a warning without any disastrous consequence to
be anticipated. Absent such statement, the first notice falls
short of the requirement of due process. The Labor Arbiter, the
NLRC and the Court of Appeals all agree in concluding that
procedural due process in the instant case was not observed. As
revealed by the evidence on record, a confidential
memorandum FN dated 2 April 1991 was sent to Dr. Maquiling
by Soriano requiring him to explain in writing the matters
contained therein. The text of the memorandum reads as
follows:
02 April 1991
CONFIDENTIAL MEMORANDUM FOR: DR. ERNESTO I.
MAQUILING
Pursuant to the directive of the Board of Directors issued in
its meeting on March 25, 1991, you are hereby instructed to
report and explain in writing to this office, within five (5) days
from notice hereof, on the following matters:
The delayed GSIS remittances;
The reported deficit of P7.3 million appearing in our financial
statement for 1990;
The expenses you approved and incurred in connection with
the Dale Carnegie and Silva Mind Control Seminar;
The P3.7 million miscellaneous expenses appearing in our
financial statement; and
Your reasons for renewing our service contract with Ultra.
For immediate compliance.
(SGD.) ATTY. ANDRES B. SORIANO
OIC-Executive Director
- On 11 April 1991, Dr. Maquiling submitted his written reply.
The second notice which informs Dr. Maquiling of the decision
to terminate his employment was sent to him on 8 June 1991. It
must be noted that the first notice dated 2 April 1991 is a mere
instruction to explain the matters enumerated therein. It did not
apprise Dr. Maquiling of any investigation to be conducted or
being conducted that will warrant his dismissal from service if
found guilty of charges specified therein. Thus, such notice fell
short of the requirement of law that an employee must be
afforded the benefit of the two-notice rule in dismissal cases
that will allow the employee to substantiate the charges
specified in the notice with full knowledge at the outset that the
investigation to be conducted may result in his dismissal or
suspension from employment.
Disposition the Decision of the Court of Appeals dated 28
March 2000 is hereby MODIFIED pursuant to the Agabon ruling
as the latest jurisprudential rule on the matter. For the
A2010 - 87 - Disini
dismissal from employment of Dr. Maquiling with a just cause
but without observing procedural due process, PTS is ORDERED
to pay Dr. Maquiling nominal damages in the amount of thirty
thousand pesos (P30,000.00).
KAY PRODUCTS INC V CA
[PAGE 312]
ACUNA V CA
[PAGE 12]
ACESITE CORP V NLRC
[PAGE 303]
SAGUM V CA
[PAGE 304]
NOMINAL DAMAGES
CENTRAL LUZON CONFERENCE V CA
466 SCRA 711
AZCUNA; August 12, 2005
FACTS
- Respondent Federico Cabanit was a sales representative of
petitioner Central Luzon Conference Corporation of Seventh-
Day Adventist Church, Inc. After six months, he became its
regular employee, assigned to the accounting department.
Promoted, he became branch manager from 1981 to 1990, and
auditor from 1990 to 1996.
- On June 11, 1997, respondent Cabanit was informed that he
erred in recording US$40 and was later suspended from July 1-
31, 1997 but the suspension was rescinded and he was
assigned as general auditor.
- Subsequently, he was required to appear before petitioner
corporation’s office and its Executive Committee pursuant to
two letters. He was placed under preventive suspension on
October 16, 1997 and required to explain in 15 days why he
should not be dismissed due to irregularities committed. He
requested copies of pertinent documents to enable him to
explain his side but petitioner corporation allegedly did not
oblige. On November 18, 1997, petitioner corporation, through
an EXECOM meeting, adopted a resolution terminating his
employment effective October 16, 1997.
- Federico Cabanit filed a complaint for illegal dismissal with the
Arbitration Branch of the National Labor Relations Commission
(NLRC).
- The Labor Arbiter (LA) dismissed the complaint for lack of
merit.
- On appeal, the NLRC affirmed the decision of the LA.
- On petition to the Court of Appeals (CA), the CA agreed that
the dismissal was for a just cause but found that therein
respondents failed in the second requirement of due
process in that the employee was not given a chance to
explain his side.
- The CA ordered payment of backwages from the time of
termination to the time the decision becomes final and
remanded the case to the LA for computation of backwages.
- Hence, this petition for review under Rule 45 of the Rules of
Court, principally to question the award of backwages.
ISSUE
WON (as in the case of Agabon), Cabanit is entitled only to
nominal damages
HELD
YES
- The violation of the petitioners’ right to statutory due process
by the private respondent warrants the payment of indemnity in
Labor Law 1
the form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into
account the relevant circumstances (Savellano v. Northwest
Airlines, G.R. No. 151783, 8 July 2003, 405 SCRA 416).
Considering the prevailing circumstances in the case at bar, we
deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations
of the statutory due process rights of employees. At the very
least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code
and its Implementing Rules
Disposition petition is GRANTED, and the decision of the Court
of Appeals is MODIFIED, by deleting the award of backwages
and granting only P30,000 as nominal damages.
SECTION 15: RETIREMENT
15.01 RETIREMENT
DEFIINITION
ARIOLA V PHILEX MINING CORP
[PAGE 205]
TYPES
GERLACH V REUTERS
448 SCRA 335
SANDOVAL-GUTIERREZ; January 17, 2005
FACTS
- On February 15, 1982, Reuters Limited, Phils. (Reuters), a
company engaged in news dissemination with offices
worldwide, hired Marilyn Odchimar Gerlach, petitioner, as its
local correspondent. On October 1, 1983, Reuters implemented
a local Retirement Benefit Plan (Plan) for its Philippine-hired
employees. The Plan is funded by the company, but an
employee-participant may volunteer to contribute a percentage
of his basic monthly salary to the fund. Gerlach was
automatically covered by the Plan by reason of her age and
length of service. However, she opted not to contribute to the
fund. She worked in Reuters Philippines up to December 23,
1983.
- On January 23, 1984, Gerlach was assigned as a journalist to
Reuters Singapore. She was informed that her home base will
continue to be Manila and should she return there at the end of
this assignment or following subsequent assignments the terms
and conditions of employment would revert to those of local
staff. She would be paid in Singaporean dollars. However, she
would still be included in the Retirement Benefit Plan based in
the Philippines using a “notional salary” in Philippine pesos. On
March 26 to June 4, 1986, petitioner was assigned to Reuters
Hongkong and her actual salary was paid in HK dollars.
Thereafter, or in July, 1986, she was appointed correspondent in
Sri Lanka where her actual salary was in rupees and her peso
“notional salary” was increased to P12,600 per month.
- On October 12, 1988, she was directed to return to Manila and
resume her post by December 15, 1988. However, she
requested to be assigned to the Reuters Office either in Bonn,
West Germany or in London. But due to the worldwide
reduction of personnel, respondent denied her request. She
then applied for a 14-month study leave to take up economic
subjects at Bonn University. Reuters approved her request for a
14-month leave without pay from January 1, 1989 up to March
1, 1990. On May 20, 1990, petitioner resigned from Reuters
- On March 1, 1991, petitioner received her retirement benefits
under the Plan in the amount of P79,228 as determined by the
A2010 - 88 - Disini
trustee bank (Bank of the Philippine Island) in accordance with
the provisions of the Plan. The computation was based on her
notional salary. However, she questioned the amount she
received as well as her entitlement to a disturbance grant,
contending that her retirement benefits must be computed on
the basis of her actual salary abroad, not on her notional salary.
- The Labor Arbiter ordered Reuters to pay Gerlach additional
retirement benefits in the sum of P436,000, which amount was
based on her actual salary abroad, not on her notional salary; a
disturbance grant in the sum of Stg 1,750 or its equivalent in
pesos; and attorney’s fees. After a series of remands, MFRs and
reversals, the NLRC ruled in favor of Gerlach. The CA ruled for
Reuters with the modification that Gerlach be paid her
disturbance and resettlement grant.
ISSUE
WON the computation of petitioner’s retirement benefits should
be based on her basic annual salary while stationed abroad
HELD
NO
Reasoning There are three kinds of retirement schemes. The
first type is compulsory and contributory in character. The
second type is one set- up by agreement between the employer
and the employees in collective bargaining agreements or other
agreements between them. The third type is one that is
voluntarily given by the employer, expressly as in an
announced company policy or impliedly as in a failure to
contest the employee's claim for retirement benefits. It is this
third type of retirement scheme which covers respondent’s
Plan.
- Article 287 of the Labor Code reads:
“Retirement. – Any employee may be retired upon reaching
the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement
and other agreements.”
- The first paragraph of the above provisions deals with the
retirement age of an employee established in (a) a collective
bargaining agreement or (b) other applicable employment
contract. The second paragraph deals with the retirement
benefits to be received by a retiring employee which he may
have earned under (a) an existing law, (b) a collective
bargaining or (c) other agreements.
- Article 287 does not in itself purport to impose any obligation
upon employers to set up a retirement scheme for their
employees over and above that already established under
existing laws, like the Social Security Act. Nonetheless, Section
14(a), Rule 1 of the Rules and Regulations Implementing Book
VI of the Labor Code, provides:
“Retirement benefits. – (a) An employee who is retired
pursuant to a bona fide retirement plan or in accordance with
the applicable individual or collective agreement or
established employer policy shall be entitled to all the
retirement benefits provided therein . . ."
- Thus, Reuters based Gerlach’s retirement benefits on its Plan
and established policy, which is in accord with the above
provision. Consequently, Gerlach’s theory that the computation
of her retirement benefits should be based on her basic annual
salary while stationed abroad is untenable. Her retirement
benefits must be based on her notional Philippine salary. It is
very clear that from the very start of her first assignment
overseas, Reuters apprised her that the company’s contribution
to the Plan is based on her notional Philippine salary. In fact,
under the Plan, the company’s contribution to the fund is 10%
of the basic monthly salary of each participant. Reuters also
informed her of the amount of her notional Philippine salary
whenever she was transferred to her next overseas assignment
or when there were increases in her salary, both actual and
notional. Significantly, Reuters was able to prove that it has
been its practice worldwide that the notional salary of an
employee is its basis in computing its contribution to the
Labor Law 1
retirement plan for a local employee detailed abroad. It follows
that the amount of retirement benefits of a retiring employee
assigned abroad is based on his notional salary.
- Besides, it is a basic rule in evidence that the burden of proof
is on the part of the party who makes the allegations – ei
incumbit probatio, qui dicit, non qui negat.
Disposition Petition is DENIED. Decision of the CA is
AFFIRMED.
BASIS
AQUINO V NLRC (OTIS ELEVATOR CO)
206 SCRA 118
CRUZ; February 11, 1992
NATURE
Petition for review from the decision of the NLRC
FACTS
- Petitioners’ services were terminated in line with the need of
the company “to streamline its operations, consolidate certain
functions, reduce its manpower and cut non-essential
spending.” They received due notice thereof.
- They received separation pay based on their CBA and which is
double than required by the Labor Code.
- They demanded retirement benefits, invoking the Retirement
Plan of Otis in their CBA (“A participant who is terminated from
employment and who has rendered at least 10 years of service
shall be entitled to receive in lump sum all or a apportion of his
accrued benefit credits as of his date of termination…”). They
also cited the case of other co-employees who were terminated
on the ground of redundancy and who received separation pay
and retirement benefits.
- Otis argued that separation pay and retirement benefits were
mutually exclusive.
- Labor Arbiter: petitioners were entitled to the retirement plan.
He said Otis is now estopped, having given retirement benefits
to other workers.
- NLRC reversed labor arbiter’s decision.
ISSUE
WON petitioners are still entitled to the retirement benefits
HELD
YES
- The petitioners are covered by the Retirement Plan because
they have contributed to the retirement fund, have been
separated by reason of retrenchment, and have served the
company for more than the prescribed minimum period of ten
years.
- Separation pay is required in the cases enumerated in Arts.
283 and 284 of the Labor Code, which include retrenchment,
and is computed at at least one month salary or at the rate of
one-half month salary for every year of service, whichever is
higher. It is a statutory right designed to provide the employee
with the wherewithal during the period that he is looking for
another employment.
- Retirement benefits, where not mandated by law, may be
granted by agreement of the employees and their employer or
as a voluntary act on the part of the employer. They are
intended to help the employee enjoy the remaining years of his
life, lessening the burden of worrying for his financial support,
A2010 - 89 - Disini
and are a form of reward for his loyalty and service to the
employer.
- The CBA and the Retirement Plan has no specific prohibition
against the payment of both benefits to the employee.
- Otis bases its arguments on Book VI, Sec. 14, Rule 1, of the
Omnibus Rules of Implementing the Labor Code, which
provides:
(a) An employee who is retired pursuant to a bonafide
retirement plan or in accordance with the applicable
individual or collective agreement or established employer
policy shall be entitled to all the retirement benefits provided
therein or to termination pay equivalent to at least one-half
month salary for every year of service, whichever is higher, a
fraction of at least 6 months being considered as one whole
year. xxx
(c) This Section shall apply where the employee retires at the
age of sixty years or more.
- However, Otis has not shown that petitioners were 60 years or
older at the time of their separation.
- If the private respondent really intended to make the
separation pay and the retirement benefits mutually exclusive,
it should have sought inclusion of the corresponding provision
in the Retirement Plan and CBA so as to remove the possible
ambiguity regarding this matter.
- Bargaining is a process where the parties discuss their
demands and counter-demands and, after haggling, agree on
what is essentially a compromise reflecting the concessions
mutually given by the parties to arrive at a common
understanding. The resultant contract provides for demandable
rights, not withdrawable doles. When the employer signs a CBA,
it recognizes the rights of the workers and does not merely
concede certain privileges to them out of the goodness of its
heart.
- Petitioners are entitled to this amount under the provisions of
the CBA and the Retirement Plan freely entered into by the
parties. These instruments are binding agreements, not being
contrary to law, morals, good customs, public order or public
policy, and must therefore be upheld.
Disposition Petition is granted. NLRC decision reversed.
GAMOGAMO V PNOC SHIPPING AND TRANSPORT
CORP
[PAGE 38]
INTERPRETATION
LOPEZ V NATIONAL STEEL CORP
423 SCRA 109
SANDOVAL-GUTIERREZ; February 16, 2004
NATURE
Petition for review on certiorari of the decision and resolution of
the Court of Appeals
FACTS
- National Steel did 2 projects, and Lopez was one of those
employed and trained. National Steel suffered substantial
losses and adopted streamlining. It issued memo announcing
retrenchment. Respondent terminated petitioner’s services.
- Lopez, after accepting separation benefits, signed Release and
Quitclaim. Eventually, she filed with Labor Arbiter complaint for
payment of retirement benefits.
- LA dismissed complaints. NLRC affirmed. CA affirmed.
ISSUES
1. WON Lopez is entitled to retirement benefits
2. WON the quitclaim is valid
HELD
1. NO
- While retirement laws are liberally construed in favor of
persons intended to be benefited, such interpretation cannot be
Labor Law 1
made in light of clear lack of consensual and statutory basis of
the grant of retirement benefits to petitioner. There is no
provision in the CBA authorizing retirement benefits in addition
to retrenchment pay. Also, petitioner has not yet reached
retirement age. Lastly, the company’s retirement plan
precludes employees whose services were terminated for
cause, from availing retirement benefits.
2. YES
- She was not forced to sign.
SALOMON V ASSOCIATE OF INTERNATIONAL
SHIPPING LINES INC
457 SCRA 254
SANDOVAL-GUTIERREZ; April 26, 2005
NATURE
Certiorari under Rule 45
FACTS
- The Association of International Shipping Lines, Inc. (AISI), is a
corporation engaged in the principal business of shipping and
container and/or cargo services.
- As a result of a decline in the volume of cargo measuring
activities and shipping transactions, AISI suffered substantial
financial losses equivalent to P213,583.00 in 1996; P783,935.00
in 1997; and P1,334,729.00 in 1998.
- With this development, AISI adopted an organizational
streamlining program that resulted in the closure of its
Measuring Department and retrenchment or termination from
the service of 17 workers. Among them were the
abovementioned petitioners who occupied booking coordinator
and measurer positions.
- In separate letters AISI terminated petitioners’ services.
Simultaneously, AISI filed with the DOLE a “Notice of Closure” or
report of petitioners’ retrenchment from the service.
- Aggrieved, petitioners filed with the National Conciliation and
Mediation Board (NCMB) a complaint for illegal dismissal and
payment of retirement benefits against AISI.
- During the conciliation proceedings, AISI paid petitioners
their retirement pay at the rate of 1 month salary per
year of service.
- Additionally, they received their leave credits, and pro-rated
13th month pay. And after having been paid their retirement
pay, they executed and signed separate Releases and
Quitclaims. Consequently, the above case was considered
closed and terminated.
- Surprisingly, petitioners filed with the LA a complaint for
payment of retirement benefits, damages and attorney’s fees
against AISI. They alleged that what each received was a
separation pay, not retirement benefits.
- LA dismissed the complaint.
- NLRC affirmed the LA’s Decision. Denied MR.
- CA affirmed the resolutions of NLRC stating that their services
were terminated due to retrenchment undertaken by AISI and
retrenchment is recognized as one of the authorized causes for
termination of employment under the Labor Code and that AISI
complied with the requirements of law with regard to
retrenchment; Deneid MR.
Petitioners’Claims:
- They invoke Sections 1 and 3 of the parties’ Collective
Bargaining Agreement (CBA) expressly providing that
retirement benefits may be granted to them in addition to their
separation pay.
- They likewise call our attention to Aquino vs. NLRC holding
that payment of separation benefits does not exclude payment
of retirement benefits.
Respondent’s Claims:
- AISI maintains that the parties’ CBA expressly prohibits the
payment of retirement benefits to employees terminated for
cause. Thus, petitioners’ reliance on Aquino vs. NLRC is
misplaced. Moreover, they executed valid quitclaims.
A2010 - 90 - Disini
ISSUE
WON the grant of ‘retirement benefits’ to petitioners as shown
in their quitclaims precludes their availment of retirement
benefits pursuant to their CBA
HELD
- While it is axiomatic that retirement laws are liberally
construed in favor of the persons intended to be benefited,
however, such interpretation cannot be made in this case
in light of the clear lack of consensual and statutory
basis of the grant of retirement benefits to petitioner.
(Philippine Scout Veterans Security & Investigation Agency, Inc.
vs. NLRC)
- The parties’ CBA provides:
“Section 1. In case of termination due to redundancy,
retrenchment, dissolution of a department/conference/section
and/or the whole ASSOCIATION, sickness or physical
disability, a regular employee shall be entitled to a separate
pay equivalent to his one (1) month basic pay for every year
of service. A fraction of at least six (6) months shall be
considered as one (1) whole year and less than six (6) months
shall be prorated accordingly.
xxx xxx
Section 3. Optional Retirement – An employee shall have the
option to retire regardless of age provided he/she has
rendered at least 15 years of continuous service to the
ASSOCIATION. An employee shall be entitled to the following
benefits.
a. 15 to less than 20 years of service – 50% of the monthly
basic salary for every year of service.
b. 20 years of service – 100% of the monthly basic salary for
every year of service.”
- Obviously, petitioners, as prescribed by the parties’ CBA, are
entitled only to either the separation pay, if they are
terminated for cause, or optional retirement benefits, if they
rendered at least 15 years of continuous services.
- Here, petitioners were separated from the service for
cause. Consequently, pursuant to the CBA, what each actually
received is a separation pay. Accordingly and considering their
Releases and Quitclaims, they are no longer entitled to
retirement benefits.
- It bears stressing that as held by the Labor Arbiter, the NLRC
and the Court of Appeals, there is no provision in the parties’
CBA authorizing the grant to petitioners of retirement benefits
in addition to their retrenchment pay; and that there is no
indication that they were forced by respondent to sign the
Releases and Quitclaims.
- SC has always accorded respect and finality to the findings of
fact of the CA, particularly if they coincide with those of the LA
and the NLRC when supported by substantial evidence, as in
this case.
- The reason for this is that quasi-judicial agencies, like the
Arbitration Board and the NLRC, have acquired a unique
expertise because their jurisdictions are confined to specific
matters. (Cosmos bottling Corporation vs. NLRC)
Disposition Petition is DENIED. CA’S DECISION AFFIRMED.
AGE
MAI PHILIPPINES INC V NLRC (NOLASCO)
151 SCRA 196
NARVASA; June 18, 1987
NATURE
Peition certiorari and prohibition to review the order and
resolution of the NLRC
FACTS
- The decision in question was rendered on November 19, 1979,
by Regional Director F. Estrella. It declared illegal the dismissal
by MAI Philippines, Inc. of its Customer Engineering Manager
Labor Law 1
Nolasco, and decreed his reinstatement with full back wages.
The decision was affirmed by the Labor Minister and in due
course became final.
- MAI Philippines, Inc. (hereafter simply referred to as MAI)
complied with it by paying Nolasco P155,025.00 on December
15, 1981. It however declined to reinstate Nolasco because
there was no longer any "substantially equivalent position
available." Instead, it offered to give separation pay at the rate
of one month for every year of service, an offer it
communicated to Nolasco in writing on November 24, 1981.
- On January 12, 1982, Nolasco brought suit in the Court of First
Instance against MAI to recover damages; 6 but on August 10,
1982, he presented a motion to dismiss his own case, based on
lack of jurisdiction, which the Court granted.
He then filed on August 16, 1982 a complaint in the Arbitration
Branch, NLRC, also grounded like his suit in the Court of First
Instance, on MAI's refusal on November 24, 1981 to reinstate
him pursuant to Director Estrella's final judgment. In this new
complaint, he sought recovery of P539,837.00, representing
salaries and pecuniary benefits from December 1, 1981 until
May 1987 "when . . . (he) reaches the age of retirement of 65
years;" P600,000.00 as moral damages; P300,000.00 as
exemplary damages; and P100,000.00 as attorney's fees.
- It is noteworthy that at the time of the filing of this second
complaint on August 16, 1982, Nolasco was already 60 years
old, his 60th birth anniversary having fallen sometime in May,
1982.
- After appropriate proceedings, Arbiter Lasquite rendered
judgment dismissing the case "for being a duplication of the
earlier labor) Case involving the same complainant (Rodolfo
Nolasco) and the same respondent (Mai Philippines, Inc.)."
The Arbiter rejected as "completely unfounded" Nolasco's claim
that "he was dismissed by respondent with malice and deceit
on 24 November (1981)" — since in truth he had not yet been
reinstated on that day, and had in fact still been ordered
reinstated by an alias writ of execution on December 7, 1981,
and had "still received his backwages up to December 1981."
The Arbiter declared that Nolasco's "appropriate remedy . . .
(was) to pursue the enforcement/implementation of the 19
November 1979 Order of Director Estrella . . . (which) is very
clear, specific and definitive," rather than to institute and
prosecute a "duplicate case."
- Notice of the Arbiter's Decision was served on Nolasco's
counsel on September 12, 1984. Twelve days later, or the
latter filed an "Appeal" — dated September 22, but verified on
September 24, 1984 15 — assailing the Arbiter's finding of
"duplication" or res judicata and broadly hinting that the Arbiter
bad knowingly rendered an unjust judgment.
- MAI filed an "OPPOSITION TO APPEAL" in which it contended
that: (1) Nolasco's appeal was filed out of time and should on
this account be dismissed; (2) the Arbiter's decision was
justified by the facts and applicable law and jurisprudence; (3)
the appeal is pro forma, being "a mere rehash of the arguments
already presented" to the Arbiter; and (4) the fact that Nolasco
had in the meanwhile "reached the age of mandatory
retirement . . . (rendered) the order of reinstatement moot and
academic."
- While his appeal from the Lasquite decision was pending
before the NLRC, Nolasco filed a motion for an alias writ of
execution, to compel payment to him pursuant to the Estrella
Decision of "accrued backwages from December 1981 to the
present" as well as "his yearly Christmas bonus or 13th month
pay for 1981, 1982, 1983, 1984 and 1985," in view of MAI's
failure of "compliance to the reinstatement of complainant."
Over MAI's objections that inter alia the matter was pending
appeal, and that reinstatement had been mooted, Director
Severo Pucan — who had taken over from Mr. Estrella as
Director of the National Capital Region — issued the alias writ
prayed for. Pursuant thereto, MAI's deposit with the Bank of
America was garnished to the extent of P239,850.00.
- MAI thereupon filed with Director Pucan's Office a "MOTION TO
QUASH AND/OR MOTION FOR RECONSIDERATION" dated
February 12, 1985, 22 and with the Ministry of Labor itself, an
"OMNIBUS MOTION AND/OR APPEAL" seeking the recall of
A2010 - 91 - Disini
the alias writ and the negation of the garnishment of its funds in
the bank. Minister Ople instructed Director Pucan "to stay the
Alias Writ of Execution . . . pending final determination of
whether the award has already been fully satisfied or not."
MAI's attorneys were advised by the Bank of America over the
telephone that Sheriff Alfonso Balais, Jr. and Nolasco were able
to obtain from it and then encash an uncrossed manager's
check amounting to P239,850.00, which was the amount set
forth in the alias writ of execution dated February 6, 1985.
- Some minutes afterwards, the same attorneys received copies
of two (2) orders which apparently constituted the authority for
the encashment of said check. The first, rendered by Deputy
Minister Leogardo, Jr. on May 27, 1985, dismissed MAI's initial
appeal and remanded the case to the National Capital Region
for enforcement of the alias writ of execution in question. 29
The second, issued by Director Pucan under date of May 28,
1985, commanded the Bank of America, under threat of
contempt, to convert into cash its check made out in the name
of Sheriff Balais in the amount of P239,850.00; this, in view of
the dismissal of MAI's appeal and the judgment's "having long
become final and executory."
- MAI filed with the Office of the Labor Minister a MOTION FOR
RECONSIDERATION of the Leogardo Order of May 27, 1985, (1)
assailing it as "most appalling, nay revolting" in the premises,
being contrary to Minister Ople's order (letter) of April 2, 1985
requiring stay of execution, and being unwarranted because
of the pendency of MAI's (second) appeal; and (2) deploring,
too, the "undue haste and speed" which attended encashment
of the check for P239,850.00. MAI also (3) pointed out that in
May, 1982, Nolasco reached the compulsory retirement age of
60 years set by the Labor Code; and Nolasco's claim — that
under MAI's retirement plans, specifically cited by him, the
retirement age is 65 — is wrong, because by the terms of those
very same retirement plans invoked by him, the retirement age
of 65 applied only to employees in the U.S.A. and Puerto Rico.
- The motion for reconsideration was resolved by Deputy
Minister Leogardo. He declared that since the order of Director
Estrella requiring reinstatement of Nolasco with full back wages
had already become final and executory, attacks against that
order "on the merits or in substance can no longer be
entertained;" but this notwithstanding, a cause had supervened
rendering the continuous execution of that final Order of
November 19, 1979 unjust, (this supervening cause being) . . .
(Nolasco's) becoming 60 years of age sometime in May, 1982,"
which is the compulsory retirement age prescribed by Section
13, Rule I, Book VI of the Omnibus Rules Implementing the
Labor Code (overruling Nolasco's theory that the retirement age
for MAI employees is 65). For this reason, Leogardo continued,
Nolasco was "no longer entitled to back wages after he became
60 years old in May, 1982; . . . (and) back wages paid to him
after May, 1982 should be credited as (full satisfaction of)
retirement pay benefits. Hence, according to Leogardo, "the
judgment . . . should be . . . considered fully satisfied and . . .
(the case) deemed closed and terminated."
- The present case is for payment of damages allegedly arising
from the respondent's bad faith in causing the abolition of the
complainant's position to render nugatory his reinstatement
under a final judgment.
ISSUE
WON the NLRC gravely abused its discretion in ignoring event
rendering reinstatement moot
HELD
YES
- The NLRC gravely abused its discretion when it refused, or
neglected to consider the fact — again quite plain from the
record and to which MAI had adverted more than once — that
the matter of Nolasco's reinstatement had become moot and
academic at the time that he filed his second action before the
labor arbiters' office against MAI on August 16, 1982; for as of
that day, he had already reached the age of 60 years, which is
the retirement age fixed by the Labor Code.
Disposition Petition granted.
Labor Law 1
RATIONALE
PRODUCERS BANK OF THE PHILS V NLRC
(PRODUCERS BANK EMPLOYEES ASSN)
298 SCRA 517
ROMERO; November 16, 1998
FACTS
- Producers Bank was assigned a conservator by the Central
Bank for the purposes of protecting its assets. When the Union
sought the implementation of the CBA re retirement plan, the
conservator refused. Union filed with LA for unfair labor practice
and for flagrant violation of CBA.
- LA dismissed. NLRC reversed, holding that the CBA must be
enforced.
ISSUE
WON the conservator can ignore the CBA
HELD
NO
- The CBA is the law between the Union and the company.
- The conservator can only preserve assets and reorganize
management. He can’t revoke an existing valid contract. Even
the legislature cannot infringe on this Constitutional right, much
less can it delegate such non-existent powers to the
conservator. The conservator can assail defective contracts; but
can’t repudiate valid ones.
- Apart from the non-impairment clause, it is also well-settled
that when the conflicting interests of labor and capital are
weighed on the scales of social justice, the dominant influence
of the latter must be counter-balanced by the sympathy and
compassion the law must accord the under-privileged worker.
- The retirement of an employee does not, in itself, affect his
employment status especially when it involves all rights and
benefits due to him, since these must be protected as though
there had been no interruption of service. It must be borne in
mind that the retirement scheme was part of the employment
package and the benefits to be derived therefrom constituted,
as it were, a continuing consideration for services rendered, as
well as an effective inducement for remaining with the
corporation. It is intended to help the employee enjoy the
remaining years of his life, releasing him from the burden of
worrying for his financial support, and are a form of reward for
his loyalty.
- When the retired employees were requesting that their
retirement benefits be granted, they were not pleading for
generosity but were merely demanding that their rights, as
embodied in the CBA, be recognized. Thus, when an employee
has retired but his benefits under the law or the CBA have not
yet been given, he still retains, for the purpose of prosecuting
his claims, the status of an employee entitled to the protection
of the Labor Code, one of which is the protection of the labor
union.
Disposition Petition denied. NLRC decision affirmed.
ELIGIBILITY
BRION V SOUTH PHILIPPINE UNION MISSION OF THE
SEVENTH DAY ADVENTIST CHURCH
307 SCRA 497
ROMERO; May 19, 1999
FACTS
- Blow, blow, thou winter wind,
Thou art not so unkind
As man's ingratitude . . .
(Shakespeare: As You Like It, Act II, sc. 7, Line 174]
A2010 - 92 - Disini
- Petitioner Delfin A. Brion became a member of respondent
South Philippine Union Mission of the Seventh Day Adventist
Church (hereafter SDA) and worked his way up the ladder until
he became an ordained minister and president of the
Northeastern Mindanao Mission of the Seventh Day Adventist
Church in Butuan City. Petitioner worked until he retired in
1983. As was the practice of the SDA, petitioner was provided a
monthly amount as a retirement benefit.
- Sometime thereafter, petitioner got into an argument with
Samuel Sanes, another pastor of the SDA. This disagreement
degenerated into a rift between petitioner and the SDA,
culminating in the establishment by petitioner of a rival
religious group which he called the "Home Church." Petitioner
succeeded in enticing a number of SDA members to become
part of his congregation even as he continued disparaging and
criticizing the SDA. Because of his actions, petitioner was
excommunicated by the SDA and, on July 3, 1993, his name was
dropped from the Church Record Book. As a consequence of his
"disfellowship," petitioner's monthly retirement benefit was
discontinued by the SDA.
- RTC ruled in favor of petitioner. CA reversed taking into
account the disloyalty after retirement.
ISSUE
WON the conditions for eligibility for retirement be met only at
the time of retirement
HELD
YES
- The following provisions on retirement, contained in the
General Conference Working Policy of the SDA, are of primary
importance in resolving the issue at hand:
Beneficiaries of Retirement Plan — The benefits of the
retirement plan are designed for those who have devoted
their lives to the work of the Seventh-day Adventist Church
and are eligible to retire for reasons of old age and/or
disability.
xxx xxx xxx
- Termination of Benefits — The benefits shall terminate with
the decease of the beneficiary, except where there is an eligible
surviving spouse and/or children.
- In the case at bar, the words are very clear. Benefits are only
to terminate upon death. The employer and employee are free
to stipulate on retirement benefits, as long as these do not fall
below the floor limits provided by law. Furthermore, pension
and retirement plans, in line with the Constitutional mandate of
affording full protection to labor, must be liberally construed in
favor of the employee, it being the general rule that pension
plans formulated by an employer are to be construed most
strongly against the employer. Again, while paying retirement
benefits to petitioner may be odious and abhorrent to the SDA,
in the absence of any other stipulation for the termination of
petitioner's retirement benefits, the SDA must comply with its
contractual obligations, the contract being the law between the
parties.
Disposition CA decision reversed and set aside
GROUND TERMINATION
CAINTA CATHOLIC SCHOOL V CAINTA CATHOLIC
SCHOOL EMPLOYEES UNION
489 SCRA 468
Labor Law 1 A2010 - 93 - Disini
TINGA; May 4, 2006 YES
- Pursuant to the existing CBA, the School has the option to
retire an employee upon reaching the age limit of sixty (60) or
NATURE
after having rendered at least twenty (20) years of service to
Petition for review on certiorari of a decision and resolution of
the School, the last three (3) years of which must be
the CA
continuous.
- Retirement is a different specie of termination of employment
FACTS
from dismissal for just or authorized causes under Articles 282
- On 6 March 1986, a Collective Bargaining Agreement (CBA)
and 283 of the Labor Code.
was entered into between Cainta Catholic School (School) and
- While in all three cases, the employee to be terminated may
the Cainta Catholic School Employees Union (Union) effective 1
be unwilling to part from service, there are eminently higher
January 1986 to 31 May 1989.
standards to be met by the employer validly exercising the
- Msgr. Mariano Balbago (Balbago) was appointed School
prerogative to dismiss for just or authorized causes. In those
Director in April 1987. From this time, the Union became
two instances, it is indispensable that the employer establish
inactive.
the existence of just or authorized causes for dismissal as
- It was only in 10 September 1993 that the Union held an
spelled out in the Labor Code. Retirement, on the other hand, is
election of officers, with Mrs. Rosalina Llagas (Llagas) being
the result of a bilateral act of the parties, a voluntary
elected as President; Paz Javier (Javier), Vice-President.
agreement between the employer and the employee whereby
- On 15 October 1993, the School retired Llagas and Javier, who
the latter after reaching a certain age agrees and/or consents to
had rendered more than twenty (20) years of continuous
sever his employment with the former.
service, pursuant to Section 2, Article X of the CBA, to wit: An
- Article 28711 of the Labor Code, as amended, governs
employee may be retired, either upon application by the
retirement of employees.
employee himself or by the decision of the Director of the
- The CBA in the case at bar established 60 as the compulsory
School, upon reaching the age of sixty (60) or after having
retirement age. However, it is not alleged that either Javier or
rendered at least twenty (20) years of service to the School the
Llagas had reached the compulsory retirement age of 60 years,
last three (3) years of which must be continuous.
but instead that they had rendered at least 20 years of service
- Three (3) days later, the Union filed a notice of strike
in the School, the last three (3) years continuous.
- On 8 November 1993, the Union struck and picketed the
- Clearly, the CBA provision allows the employee to be retired
School’s entrances.
by the School even before reaching the age of 60, provided that
- The labor dispute was certified to the NLRC for compulsory
he/she had rendered 20 years of service.
arbitration, pursuant to Article 263(g) of the Labor Code as
- By their acceptance of the CBA, the Union and its members
amended. Accordingly, all striking teachers and employees
are obliged to abide by the commitments and limitations they
were directed to return to work within 24 hours from receipt of
had agreed to cede to management. The questioned retirement
the Order and the School Administrator to accept all returning
provisions cannot be deemed as an imposition foisted on the
employees under the same terms and conditions prevailing
Union, which very well had the right to have refused to agree to
prior to the strike. The effects of the termination of Ms.
allowing management to retire employees with at least 20
Rosalinda Llagas and Paz A. Javier were suspended.
years of service.
- On 27 July 1994, the Union filed a complaint for unfair labor
- Twenty years is a more than ideal length of service an
practice before the NLRC
employee can render to one employer. Under ordinary
- On 31 January 1997, the NLRC rendered a Resolution favoring
contemplation, a CBA provision entitling an employee to retire
the School.
after 20 years of service and accordingly collect retirement
-The NLRC ruled that the retirement of Llagas and Javier is legal
benefits is "reward for services rendered since it enables an
as the School was merely exercising an option given to it under
employee to reap the fruits of his labor — particularly
the CBA. The NLRC dismissed the unfair labor practice charge
retirement benefits, whether lump-sum or otherwise — at an
against the School for insufficiency of evidence. Furthermore, it
earlier age, when said employee, in presumably better physical
was found that the strike declared by the Union from 8 to 12
and mental condition, can enjoy them better and longer.
November 1993 is illegal, thereby declaring all union officers to
- Under Article 287 of the Labor Code, a CBA may validly accord
have lost their employment status.
management the prerogative to optionally retire an employee
- The Union moved for reconsideration but it was denied
under the terms and conditions mutually agreed upon by
- On 9 July 1997, the Union filed a petition for certiorari before
management and the bargaining union, even if such agreement
this Court. The Court issued a temporary restraining order
allows for retirement at an age lower than the optional
(TRO) against the enforcement of the subject resolutions
retirement age or the compulsory retirement age.
- On 28 July 1997, ten (10) regular teachers, who were declared
Disposition petition is granted. The Resolution dated 31
to have lost their employment status under the aforesaid NLRC
January 1997 of the NLRC is reinstated.
Resolution reported back to work but the School refused to
accept them by reason of its pending motion for clarification.
This prompted the Union to file a petition for contempt against
Balbago and his agents before this Court, which was later on 15.02 ACCRUAL OF BENEFITS
consolidated with the earlier petition.
- The case was referred to the Court of Appeals which rendered
a decision giving due course and granting the petition to annul ACCRUAL
and set aside the 31 January 1997 and 30 April 1997
Resolutions of the NLRC; while dismissing the petition for
contempt for lack of merit. 11
Any employee may be retired upon reaching the retirement age established in the
- The motion for reconsideration subsequently filed by the collective bargaining agreement or other applicable employment contract.
School was denied In case of retirement, the employee shall be entitled to receive such retirement
- Thereafter, petitioners filed this petition for review on benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee’s retirement
certiorari benefits under any collective bargaining agreement and other agreements shall not
be less than those provided herein.
ISSUE In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
WON the forced retirement of Llagas and Javier was a valid years or more, but not beyond sixty-five (65) years which is hereby declared the
exercise of management prerogative compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
HELD (6) months being considered as one whole year.
Labor Law 1
CRUZ V PHIL GOLBAL COMMUNICATIONS INC
430 SCRA 184
SANDOVAL-GUTIERREZ; May 28, 2004
NATURE
Petition for review on certiorari of CA decision
FACTS
- Phil Global Communications, Inc. is a corporation engaged in
the principal business of communications through telex and
telegram, with various branches nationwide. As a result of a
decline in the volume of recorded messages sent via telex and
telegram, it suffered substantial financial losses. It then
adopted an organizational streamlining program that resulted in
the closure of its branches and termination from the service of
42 workers.
- In separate letters, the PGCI terminated petitioners’ services
and eventually paid them their separation pay at the rate of 1
½ months salary per year of service. They then executed and
signed a "Release, Waiver and Quitclaim."
- Petitioners filed with the Labor Arbiter a complaint for
payment of retirement benefits, damages and attorney’s fees.
- Labor Arbiter: Sustained petitioners’ claim for retirement
benefits under respondent’s Retirement Plan.
- NLRC: Reversed the Labor Arbiter’s decision.
- CA: Affirmed NLRC.
- Petitoners contend that the applicable provision should be Sec
4, Art VI of the PHILCOM’s Retirement Plan which reads:
Section 4 – Involuntary Separation "A member whose services
may be terminated by the Company for any reason other
than just cause or voluntary resignation shall be entitled to
benefit determined in accordance with the retirement benefit
formula provided in Article V hereof. However, if the
termination is due to redundancy, the employee will be paid
one and one-half months pay for every year of service (as
amended on July 1, 1988).
ISSUE
WON the retrenched employees may still claim their retirement
benefits after receiving their separation pay
HELD
NO
Ratio The employees’ right to payment of retirement benefits
and/or separation pay is governed by the Retirement Plan of the
parties. Under the Retirement Plan before us, petitioners are
not entitled to both separation pay and retirement benefits.
Reasoning
- Sec.4 should not be interpreted singly but should be read
together with the other provisions of the Retirement Plan in
question to determine the intent of the Plan. Section 6(b)12
Article XI, of the Retirement Plan is explicit and leaves no doubt
as to the intention to prohibit the recovery of both separation
pay and retirement benefits. NLRC correctly pointed out that
‘the payment of separation pay is a requirement of the law, i.e.
the Labor Code, which is a social legislation. The Retirement
Plan itself clearly sets forth the intention of the parties to entitle
12
Section 6 – Effect of Social Legislation
a) Social Security and Workmen’s Compensation – The benefits payable under
this Plan shall be in addition to such benefits which the Member shall be entitled
under the Social Security and Workmen’s Compensation Acts.
b) Adjustment of Benefits payments – Except only as provided in paragraph (a) of
this Section, in the event the company is required under the law or by lawful order of
competent authority, to pay to the Member benefits or emoluments similar or
analogous to those already provided in the Plan, the member concerned shall not be
entitled to both what the law or the lawful order of competent authority requires the
company to give and the benefits provided by the Plan, but shall only be entitled to
whichever is the greatest among them, it being understood however that for the
purpose of determining whichever benefits is greatest, it is the total benefits required
to be paid under the law or lawful order of competent authority or the Plan that shall
be reckoned. The benefit provided by this Plan may be reduced or amended in an
equitable manner by the company by the value of any present or future contract
such as collective bargaining, law, e.g. termination pay provisions or lawful order of
competent authority.
A2010 - 94 - Disini
employees only to whatever is greater between the Retirement
Benefits then due and that which the law requires to be given
by way of separation pay. To give way to complainant’s
demands would be to totally ignore the contractual obligations
of the parties in the Retirement Plan, and to distort the clear
intent of the parties as expressed in the terms and conditions
contained in such plan.’
- Under Art 283 of the LC, affected employees, in case of
retrenchment or cessation of operations, are always given
termination or separation pay equivalent to one month pay or
at least ½ month pay for every year of service, whichever is
higher. Under Sec 4, Art VI of respondent’s Retirement Plan, the
employees are entitled to a retirement pay equivalent to 1 ½
months pay for every year of service computed on the basis of
their basic monthly salary at the time of retirement. Here,
respondent opted to pay petitioners separation benefits
computed under the Retirement Plan, the same being higher
than what Art 283 of the LC provides.
Disposition Petition is DENIED.
LLORA MOTORS INC V DRILON
179 SCRA 175
FELICIANO; November 7, 1989
NATURE
Petition for certiorari with Preliminary Injunction
FACTS
- Sometime in September of 1968, Primitivo Alviar began his
employment with Llora Motors, Inc. As a truck driver, Mr. Alviar
rendered services to the company 8 hours a day (excluding
overtime) seven days a week, and for his labor received a
salary computed on a per trip basis plus emergency cost of
living allowance (ECOLA). At the time he stopped working on 19
April 1985, Mr. Alviar was 65 Years of age.
- On 28 October 1985, Alviar filed with NLRC a complaint for
separation pay and non-payment of daily wages against
petitioners Llora Motors and Constantino Carlota, Jr., the
company manager. Alviar claimed entitlement to ECOLA
underpayments from November 1982 up to April 1985 in the
amount of P4,709.54 as well as retirement benefits, computed
at one-half month's pay for every year of service.
- Petitioners alleged that all of the employment benefits
claimed by ALviar had already been fully paid. On the matter of
retirement benefits, it was contended that Alviar had not been
dismissed by Llora Motors, but that sometime in the early part
of 1985, Alviar showed utter lack of interest in his work and was
absent for no apparent reason; that the truck assigned to him
laid idle and because of non-use for sometime, it deteriorated
so seriously; that in the last week of April of 1985, Alviar
reported for work and was then informed that while the truck
has not been rehabilitated as yet, he could act as relief driver;
that Alviar did not like to be a relief driver in the meantime for
since then he did not report for work; and that it was Alviar who
abandoned his work since the last week of April 1985 and never
reported since then. Neither had Mr. Alviar been retired,
petitioners claimed, for the simple reason that respondent
corporation does not have any retirement plan or any collective
bargaining agreement with the employees for no union exists
within the company because the employees, drivers included,
received more than the standard benefits for their labor.
Petitioners contended further that "records will show that Alviar
had received retirement benefits from the Social Security
System when he retired therefrom in 1983.
- Alviar did not controvert petitioner's allegations of
abandonment and non-dismissal. Mr. Alviar there simply alleged
that in April of 1985, he "retired from the service due to his old
age of 65 years."
- The Labor Abriter decided in favor of Alviar and ordered
petitioner to pay unpaid ECOLA and retirement benefits to him.
The NLRC affirmed said decision.
ISSUE
Labor Law 1
WON Alviar is legally entitled to receive retirement benefits
from petitioners
HELD
NO
- Our Labor Code has only one article that deals with the
subject of "retirement from the service." Article 287 of the Code
reads as follows:
Article 287. Retirement. — Any employee may be retired
upon reaching the retirement age established in the
Collective Bargaining Agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or other
agreement.
- Examination of Article 287 above shows that entitlement to
retirement benefits may accrue either (a) under existing laws or
(b) under a collective bargaining agreement or other
employment contract. It is at once apparent that Article 287
does not itself purport to impose any obligation upon employers
to set up a retirement scheme for their employees over and
above that already established under existing laws. In other
words, Article 287 recognizes that existing laws already provide
for a scheme by which retirement benefits may be earned or
accrue in favor of employees, as part of a broader social
security system that provides not only for retirement benefits
but also death and funeral benefits, permanent disability
benefits, sickness benefits and maternity leave benefits. As is
commonplace knowledge, the Social Security Act provides for
retirement benefits which essentially consist of the right to
receive a monthly pension for the rest of the covered
employee's life provided that: (1) such employee had paid at
least 120 monthly contributions prior to retirement; and (2) has
reached the age of sixty (60) years (if his salary is less than
P300.00 a month) or 65 years. The retirement scheme here
'established is compulsory and contributory in character on the
part of both the employer and the employee, backed up by
criminal sanctions and administered by a large and elaborate
bureaucracy.
- Article 287 of the Labor Code recognizes that employers and
employees may, by a collective bargaining or other agreement,
set up a retirement plan in addition to that established by the
Social Security law, but prescribes at the same time that such
consensual additional retirement plan cannot be substituted for
or reduce the retirement benefits available under the
compulsory scheme established by the Social Security law.
Such is the thrust of the second paragraph of Article 287 which
directs that the employee shall be entitled to receive retirement
benefits earned "under existing laws and any collective
bargaining or other agreement."
- It is also important here to examine Section 13 and 14 of
Rule, I, book VI of the Rules and Regulations Implementing the
Labor Code (hereafter, "Implementing rule I"). Implementing
Rule I deals with both termination of services and retirement,
being entitled "Termination of Employment and Retirement."
But Sections 13 and 14 of Implementing Rule I are the only
provisions which deal with retirement matters. Under Section 13
which provides as follows:
Sec. 13. Retirement. — In the absence of any collective
bargaining agreement or other applicable agreement
concerning terms and conditions of employment which provides
for retirement at an older age, an employee may be retired
upon reaching the age of sixty (60) years.
- where an additional retirement plan has been established by
a collective bargaining agreement, or other applicable
agreement (or, under Section 14, an "established employer
policy"), but such plan fails to specify another, older, age of
retirement, an employee may retire, and may in turn be retired
by his employer, upon reaching age sixty (60).
Sec. 14. Retirement benefits. —
(a) An employee who is retired pursuant to a bona-fide
retirement plan or a in accordance with the applicable
individual or collective agreement or established employer
A2010 - 95 - Disini
policy shall be entitled to all the retirement benefits provided
therein or to termination pay equivalent at least one-half month
salary for every year of service, whichever is higher, a fraction
of at least six (6) months being considered as one whole year.
(b) Where both the employer and the employee contribute to
the retirement plan, agreement or policy, the employer's total
contribution thereto shall not be less than the total termination
pay to which the employee would have been entitled had there
been no such retirement fund. In case the employer's
contribution is less than the termination pay the employee is
entitled to receive, the employer shall pay the deficiency upon
the retirement of the employee.
(c) This Section shall apply where the employee retires at the
age of sixty (60) years or older.
- Section 14 (a) refers to "termination pay equivalent to at least
one-half (1/2) month for every year of service" while Section 14
(b) mentions "termination pay to which the employee would
have been entitled had there been no such retirement fund" as
well as "termination pay the employee is entitled to receive." It
should be recalled that Sections 13 and 14 are found in
Implementing rule I which deals with both "termination of
employment" and "retirement." It is important to keep the two
(2) concepts of "termination pay" and "retirement benefits"
separate and distinct from each other. Termination pay or
separation pay is required to be paid by an employer in
particular situations Identified by the Labor Code itself or by
Implementing rule I. Termination pay where properly due and
payable under some applicable provision of the Labor Code or
under Section 4 (b) of Implementing Rule 1, must be paid
whether or not an additional retirement plan has been set up
under an agreement with the employer or under an
"established employer policy."
- Section 14 of Implementing Rule 1, like Article 287 of the
Labor Code, does not purport to require "termination pay" to be
paid to an employee who may want to retire but for whom no
additional retirement plan had been set tip by prior agreement
with the employer. Thus, Section 14 itself speaks of an
employee "who is retired pursuant to a bona-fide retirement
plan or in accordance with the applicable individual or collective
agreement or established employer policy." What Section 14 of
Implementing Rule I may be seen to be saying is that where
termination pay is otherwise payable to an employee under an
applicable provision of the Labor Code, and an additional or
consensual retirement plan exists, then payments under such
retirement plan may be credited against the termination pay
that is due, subject, however, to certain conditions. These
conditions are: (a) that payments under the additional
retirement plan cannot have the effect of reducing the amount
of termination pay due and payable to less than one-half (1/2)
month's salary for every year of service; and (b) the employee
cannot be made to contribute to the termination pay that he is
entitled to receive under some provision of the Labor Code; in
other words, the employee is entitled to the full amount of his
termination pay plus at least the return of his own contributions
to the additional retirement plan.
- In the instant, case there is no consensual basis for the
required payment of additional retirement benefits. The Labor
Arbiter and the NLRC had not declared Alviar to have been
illegally dismissed by petitioners. Neither was there any
pretense on the part of Alviar that labor-saving devices had
been installed, or that redundancy or retrenchment or cessation
of operations had occurred in Llora Motors or that he was
afflicted by some disabling disease, or that, being entitled to
reinstatement, he could not be reinstated to this old position.
Under these circumstances, the portion of the Labor Arbiter's
award which required petitioners to pay an amount equivalent
to a half month's pay for every year of service of Mr. Alviar
cannot be justified either as (additional) retirement benefits or
as termination pay and hence constituted an act without or in
excess of jurisdiction.
- Wherefore, petitioner is required to pay Alviar only P4,709.54
for unpaid ECOLA differentials.
Labor Law 1 A2010 - 96 - Disini
employee may have earned under (a) an existing law, (b) a
15.03 PRIVATE PLAN collective bargaining or (c) other agreements.
- KINDS OF RETIREMENT SCHEMES: (1)compulsory and contributory in
character; (2) one set up by agreement between the employer
EMPLOYER OBLIGATION and the employees in collective bargaining agreements or other
agreements between them (Llora Motors, Inc. v. Drilon, supra);
(3) one that is voluntarily given by the employer, expressly as
GVM SECURITY AND PROTECTIVE AGENCY V NLRC in an announced company policy or impliedly as in a failure to
224 SCRA 734 contest the employee's claim for retirement benefits (Allied
QUIASON; July 23, 1993 Investigation Bureau, Inc. v. Ople, 91 SCRA 265 [1979]).
- problema daw ng legislature yan!
Disposition instant petition is GRANTED. The assailed
NATURE
Resolutions of the NLRC dated August 23, 1991 and December
Petition for Review for Certiorari
28, 1990 are SET ASIDE, and the Temporary Restraining Order
issued by the Court on November 4, 1991 is made PERMANENT
FACTS
- Antonio Dulce was employed as a security guard by
petitioners in July 1958. After 28 years in the service, he
tendered his resignation at age 64 years old. He was earning a 15.04 BENEFITS AND GRATUITY
monthly salary of P2350. Petitioners paid him P6650 as his
“cash deposit” and then Dulce executed a quitclaim.
- Dulce filed a complaint for monetary claims, including STA. CATALINA COLLEGE V NLRC
retirement pay. Petitioners deny liability, saying that they did [PAGE 285]
not have a company policy or CBA on employee’s retirement
benefits.
- LA: dismissed complaint, lack of sufficient supporting evidence
to establish claims, BUT awarded ex-gratia benefits, or any
benefits pursuant to company policy (but there’s none)
- NLRC: petitioners liable for P3915 as differential to Dulce’s
separation pay, and P391.50 as attorney’s fees, using formula
in par(a), Sec 14, Rule I, Book VI of the Omnibus Rules
(provision granting separation pay equivalent to ½ month
salary for every year of service and considering a fraction of at
least 6 months as 1 whole year) –both parties appealed
- NLRC (on appeal): petitioner pay P27325 as differential of
retirement benefits and P2742.50 as attorney’s fees
- SC issued TRO on NLRC from implementing assailed
resolutions

ISSUE
WON a 64-year old employee, who voluntarily resigned, is
entitled to retirement benefits under the Labor Code, in the
absence of a company retirement plan or collective bargaining
agreement or an established company policy on such benefits

HELD PART III SOCIAL LEGISLATION

NO
- Respondent is not asking for retirement benefits due him
under the Social Security Law. He does not claim that there is a
collective bargaining agreement or other applicable, contract or
A. INTEGRATED OUTLINE
an established company policy, granting him retirement
benefits.  SOCIAL SECURITY ACT; GOVERNMENT
Ratio. Under Article 28713 of the Labor Code, entitlement of
employees to retirement benefits must be specifically granted SERVICE INSURANCE ACT; AND
under existing laws, a collective bargaining agreement or EMPLOYEES COMPENSATION AND
employment contract or an established employer policy [Llora
Motors, Inc. v. Drilon]. STATE INSURANCE FUND; AND
Reasoning NATIONAL HEALTH INSURANCE ACT
- Article 287 does not in itself purport to impose any obligation
upon employers to set up a retirement scheme for their
employees over and above that already established under 3.01 POLICY OBJECTIVES
existing laws, like the Social Security Act.
- EXPLANATION OF A287: The first paragraph of Article 287 deals
with the retirement age of an employee, which is the age LAW CONCEPT
established in (a) a collective bargaining agreement or (b) other
applicable retirement contract. The second paragraph of said
Article deals with the retirement benefits to be received by a SULIT V EMPLOYEES COMPENSATION COMMISSION
retiring employee and which are the retirement benefits as the 98 SCRA 483
AQUINO; June 30, 1980
13 Article 287. Retirement. -- Any employee may be retired upon reaching the retirement age established in the collective bargaining
FACTS
agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any
- Sulit was employed as a mechanic in the Cavite Naval
collective bargaining agreement and other agreements. Shipyard. Due to aches accompanied by fevers and chills, he
was confined in PGH for 6 days up to his death due to
Labor Law 1
bronchopneumonia and pyelonephritis, lung and kidney
infections respectively.
- Mrs. Sulit filed a claim for compensation under the Employees
Compensation and State Insurance Fund (PD 626), contending
that his work was postural in nature, kinking his ureters and
stagnating his urine flow, causing the infection. GSIS and the
Employee’s Compensation Commission (ECC) rejected the
claim, arguing that his ailments were not occupational in
nature. ECC claims the aggravation of the disease due to the
work is not covered under said law.
ISSUE
WON petitioner is entitled to compensation under PD 626
HELD
NO
- Mrs. Sulit, in her arguments, was referring to the old law, Act
No. 3428 as amended by Act 3812, which originally restricted
compensation to injuries sustained in the course of employment
or resulting form its nature.
- RA 772 amended Act 3812, specifying tuberculosis as a
compensable disease and adopting the rule that aggravation of
the disease by the nature of the work is compensable as well as
introducing the presumption of compensability.
- Such innovations paved the way for the expansive application
of the Workmen’s Compensation Law in favor of the worker,
destroying the parity between the competing interests of
employer and employee. Hence, to restore this balance, the old
law was jettisoned and replaced with PD 626 and the Labor
Code, which abolished the presumption of compensability and
the rule on aggravation of illness caused by the nature of
employment.
- Her claim was thus decided under the Labor Code and the
employees’ compensation provisions. Article 166 provides that
the State shall promote and develop an employees’
compensation program whereby employees and their
dependents may receive benefits in case of work connected
disability or death. Such compensable sicknesses are left to be
determined and approved by the ECC, based on the peculiar
hazards of the employment. In the instant case, Sulit’s cause of
death was not deemed work related and was thus not
compensable.
Disposition appeal is DISMISSED
SANTOS V EMPLOYEES' COMPENSATION
COMMISSION
221 SCRA 182
NOCON; April 7, 1993
FACTS
- Francisco Santos was employed as welder at the Philippine
Navy and its Naval Shipyard. He died of liver cirrhosis after 32
years in service.
- Mrs. Carmen A. Santos filed a claim for the death benefit of
her husband pursuant to Presidential Decree No. 626, as
amended. However, GSIS denied the claim on the ground that
upon proofs and evidence submitted, Francisco's ailment
cannot be considered an occupational disease as contemplated
under P.D. 626, as amended.
- Mrs. Santos then sought the assistance of the Commander of
NASCOM, PN, who in turn wrote the GSIS requesting for a
favorable action on her claim. Said letter also substantiated
petitioner's claim that her husband's duties as Senior Welder
required him to perform delicate welding jobs inside
compartments of naval vessels, like compartmentation bulk
heads; CIC rooms; officers and PO's quarters; fuel, lube oil and
fresh water tanks, where he was exposed to heat and inhalation
of burning chemical substances and gas fumes coming from
burning welding electrodes. However, petitioner's motion for
reconsideration was likewise denied, upon claim of the GSIS
that Francisco's job as a welder would instead cause lung
disease rather than liver cirrhosis.
A2010 - 97 - Disini
- On appeal to the Employees' Compensation Commission
(ECC), the Commission affirmed the denial of the GSIS on
petitioner's claim relying on the fact that the diagnosis on
Francisco's illness did not specify the type of cirrhosis which
caused his death. Nevertheless, the Commission took cognizant
of the fact that the deceased employee did not have a previous
history of alcoholism, hepatitis or a previous history of biliary
condition which could give a clue to the nature of cirrhosis he
had.
ISSUE
WON liver cirrhosis an illness which is compensable
HELD
YES
- Liver cirrhosis, although not one among those listed as
compensable ailment, as considered in the case at bar as
covered under the Act, on the ground that the nature of the
work of petitioner's husband, exposed him to the risk of
contracting the same.
Reasoning
a. As a welder, Francisco was exposed to heat, gas fumes and
chemical substances coming from the burning electrodes
caused by welding. Generally, the metal burned is iron. In the
course thereof, other compounds and oxides, such as carbon
monoxide, carbon dioxide, sulfur and phosphorus, may be
emitted in the process of welding, depending on the kind of
material used and extent of corrosion of the metal worked on.
These vaporized metals are inhaled by the welder in the
process and significantly in this case, Francisco had to do
welding jobs within enclosed compartments.
b. The deceased experienced untold sufferings in the course of
his inspection of barrio schools and that he became
malnourished because of the scarcity of food in the places he
travelled to.
c. Liberal interpretation of the law in favour of labor - While the
presumption of compensability and theory of aggravation under
the Workmen's Compensation Act may have been abandoned
under the new Labor Code, the liberality of the law in general in
favor of the working man still prevails. The Employees'
Compensation Act is basically a social legislation designed to
afford relief to the working man and woman in our society. The
Employees' Compensation Commission, as the agency tasked
with implementing the social justice mandate guaranteed by
the Constitution, should be more liberal in resolving
compensation claims of employees especially where there is
some basis in the facts for inferring a work connection to the
cause of death.
Disposition GRANTED and the decision of the Employees'
Compensation Commission is REVERSED.
LATGAN V EMPLOYEES COMPENSATION
COMMISSION
[PAGE]
3.02 DEFINITIONS
1. EMPLOYER
ORATE V CA (EMPLOYEES COMPENSATION
COMMISSION)
399 SCRA 572
YNARES-SANTIAGO; March 26, 2003
NATURE
Petition for review on certiorari under Rule 45 of the ROC
assailing the Decision of CA and Resolution denying petitioner’s
MFR
FACTS
Labor Law 1
- December 5, 1972 - Norma Orate was employed by Manila Bay
Spinning Mills, Inc., as a regular machine operator.
- On March 22, 1995, she was diagnosed with breast cancer.
Consequently, she underwent modified radical mastectomy.
The operation incapacitated her from performing heavy work,
for which reason she was forced to go on leave and, eventually,
to retire from service at the age of 44.
- On November 17, 1995, petitioner applied for employees
compensation benefits with the Social Security System (SSS),
but the same was denied on the ground that her illness is not
work-related. On January 22, 1996, she moved for
reconsideration contending that her duties as machine operator
which included lifting heavy objects increased the risk of
contracting breast cancer. The SSS, however, reiterated its
denial of petitioner’s claim for benefits under the Employees’
Compensation Program. Instead, it approved her application as
a sickness benefit claim under the SSS, and classified the same
as a permanent partial disability equivalent to a period of
twenty-three (23) months.
- Petitioner requested the elevation of her case to the
Employees’ Compensation Commission (ECC), which affirmed
the decision of the SSS. The ECC ruled that petitioner’s
disability due to breast cancer is not compensable under the
Employees’ Compensation Program because said ailment is not
included among the occupational diseases under Annex “A” of
the Rules on Employees’ Compensation; and it was not
established that the risk of contracting said ailment was
increased by the working conditions at Manila Bay Spinning
Mills, Inc. Petitioner filed a petition for review with the CA. On
May 14, 1997, the CA reversed the decision of the ECC, and
granted petitioner’s claim for compensation benefit under the
Workmen’s Compensation Act (Act No. 3428). It held that
petitioner’s breast cancer must have intervened before the
effectivity of Title II, Book IV of the Labor Code on Employees’
Compensation and State Insurance Fund on January 1, 1975,
hence, the governing law on petitioner’s claim for compensation
benefit is Act No. 3428, which works upon the presumption of
compensability, and not the provisions of the Labor Code on
employees’ compensation. The CA further ruled that since
Manila Bay Spinning Mills, Inc. failed to discharge the burden of
proving that petitioner’s ailment did not arise out of or in the
course of employment, the presumption of compensability
prevails, entitling her to compensation.
- Petitioner filed a MFR arguing that it is the Labor Code which
should be applied to her case inasmuch as there is no evidence
that the onset of her breast carcinoma occurred before January
1, 1975. She claimed that the basis of the computation of her
compensation benefits should be the Labor Code and not the
Workmen’s Compensation Act. CA denied MFR
ISSUE
1. What is the law applicable to petitioner’s claim for disability
benefits?
2. WON she is entitled under the applicable law to be
compensated for disability arising from breast carcinoma
HELD
1. In the case at bar, petitioner was found to be positive for
breast cancer on March 22, 1995. Since no evidence was
presented as to when she contracted said ailment. The
presumption is that her illness intervened when P.D. No. 626
was already the governing law.
- The first law on workmen’s compensation in the Philippines is
Act No. 3428, otherwise known as the Workmen’s
Compensation Act, which took effect on June 10, 1928. This Act
works upon the presumption of compensability which means
that if the injury or disease arose out of and in the course of
employment, it is presumed that the claim for compensation
falls within the provisions of the law. The employee need not
present any proof of causation. It is the employer who should
prove that the illness or injury did not arise out of or in the
course of employment.
- On November 1, 1974, the Workmen’s Compensation Act was
repealed by the Labor Code (Presidential Decree No. 442). On
A2010 - 98 - Disini
December 27, 1974, Presidential Decree No. 626 (which took
effect on January 1, 1975) was issued. It amended the
provisions of Title II, Book IV of the Labor Code on Employees’
Compensation and State Insurance Fund. The law as it now
stands requires the claimant to prove that the illness was
caused by employment and the risk of contracting the disease
is increased by the working conditions. It discarded, among
others, the concepts of “presumption of compensability” and
“aggravation” and substituted a system based on social
security principles. The present system is also administered by
social insurance agencies – the Government Service Insurance
System and Social Security System – under the Employees’
Compensation Commission. The intent was to restore a sensible
equilibrium between the employer’s obligation to pay
workmen’s compensation and the employee’s right to receive
reparation for work-connected death or disability.
- In workmen’s compensation cases, the governing law is
determined by the date when the claimant contracted the
disease. An injury or illness which intervened prior to January 1,
1975, the effectivity date of P.D. No. 626, shall be governed by
the provisions of the Workmen's Compensation Act, while those
contracted on or after January 1, 1975 shall be governed by the
Labor Code, as amended by P.D. No. 626. Corollarily, where the
claim for compensation benefit was filed after the effectivity of
P.D. No. 626 without any showing as to when the disease
intervened, the presumption is that the disease was contracted
after the effectivity of P.D. No. 626.
2. The instant controversy is not on all fours with the cases
where the Court applied the “presumption of compensability”
and “aggravation” under the Workmen’s Compensation Act,
even though the claim for compensation benefit was filed after
January 1, 1975. In the said cases, the symptoms of breast
cancer manifested before or too close to the cut off date –
January 1, 1975, that it is logical to presume that the breast
carcinoma of the employee concerned must have intervened
prior to January 1, 1975.
- In Avendaño v. Employees’ Compensation Commission, the
Workmen’s Compensation Act was applied to a claim for
disability income benefit arising from breast carcinoma, though
the said claim was filed only in 1976, after the effectivity of the
Labor Code. Per certification of the physician of the claimant,
her breast cancer was contracted sometime in 1959, although
the clinical manifestations thereof started only in 1969.
- The “presumption of compensability” and “aggravation” under
the Workmen’s Compensation Act cannot be applied to
petitioner’s claim for compensation benefit arising from breast
cancer. Hence, the provisions of the Labor Code govern. For
breast carcinoma and resulting disability to be compensable,
the claimant must prove, by substantial evidence, either of two
things: (a) that the sickness was the result of an occupational
disease listed under Annex “A” of the Rules on Employees’
Compensation; or (b) if the sickness is not so listed, that the risk
of contracting the disease was increased by the claimant’s
working conditions.
Since cancer of the breast is not listed as an occupational
disease under Annex “A” of the Rules on Employees’
Compensation, petitioner has the burden of proving, by
substantial evidence, the causal relationship between her
illness and her working conditions.
- Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion. In the case at bar, petitioner argued before the SSS
and the ECC that her job as machine operator, which required
lifting of heavy objects increased the risk of her contracting
breast carcinoma. In addition, she contended that her job in
the winding department exposed her to cancer-causing dyes
used in coloring threads. However, said bare allegations and
vague excerpts on cancer do not constitute such evidence that
a reasonable mind might accept as adequate to support the
conclusion that there is a causal relationship between her
illness and her working conditions. Awards of compensation
cannot rest on speculations and presumptions.
- It is not also correct to say that all disability or death resulting
from all kinds of cancer are not compensable. There are certain
Labor Law 1
cancers which are reasonably considered as strongly induced
by specific causes. What the law requires for others is proof.
This was not satisfied in the instant case.
While we sustain petitioner’s claim that it is the Labor Code that
applies to her case, we are nonetheless constrained to rule that
under the same code, her disability is not compensable. Much
as we commiserate with her, our sympathy cannot justify an
award not authorized by law. It is well to remember that if
diseases not intended by the law to be compensated are
inadvertently or recklessly included, the integrity of the State
Insurance Fund is endangered. Compassion for the victims of
diseases not covered by law ignores the need to show a greater
concern for the trust fund to which the tens of millions of
workers and their families look to for compensation whenever
covered accidents, diseases and deaths occur. This stems from
the development in the law that no longer is the poor employee
still arrayed against the might and power of his rich corporate
employer, hence the necessity of affording all kinds of favorable
presumptions to the employee. This reasoning is no longer good
policy. It is now the trust fund and not the employer which
suffers if benefits are paid to claimants who are not entitled
under the law.
Disposition the decision of the Court of Appeals is REVERSED
and SET ASIDE. The decision of the Employees’ Compensation
Commission, dismissing petitioner’s claim for compensation
benefits under the Employees’ Compensation Program is
REINSTATED.
2. EMPLOYEE
3. DEPENDENT
4. BENEFICIARIES
3.03 COVERAGE
COVERAGE
PHIL BLOOMING MILLS V SSS
17 SCRA 107
BARRERRA; August 31, 1966
FACTS
- Philippine Blooming Mills Co. Inc. is a domestic corporation
employing Japanese technicians. From April 28, 1957, to
October 26, 1958, the corporation had in its employ 6 Japanese
technicians. In connection with this, Phil. Blooming sent an
inquiry to SSS whether these employees are subject t
compulsory coverage under the System. The First Deputy
Administrator of the SSS answered through a letter:
- SIR:
With reference to your letter of August 24, 1957, hereunder
are our answers to your queries:
Aliens employed in the Philippines:
Aliens who are employed in the Philippines shall also be
compulsorily covered. But aliens who are employed
temporarily shall, upon their departure from the Philippines,
be entitled to a rebate of a proportionate amount of their
contributions; their employers shall be entitled to the same
proportionate rebate of their contributions in behalf of said
aliens employed by them. (Rule I, Sec. 3[d], Rules and
Regulations.)
- On October 7, 1958, Phil. Blooming filed a claim with the SSS
for the refund of the premiums paid to the System, on the
ground of termination of the members' employment. The claim
was denied so they filed a petition with the Social Security
Commission for the return or refund of the premiums, in the
A2010 - 99 - Disini
total sum of P2,520.00, paid by the employer corporation and
the 6 Japanese employees, plus attorneys' fees. The claim was
controverted by the SSS, alleging that Rule IX of the Rules and
Regulations of the System, as amended, requires membership
in the System for at least 2 years before a separated or
resigned employee may be allowed a return of his personal
contributions. Under the same rule, the employer is not also
entitled to a refund of the premium contributions it had paid.
- After hearing, the Commission denied the petition for the
reason that, although under the original provisions of Section 3
(d) of Rule I of the Rules and Regulations of the SSS, alien-
employees (who are employed temporarily) and their employers
are entitled to a rebate of a proportionate amount of their
respective contributions upon the employees' departure from
the Philippines, said rule was amended by eliminating that
portion granting a return of the premium contributions. This
amendment became effective on January 14, 1958, or before
the employment of the subject aliens terminated. The rights of
covered employees who are separated from employment,
under the present Rules, are covered by Rule IX which allows a
return of the premiums only if they have been members for at
least 2 years.
ISSUE
WON appellants are bound by the amended Rules requiring
membership for two years before refund of the premium
contributions may be allowed
HELD
YES
- These rules and regulations were promulgated to provide
guidelines to be observed in the enforcement of the law. As a
matter of fact, Section 3 of Rule I is merely an enumeration of
the "general principles to guide the Commission" in the
determination of the extent or scope of the compulsory
coverage of the law. One of these guiding principles is
paragraph (d) relied upon by appellants, on the coverage of
temporarily-employed aliens. It is not pretended, that the
amendment of this Section 3(d) of Rule I, as to eliminate the
provision granting to these aliens the right to a refund of part of
their premium contributions upon their departure from the
Philippines, is not in implementation of the law or beyond the
authority of the Commission to do.
- However, while the amendment to the Rules may have been
lawfully made by the Commission and duly approved by the
President on January 14, 1958, such amendment was only
published in the November 1958 issue of the Official Gazette,
and after appellants' employment had already ceased. Suffice it
to say, in this regard, that under Article 2 of the Civil Code, the
date of publication of laws in the Official Gazette is material for
the purpose of determining their effectivity, only if the statutes
themselves do not so provide.
- In the present case, the original Rules and Regulations of the
SSS specifically provide that any amendment thereto
subsequently adopted by the Commission, shall take effect on
the date of its approval by the President. Consequently, the
delayed publication of the amended rules in the Official Gazette
did not affect the date of their effectivity, which is January 14,
1958, when they were approved by the President. It follows that
when the Japanese technicians were separated from
employment in October, 1958, the rule governing refund of
premiums is Rule IX of the amended Rules and Regulations,
which requires membership for 2 years before such refund of
premiums may be allowed.
Disposition finding no error in the resolution of the
Commission appealed from, the same is hereby affirmed, with
costs against the appellants.
STA. RITA V CA (PPL OF THE PHILS, SSS)
247 SCRA 487
FELICIANO; August 21, 1995
NATURE
Labor Law 1
Petition for Review an Certiorari of the Decision of the Court of
Appeals
FACTS
- Sta. Rita was charged in the RTC with violating Section 2(a) in
relation to Sections 22(d) and 28(e) of Social Security Law. The
Information alleged that petitioner, "as President/General
Manager of B. Sta. Rita Co., Inc. a compulsorily covered
employer under the Social Security Law, as amended, did then
and there willfully and unlawfully fail, neglect and refuse and
still fails, neglects and refuses to remit to the Social Security
System contributions for SSS, Medicare and Employees
Compensation for its covered employees."
- RTC sustained petitioner's motion and dismissed the criminal
case filed against him. It ruled that the Memorandum of
Agreement entered into between the Department of Labor and
Employment ("DOLE") and the Social Security System ("SSS")
extending the coverage of Social Security, Medical Care and
Employment Compensation laws to Filipino seafarers on board
foreign vessels was null and void as it was entered into by the
Administrator of the SSS without the sanction of the
Commission and approval of the President of the Philippines, in
contravention of Section 4 (a) of R.A. No. 1161, as amended.
- The People, through the Solicitor General, filed in the Court of
Appeals a petition for certiorari, prohibition and mandamus
assailing the order of dismissal issued by the trial court.
Respondent appellate court granted the petition and ordered
the Presiding Judge of the trial court to reinstate the criminal
case against petitioner. A motion for reconsideration thereof
was denied by the CA.
- Sta. Ana filed in this Court a motion for extension of thirty
days from the expiration of reglementary period within which to
file a petition for review on certiorari. The Court granted the
motion and gave petitioner until 9 June 1995 to file the petition
with warning that no further extension will be given. Despite the
warning, the petition was filed only on 13 June 1995 or four (4)
days after the due date. Moreover, it failed to comply with
requirement no. 2 of Circular No. 1-88, as amended and Circular
No. 19-91 of the Court as it did not contain an affidavit of
service of copies thereof to respondents. It was only on 14 July
1995, through an ex-parte manifestation, that the affidavit of
service was belatedly submitted to this Court.
ISSUE
WON Filipino seafarers recruited by B. Sta. Rita Co. and
deployed on board foreign vessels outside the Philippines are
exempt from the coverage of R.A. No. 1161
HELD
NO
- Respondent appellate court correctly upheld the validity of the
Memorandum of Agreement entered into between the DOLE
and the SSS. The Memorandum of Agreement was approved by
the Social Security Commission per the Commission's
Resolution No. 437, dated 14 July 1988. Upon the other hand,
the Memorandum of Agreement is not a rule or regulation
enacted by the Commission in the exercise of the latter's quasi-
legislative authority Under Section 4 (a) of R.A. No. 1161.
- What the Memorandum of Agreement did was to record the
understanding between the SSS on the one hand and the DOLE
on the other hand that the latter would include among the
provisions of the Standard Contract of Employment required in
case of overseas employment, a stipulation providing for
coverage of the Filipino seafarer by the SSS. The Memorandum
of Agreement is not an implementing rule or regulation of the
Social Security Commission which, under Section 4 (a), is
subject to the approval of the President. Indeed, as a matter of
strict law, the participation of the SSS in the establishment by
the DOLE of a uniform stipulation in the Standard Contract of
Employment for Filipino seafarers was not necessary; the
Memorandum of Agreement related simply to the
administrative convenience of the two (2) agencies of
government.
A2010 - 100 - Disini
- Section 8 (j) (5) simply defines the term "employment" and
does not in any way relate to the scope of coverage of the
Social Security System. That coverage is, upon the other hand,
set out in Section 9 of R.A. No. 1161 as amended, which defines
the scope of SSS coverage in the following terms:
Sec. 9 Compulsory Coverage. — (a) Coverage in the SSS shall
be compulsory upon all employees not over sixty years of age
and their employers; Provided, . . . .
(b) Fillpinos recruited in the Philippines by foreign employers
for employment abroad may be covered by the SSS on a
voluntary basis. (As amended by Sec. 2, P.D. No. 177, S-1973
and Sec. 6, P.D. No. 735-S-1975) (Emphasis supplied)
- The Standard Contract of Employment to be entered into
between foreign shipowners and Filipino seafarers is the
instrument by which the former express their assent to the
inclusion of the latter in the coverage of the Social Security Act.
In other words, the extension of the coverage of the Social
Security System to Filipino seafarers arises by virtue of the
assent given in the contract of employment signed by employer
and seafarer; that same contract binds petitioner Sta. Rita or B.
Sta. Rita Company, who is solidarily liable with the foreign
shipowners/employers.
- By extending the benefits of the Social Security Act to Filipino
seafarers on board foreign vessels, the individual employment
agreements entered into with the stipulation for such coverage
contemplated in the DOLE-SSS Memorandum of Agreement,
merely give effect to the constitutional mandate to the State to
afford protection to labor whether "local or overseas."
Nullification of the SSS stipulation in those individual
employment contracts, through nullification of the
Memorandum of Agreement, constituted serious reversible
error on the part of the trial court. That petitioner should seek
to deprive his countrymen of social security protection after his
foreign principal had agreed to such protection, is cause for
dismay and is to be deplored.
Disposition The Court Resolved to DENY the Petition for
having been filed late, for failure to comply with applicable
Court Circulars and for lack of merit. The assailed Decision of
the Court of Appeals is hereby AFFIRMED. Cost against
petitioner.
CORPORAL V NLRC (ENTENG)
341 SCRA 658
QUISUMBING; Octovber 2, 2000
NATURE
Special Civil Action.Certiorari
FACTS
- Petitioners have been working as barbers and manicurists in
New Look Barber Shop for many years. The children of the
original owner decided to incorporate the barber shops owned
by their father.
- On April 15, 1995, the petitioners were told that the land and
building where the barber shop was housed will be sold thus
their services were not longer required. thus they filed a
complaint for illegal dismissal. The Labor Arbiter and the NLRC
dismissed the case on the ground that there was no employer-
employee relationship existing. They deemed the relationship
as one of joint venture.
ISSUE
WON NLRC committed rave abuse of discretion amounting to
lack or excess of jurisdiction considering the petitioners as
independent contractors
HELD
YES
- The petitioners were registered with the Social Security
System as regular employees of the respondent. The SSS
employment records show the employer’s ID was 03-0606200-1
and ID No. 03-8740074-7 for Lao Enteng. While it is no longer
true that membership to SSS is predicated on the existence of
Labor Law 1
an employer-employee relationship since the policy is now to
encourage the self employed to become members, the court did
not appreciate the allegation of the respondent that the
registration was only as a matter of accommodation. The court
held that it was unlikely that respondents would report certain
persons as their workers, pay the SSS premium as well as their
wages if it were not true that they were indedd their
employees.
Reasoning
- The petitioners could not have been independent contractors
as they fail to meet the test of what constitute an independent
contractor. they neither control or direct their own activity not
do they have substantial capital.
Disposition Petition granted
CHUA V CA
[PAGE 242]
3.04 EFFECT OF SEPARATION
FORM EMPLOYMENT
3.05 REPORTING
REQUIREMENTS
POBLETE CONSTRUCTION CO V ASIAIN
20 SCRA 1143
MAKALINTAL; August 30, 1967
NATURE
ORIGINAL ACTION in the Supreme Court. Certiorari with
preliminary injunction.
FACTS
- Miguel Asiain was an employee of the Poblete Construction
Company from 1956 until his death on November 22, 1959, with
a monthly salary of P300. Upon his death his widow, Judith
Asiain, for herself - and her minor children, filed a petition
before the Social Security Commission against the company
'and its manager, Domingo Poblete, to recover the following
sums:
(1) P3,600.00 equivalent to one year's salary of the
deceased;
(2) P600.00 representing his unpaid salary for two months;
(3) P288.00 "representing the cash received by respondents
from their laborers as contribution to the family of the
deceased;" and
(4) P2,000.00 by way of attorney's fees.
- Poblete Construction moved to dismiss the petition on the
grounds that the Social Security Commission, had no
jurisdiction over the subject-matter and that the Judith Asiain
had no capacity to sue.
- February 25, 1960 - Commission denied the motion to dismiss
and ordered Poblete Construction to file their answer.
- March 9, 1960 - When no answer was forthcoming, Poblete
Construction was declared in default and the Asiain et al were
allowed to present their evidence.
- September 15, 1960 - In its resolution, Commission declared
itself without jurisdiction to entertain the claims in the petition
except the one for the sum of P3,600, which it awarded on the
basis of the evidence adduced at the hearing and pursuant to
Section 24 of Republic Act No. 1161, as amended.
- A subsequent motion for reconsideration filed by the
respondents was denied
- Court of Appeals issued a writ of preliminary injunction to stop
all further proceedings below, including execution of the award.
ISSUE
A2010 - 101 - Disini
WON the Commission has jurisdiction to entertain the claim of
P3,600, which should have been, presented before the ordinary
courts
HELD
YES
- This claim was filed under Section 24 of the Social Security Act
(R.A. 1161, as amended), which provides:
'SEC. 24. Employment records and reports. - (a) each
employer shall report immediately to the System the names,
ages, civil status, occupations, salaries and dependents of all
his employees who are in his employ and who are or may
later be subject to compulsory coverage: Provided, That if an
employee subject to compulsory coverage should die or
become sick or disabled without the System having
previously received a report about him from his employer, the
said employer shall pay to the employee or his legal heirs
damages equivalent to the benefits to which said employee
would have been entitled had his name been reported on
time by the employer to the System."
- There is no question that the deceased Miguel Asiain was
subject to compulsory coverage in the Social Security System,
although the deceased's SSS Form E-1 (Employees' Date
Record) was never filed with the Social Security System for the
reason, according to the company, that he refused to have his
share of the corresponding monthly contributions deducted
from his salary. It was the duty of the employer to "report
immediately to the System" his name, age, civil status,
occupation, salary and dependents. Compliance with this duty
did not depend upon the employee's willingness to give his
share of the contribution. Section 24 is mandatory, to such an
extent that if the employee should die or become sick or
disabled without the report having been made by the employer,
the latter is liable for an amount equivalent to the benefits to
which the employee would have been entitled had such report
been made.
- It is true that Section 24 uses the word "damages" in referring
to the amount that may be claimed. But this fact alone does not
mean that the Social Security Commission lacks jurisdiction to
award the same. Section 5(a) of the Social Security Act provides
that "the filing, determination and settlement of claims shall be
governed by the rules and regulations promulgated by the
Commission;" and the rules and regulations thus promulgated
state that "the effectivity of membership in the System, as well
as the final determination and settlement of claims, shall be
vested in the Commission." The term "claims" is broad enough
to include a claim for damages under Section 24. Otherwise an
employer could nullify the jurisdiction of the Commission by the
simple expedient of not making a report as required by said
Section. The collection of the employee's share is a duty
imposed by law, and his unwillingness to have it deducted from
his salary does not excuse the employer's failure to make the
report aforesaid. It is precisely in this situation that the
employer is liable, and there is no question as to the amount of
such liability in this case.
Disposition The decision of the Social Security Commission is
affirmed, and the writ of preliminary injunction is dissolved, with
costs against herein petitioner.
3.06 FUNDING
FUND OWNERSHIP
CMS ESTATE INC V SOCIAL SECURITY SYSTEM
[PAGE 2]
Labor Law 1
3.07 EFFECT OF NON-
REMITTANCE
SSS FAILURE REMIT
SANTIAGO V CA (SSS)
133 SCRA 34
MELENCIO-HERRERA; October 31, 1984
NATURE
Petition to review decision of CA (affirming SSS commission
resolution denying the petition to credit in their favor the salary
deductions made by their employer as premium contributions
and loan installment payments)
FACTS
- Santiago et. al. were employed by I-Feng Enamelling Co. They
had been paying their contributions, by way of salary
deductions, their personal contributions to the SSS. During their
employment, they availed of salary loan benefits, installment
payments to which were also deducted from their salaries. The
employer deducted the required amounts from their salaries,
but failed to remit them to the SSS.
- Petitioners then sought to have the amounts credited in their
favor but the SSS Commission denied this. CA affirmed.
- Petitioners’ contentions: there existed a contract of agency
between SSS and the employer, thus payment to the agent
(employer) is payment to the principal (SSS).
ISSUE
WON premium contributions and loans payments by petitioners,
which were deducted and collected from their salaries by their
employer, but not remitted to the SSS, should be credited in
their favor by the SSS
HELD
NO
Ratio As there is no contract of agency between the SSS and
the employers, payment made to the employer by way of salary
deduction is in no way payment to SSS
Reasoning
- SSS circular no. 52 provides that it is the borrower who
expressly authorizes his employer and subsequent employers to
deduct from his salary the installments due on his salary loan.
The employer then remits the installments due to the SSS in
accordance with rules that the SSS has laid down. The
employer, in so deducting the installment payments from the
borrower, does so upon the latter's authorization. The employer
is merely the conduit for remitting the premiums for reasons of
administrative convenience and expediency in order that SSS
members may be served efficiently and expeditiously. No
contract of agency, in the legal sense, therefore may be said to
exist between the employer and the SSS.
- as correctly observed by the CA: “To rule otherwise would be
to open the door for unscrupulous employers to circumvent the
law by not remitting their collections of salary loans installment
payments from employees since, anyway, the SSS would credit
them with what they had paid to the employer even though the
latter fails to remit them to the SSS.”
- there is a difference WRT to premium contributions (from loan
payments):
Clearly, if the employer neglects to pay the premium
contributions, the SSS may proceed with the collection in the
same manner as the BIR in case of unpaid taxes. Plainly, too,
notwithstanding non-remittance by employers of the premium
contributions, covered employees are entitled to the benefits of
the coverage, such as death sickness, retirement, and
permanent disability benefits. These benefits continue to be
enjoyed by the employees by operation of law and not, as
petitioners allege, because the premium contributions and
A2010 - 102 - Disini
salary loan installment payments have already became the
money of the SSS upon payment by the employees to the
employer. It should be remembered that funds contributed to
the SSS by compulsion of law are funds belonging to the
members, which are merely held in trust by the government.
The mentioned benefits, however, do not include the salary loan
privileges that member-employees apply for. The SSS may or
may not grant those loans pursuant to its rules and regulations.
The salary loans are not covered by law but by contract
between the SSS as lender, and the private employee, as
borrower.
Disposition Petition dismissed. CA decision AFFIRMED.
SEPARATE OPINION
PLANA [concur]
- Who bears the loss of unremitted SSS premium contributions
and salary loan repayments previously withheld from the
salaries of employees in private enterprises in case the
employer who has misappropriated the same fails to make
restitution?
- the law as it stands seems inadequate to protect either the
interest of the employees or the SSS. Thus, with respect to
unremitted salary loan re-payments, the employees have to
shoulder the loss, if the employer is insolvent. On the other
hand, as to premium contributions, the SSS and ultimately the
members of the SSS must suffer the employer's misconduct and
insolvency.
BENEDICTO V ABAD SANTOS
183 SCRA 434
FELICIANO; March 21, 1990
NATURE
Petition for Prohibition and Mandamus with preliminary
injunction
FACTS
- Benedicto employed the late Salvador Pillon as truck driver.
He however, did not report Pillon's employment to the Social
Security System ("SSS") for compulsory coverage and did not
pay the corresponding SSS contributions.
- This came to the knowledge of the SSS sometime in 1975.
- After Pillon's death, an investigator of the SSS was deputized
to conduct an enquiry in respect of Benedicto's alleged
violations of theSocial Security Act (RA 1161).
- The report stated that Benedicto had admitted having failed to
report and to register with the SSS Pillon's employment for the
period from March 1971 up to the time of Pillon's death in 1974,
and to pay the corresponding SSS contributions.
- Ten years later, upon complaint of the Legal Department of
the SSS, the Assistant City Fiscal of Bacolod City filed an
information charging petitioner Benedicto with violations of the
Social Security Act.
- Benedicto moved to quash the information asserting that his
liability had already been extinguished by prescription.
- SSS opposed the Motion to Quash contending that the offense
charged in the information had not yet prescribed since the
applicable prescriptive period was twenty (20) years and since
the information was filed within this 20-year period.
- Respondent Judge denied petitioner Benedicto's Motion to
Quash .
(Paragraph B of Section 22 of the Republic Act 1161 as
amended by Section 15 of the PD 1636 'The right to institute
the necessary action against the employer may be commenced
within Twenty Years (20) from the time the Delinquency is
Labor Law 1
known or the assessment is made by the SSS, or from the time
the Benefit Accrues, as the case may be.')
- Petitioner moved for reconsideration of the above order,
without success.
Petitioner’s claim:
- the 20-year prescriptive period established in Section 22 (b) of
the Social Security Act applies only in respect of administrative
and civil actions involving delinquency in the remittance of
contributions to the SSS, and not to a criminal action like that
initiated in the case at bar
- since the Social Security Act had not established a prescriptive
period in respect of criminal liability for violations of the Social
Security Act or the Rules and Regulations promulgated by the
Social Security Commission concerning registration of
employees and remittance of contributions to the SSS, the
applicable statute of limitations was four (4) years under Act
No. 3326.
"SEC. 22. Remittance of Contributions.
(b) The contribution payable under this Act in cases where an
employer refuses or neglects to pay the same shall be
collected by the SSS in the same manner as taxes are made
collectible under the' National Internal Revenue Code, as
amended. Failure or refusal of the employer to pay or remit
the contributions herein penalized shall not prejudice the
right of the covered employee to the benefits of the
employee.
The right to institute the necessary action against the
employer may be commenced within twenty (20) years from
the time the delinquency is known or the assessment is made
by the SSS, or from the time the benefit accrues, as the case
may be."
"Sec. 28. Penal Clause-x x x
(e) Whoever fails or refuses to comply with the provisions of
this Act or with the rules and regulations promulgated by the
Commission, shall be punished by a fine of not less than five
hundred pesos nor more than five thousand pesos, or
imprisonment for not less than six months nor more than one
year, or both, at the discretion of the court: Provided, That,
where the violation consists in failure or refusal to register
employees, or to deduct contributions from employee's
compensation and remit the same to the SSS. the penalty
shall be a fine of not less than five hundred pesos nor mom
than five thousand pesos and imprisonment for not less than
six months nor more than one year."
- Act No. 3326, as amended by Act No. 3763 provides as
follows:
"SECTION 1. Violations penalized by special acts shall, unless
otherwise provided in such acts, prescribe in accordance with
the following rules: (a) after a year for offenses punished only
by a fine or by imprisonment for not more than one month, or
both; (b) after four years for those punished by imprisonment
for more than one month, but less than two years;….
Provided, however, That all offenses against any law or part
of law administered by the Bureau of Internal Revenue shall
prescribe after five years. Violations penalized by municipal
ordinances shall prescribe after two months.
SSS’ argument:
- Act No. 3326, as amended, was not applicable to the instant
case for the reason that the Social Security Act itself had
established a statute of limitations in section 22 (b) of the Social
Security Act as amended by P.D. No. 1636,
- the 20-year statute of limitations embodied in Section 22 (b) is
applicable in respect of all kinds of actions against a delinquent
employer, whether criminal or civil.
ISSUE
WON the offense with which petitioner Benedicto is charged has
prescribed
HELD
YES
- The statutory crime here charged had prescribed by then, the
prescriptive period here applicable being four (4) years.
Reasoning
A2010 - 103 - Disini
- The 20-year prescriptive period is found in Section 22 of the
Social Security Act which deals generally with the remittance of
contributions to the SSS. Section 22 (b) does not deal with penal
sanctions for violations of provisions of the Social Security Act
nor of the rules and regulations promulgated by the Social
Security Commission.
- a 20-year statute of limitation would constitute a
disproportionately long statute of limitations if one compared it
with either the applicable prescriptive periods in respect of
crimes punishable under the Revised Penal Code or the
prescriptive periods applicable to crimes punished by special
statutes under Act No. 3326.
- to apply a single, uniform 20-year prescriptive period to both
civil actions for collection of unremitted SSS premiums and to
criminal prosecutions for violations of provisions of the Social
Security Act and of rules and regulations promulgated by the
Social Security Commission, would be both grossly
disproportional and too simplistic.
- This is concerned only with the extinguishment of the criminal
liability for the offense charged in the information and does not
carry with it the extinction of the civil action to enforce civil
liability arising from the offense charged.
- The information against petitioner Benedicto itself specified
the amount of the civil liability-P6,381.00, being the amount
equivalent to the benefits which the heirs of the deceased
Salvador Pillon would have been entitled to had Pillon been
reported and registered with the SSS on the time and the
necessary contributions remitted to the SSS. That amount will,
upon collection, be payable to Salvador Pillon's heirs.
CHUA V CA
[PAGE 242]
3.08 BENEFITS
GSIS RETIREMENT BENEFITS
CONTE V COMMISSION ON AUDIT
264 SCRA 19
PANGANIBAN; November 4, 1996
NATURE
Petition for certiorari of a decision of COA.
FACTS
- SSS Resolution No. 56 [RES.56, for brevity], approved on 1971,
provides incentive to retiring SSS employees to avail of the
retirement benefits under RA 660 as amended,14 rather than
those under RA 1616 as amended,15 by giving them “financial
assistance” equivalent to the difference between what a retiree
would have received under RA 1616, less what he was entitled
to under RA 660. The benefits under RA 660 are entirely
payable by GSIS while those under RA 1616 are primarily
shouldered by SSS. RES.56 came about upon observation that
qualified SSS employees have invariably opted to retire under
RA 1616 instead of RA 660 because the benefit under the
former is much greater than that under the latter. As a
consequence, the SSS usually ended up virtually paying the
entire retirement benefit, instead of GSIS which is the main
insurance carrier for government employees. In other words,
RES.56 was issued not only to equalize the benefits received
under both RAs, but also as a cost-cutting device for SSS.
- PETITIONERS were former SSS employees who, upon
retirement, availed of the benefits under RA 660, and as
14
“An Act to amend [CA No. 186] entitled ‘An Act to create and establish a
Government Service Insurance System…,’ and to provide retirement insurance and
for other purposes.” (1951)
15
“An Act further amending… [CA No. 186], as amended, by prescribing two other
modes of retirement and for other purposes.” (1957)
Labor Law 1
expected, they sought payment from SSS of the benefits under
RES.56. SSS denied their request pursuant to a ruling by COA
disallowing all claims under RES.56. The ruling stated that SSS’
scheme of financial assistance is similar to the separate
retirement plans by other government agencies “which results
in the increase of benefits beyond what is allowed under
existing retirement laws.” The law referred to is RA 496816
which amended CA No.186 by providing that “no… retirement
plan for… employees shall be created by employer. All
supplementary retirement… plans… in force in any government
office…, are hereby declared inoperative.”
- Consequently, PETITIONERS sought reconsideration of the COA
ruling. COA denied the request; hence, this petition.
ISSUE
WON COA abuse its discretion when it disallowed PETITIONERS’
claims for benefits under RES.56
HELD
NO
Ratio RES.56 itself states: “Resolved, further, that SSS
employees who availed themselves of the said life annuity
(under RA 660), in… recognition of their long and faithful
service, be granted financial assistance.” It is plain to see that
the grant of said financial assistance is inextricably linked with
the application for and approval of retirement benefits under RA
660 – availment of said assistance under RES.56 may be done
only in conjunction with the availment of benefits under RA 660,
and the former (RES.56) is in supplementation of the latter
benefits (RA 660). CA 186, as amended by RA 4968, in no
uncertain terms bars the creation of any insurance or
retirement plan - other than the GSIS - for government
employees, in order to prevent the undue and inequitous
proliferation of such plans. It is beyond cavil that RES.56
contravenes the provision of law and is, therefore, void.
- We are not unmindful of the laudable purposes for
promulgating RES.56, and the positive results it must have had,
not only in reducing costs of the SSS in connection with the pay-
out of retirement benefits and gratuities, but also in improving
the quality of life for scores of retirees. But it is simply beyond
dispute that the SSS had no authority to maintain and
implement such retirement plan, particularly in the face of the
statutory prohibition. The SSS cannot, in the guise of rule-
making, legislate or amend laws or worse, render them
nugatory.
- The scheme cannot also be likened to honoraria received by
employees of DOJ and of the Office of the Solicitor-General. As
clarified by the Solicitor-General himself, the honoraria are
“travelling and/or representation expenses… incurred by them
in the course of handling cases, attending… hearings, or
performing other field work. These monetary benefits are given
upon rendition of service while the ‘financial benefits’ under…
[RES.56] are given upon retirement from service.”
- Finally as equity is applied only in the absence of statutory law
or rules of procedure, it cannot be applied to give effect to RES.
56, which directly contravenes the clear mandate of RA 4968.
But it can be still be invoked for it is clear appears that
PETITIONERS are simply innocent bystanders in this whole
bureaucratic rule-making drama; to the extent possible, they
ought not be penalized as a result of the subsequently
determined invalidity of RES. 56, the promulgation and
implementation of which they had nothing to do with.
PETITIONERS, being qualified to avail of benefits under RA 660,
may also readily qualify under RA 1616. It would therefore not
be misplaced to enjoin the SSS to render all possible assistance
to PETITIONERS for the prompt processing and approval of their
applications under RA 1616, and in the meantime, unless
barred by existing regulations, to advance to petitioners the
difference between the amounts due under RA 1616, and the
amounts they already obtained, if any, under RA 660.
Disposition Petition DISMISSED.
16
The Teves Retirement Law, which took effect in 1967.
A2010 - 104 - Disini
ECSIF CASES
DEFINITION – DISABILITY
EMPLOYEES’ COMPENSATION COMMISSION (SSS) V
SANICO
34 SCRA 269
KAPUNAN; December 17, 1999
NATURE
Petition for review of the decision of the CA
FACTS
- Private respondent was a former employee of John Gotamco
and Sons. He worked in said company as “wood filer” from
1986 until he was separated from employment on 31 December
1991 due to his illness.
- His medical evaluation report, dated 31 September 1991,
showed that he was suffering from pulmonary tuberculosis
(PTB). Subsequent chest x-rays taken on 9 October 1994 and 3
May 1995 diagnostically confirmed his illness.
- On 9 November 1994, private respondent filed with SSS a
claim for compensation benefits under P.D. No. 626, as
amended.
- SSS denied private respondent’s claim on the ground of
prescription. The SSS ruled that under Article 201 of the Labor
Code, a claim for compensation shall be given due course only
when the same is filed with the System three (3) years for the
time the cause of action accrued.
- In private respondent’s case, the SSS reckoned the three-year
prescriptive period on 21 September 1991 when his PTB first
became manifest. When he filed his claim on 9 November
1994, the claim had allegedly already prescribed.
- CA reversed petitioner’s decision and granted private
respondent’s claim for compensation benefits. In ruling that
private respondent’s claim was filed well within the prescriptive
period under the law, the CA reconciled Article 201 of the Labor
Code with Article 1144(2) of the Civil Code.
ISSUE
WON private respondent’s claim for compensation benefit had
already prescribed when he filed his claim on 9 November 1994
HELD
NO
Ratio Disability should not be understood more on its medical
significance but on the loss of earning capacity. Permanent
total disability means disablement of an employee to earn
wages in the same kind of work, or work of similar nature that
[he] was trained for or accustomed to perform, or any kind of
work which a person of [his] mentality and attainment could
do. It does not mean absolute helplessness. In disability
compensation, it is not the injury which is compensated, but
rather it is the incapacity to work resulting in the impairment of
one’s earning capacity.
Reasoning
- In determining whether or not private respondent’s claim was
filed within the three-year prescriptive period under Article 201,
petitioner and the SSS reckoned the accrual of private
respondent’s cause of action on 31 September 1991, when his
PTB became known. This is erroneous.
- the prescriptive period for filing compensation claims should
be reckoned from the time the employee lost his earning
capacity, i.e., terminated from employment, due to his illness
and not when the same first became manifest. Indeed, a
Labor Law 1
person’s disability might not emerge at one precise moment in
time but rather over a period of time.
- the Court takes this opportunity to once again remind
petitioner that P.D. No. 626, as amended, is a social legislation
whose primordial purpose is to provide meaningful protection to
the working class against the hazards of disability, illness and
other contingencies resulting in the loss of income.
Disposition instant petition is hereby DISMISSED.
SSS V CA (RAGO)
439 SCRA 239
DAVIDE; September 27, 2004
NATURE
Petition for review of CA decision and resolution which reversed
the resolution of the Social Security Commission denying
respondent Rago’s request to convert his monthly pension from
permanent partial disability to permanent total disability
FACTS
- Private respondent Rago, an electrician for Legend
Engineering in Cebu, sustained an injury while working on the
ceiling of a building. He stepped on a weak ceiling joist which
gave way and caused him to crash into a corridor 12 feet below.
X-rays revealed that he had a marked compression fracture
without signs of dislocation and bone destruction as well as
slight kyphosis (curvature or deformity of the upper spine), with
the alignment of the spine still normal. He was confined in the
hospital for almost a month and thereafter confined in his home
for 8 months from Dec.25, 1993 to Aug. 25, 1993.
- On Nov. 1995, Rago filed a claim for Employee’s
Compensation (EC) sickness benefit which was approved for a
maximum of 120 days to cover the period from Dec 1993 to
March 1994. He then filed another claim to convert his SSS
disability to EC disability which was again resolved in his favor.
A claim for the extension of his EC partial disability was likewise
granted. Rago, thereafter, filed several requests for the
adjustment of his partial disability to total disability but they
were denied by the SSS based on medical findings that he was
not totally prevented from engaging in any gainful occupation.
Rago, undaunted, filed with the SSC a petition for total
permanent disability benefits on the grounds that he had been
confined both in the hospital and at home for 268 days (under
SSC guidelines, injury persisting for more than 240 days is
considered permanent total disability), x-rays show a
deteriorating condition, and he had lost his original capacity to
work as an electrician and has been unemployed since the
accident. On the other hand, the SSS argued that Rago had
already been granted the maximum partial disability benefits. A
physical examination showed that he was more than capable of
physically engaging in any gainful occupation thus, it
recommended the denial of the Rago’s petition.
- The SSC later denied Rago’s petition for lack of merit. It ruled
that he was not entitled to permanent partial disability more
than what was already granted, more so to permanent total
disability benefits since he was already granted the maximum
allowable benefit for his injury.
- Rago did not file a MFR but instead appealed to the CA by
filing a petition for review and reiterating his claim for
permanent disability benefits. The CA reversed the SSC’s
resolution. MFR was filed by SSC but the same was denied by
the CA. Thus, in this petition, the SSS and the SSC pray to set
aside the CA decision and resolution and to have the case
remanded to the SSC for further proceedings.
***Procedural matters: The SSC challenged the immediate
appeal by Rago to the CA and likewise the CA’s decision to take
cognizance of the case. On this issue, the SC held: Rago
disregarded procedural and curative rules in taking immediate
recourse to the appellate court. The CA similarly erred in taking
cognizance of the appeal... Nevertheless, to require Rago to
comply with the principle of exhaustion of administrative
remedies at this stage of the proceedings would be
unreasonable, unjust and inequitable. It would prolong
A2010 - 105 - Disini
needlessly and uselessly the resolution of this claim. The
principle of exhaustion of remedies is not an ironclad rule. It
may be disregarded when, as in this case, requiring the
exhaustion of administrative remedies would be unreasonable.
ISSUE
WON Rago is entitled to permanent total disability
HELD
YES
Ratio An employee who is unable to perform his customary job
for more than 120 days because of the injury or sickness he
sustained and does not come within the coverage of Rule 10 of
the Amended rules on EC, suffers from “permanent total
disability” regardless of WON he loses the use of any part of his
body.
- A temporary total disability lasting continuously for more than
120 days, shall be considered permanent.
- The test of WON an employee suffers from “permanent total
disability” is a showing of the capacity of the employee to
continue performing his work notwithstanding the disability he
incurred.
Reasoning
- The CA correctly observed that Rago’s injury made him unable
to perform any gainful occupation for a continuous period
exceeding 120 days. The SSS had granted Rago’s sickness
benefit for 120 days and, thereafter, permanent partial
disability for 38 months. Such grant is an apparent recognition
by the SSS that his injury is permanent and total as we have
pronounced in several cases. This is in conformity with Section
2(b), Rule VII of the Amended Rules on EC which defines a
disability to be total and permanent if, as a result of the injury
or sickness, the employee is unable to perform any gainful
occupation for a continuous period exceeding 120 days, and
Section 1, b(1) of Rule XI of the same Amended Rules which
provides that a temporary total disability lasting continuously
for more than 120 days, shall be considered permanent.
- In Vicente v Employees Compensation Commission, we laid
down the litmus test and distinction between Permanent Total
Disability and Permanent Partial Disability:
While “permanent total disability” invariably results in an
employee’s loss of work or inability to perform his usual work,
“permanent partial disability,” on the other hand, occurs
when an employee loses the use of any particular anatomical
part of his body which disables him to continue with his
former work. Stated otherwise, the test of whether or not
an employee suffers from “permanent total disability”
is a showing of the capacity of the employee to
continue performing his work notwithstanding the
disability he incurred. Thus, if by reason of the injury or
sickness he sustained, the employee is unable to perform his
customary job for more than 120 days and he does not come
within the coverage of Rule X of the Amended Rules on EC
(which describes what constitutes temporary total disability),
then the said employee undoubtedly suffers from “permanent
total disability” regardless of WON he loses the use of any
part of his body.
- Disability should be understood less on its medical significance
than on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same
kind of work, or work of similar nature that he was trained for or
accustomed to perform, or any kind of work which a person of
his mentality and attainment could do. It does not mean
absolute helplessness. Moreover, a person’s disability may not
manifest fully at one precise moment in time but rather over a
period of time. It is possible that an injury which at first was
considered to be temporary may later on become permanent or
one who suffers a partial disability becomes totally and
permanently disabled from the same cause.
Disposition CA’s decision and resolution are AFFIRMED
MANIFESTATION
Labor Law 1
GSIS V CA (LIWANAG)
285 SCRA 430
DAVIDE; September 28, 1998
NATURE
Appeal from decision of CA
FACTS
- Jaime Liwanag was a Senior Superintendent of the PNP at the
time of his death on Sept 14, 1994. He was 48 years old and
had served the police force for 27 years. Zenaida Liwanag,
private respondent, is his surviving spouse.
- On Aug 28, 1994, P/Sr. Supt. Jaime Liwanag was admitted at
the Medical Center of Manila. CT Scan showed Cirrhosis with
probable Hepatocellular CA, HB 5A3 positive. Despite medical
intervention, Jaime Liwanag succumbed to Upper GI Bleeding,
Cirrhosis Secondary to Hepatitis B; Hepatocellular Carcinoma on
Sept 14, 1994.
- Zenaida filed a claim with GSIS for compensation benefits. The
claim was denied for not being an occupational disease under
the law, neither was the risk of contracting the ailment of the
deceased increased by his employment as a member of the
police force.
- On appeal the Employees Compensation Commission affirmed
the GSIS ruling and dismissed the appeal for lack of merit,
ruling that Sec 1 (B), Rule III of the Amended Rules on
Employees' Compensation clearly provides: “For the sickness
and the resulting disability or death to be compensable, the
sickness must be the result of an occupational disease listed
under Annex "A" of these rules with the conditions set therein
satisfied; otherwise proof must be shown that the risk of
contracting the disease is increased by the working conditions.”
It has not been shown that Jaime’s ailments were among those
listed as occupational diseases, nor has proof been shown that
risk of contracting the diseases were increased by his work.
CA proceedings
a. Private respondent Zenaida
Zenaida relied heavily on two documents as proof of the
causal relation between Jaime’s ailments and his employment
and working conditions:
"Investigation Report Re Death of the Late P/SSUPT. JAIME
M. LIWANAG" dated 14 Sept 1994 submitted by Cristeto
Rey R. Gonzalodo, Police Chief Inspector, Investigator on
Case. In essence, the report says:
Jaime had constantly undergone physical/medical
examination throughout the course of his employment
and all the while was found to be physically and mentally
fit for the service.
It is highly believed that Jaime acquired his illness in the
course of his employment with PNP considering that
there are some personnel in his office who were positive
with Hepatitis B (Reactive) virus.
The report concluded that the death of Jaime was in Line
of Duty and not attributable to his own misconduct or
negligence.
“REPORT OF PROCEEDINGS OF LINE OF DUTY (LOD) BOARD
TO DETERMINE THE LINE OF DUTY STATUS OF THE LATE
P/SSUPT. JAIME J. LIWANAG PNP." In essence, the report
says:
Based on the record, the immediate cause of death of
Jaime was Cardio-Respiratory Arrest Secondary to
Gastro-Intestinal bleeding as a result of fulminating
Hepatitis.
It is highly possible that he got infected in the Directorate
for Plans since there were 5 other ODPL personnel out 45
who are reactive to Hepatitis B Antigen Test. Modes of
transmittal are through body fluids and secretion. All the
immediate members of his family are negative [for the]
Hepatitis B Virus. It was strongly believed that he got
this while working at the Headquarters since this is was
already endemic in the camp.
A2010 - 106 - Disini
The type of Hepatitis B acquired by Jaime was of Acute
Fulminant Type. The effect is so immediate that one out
of ten usually dies.
It was raised that under Ministry of National Defense DO
No 162 dated 15 Jan 65, a military personnel who died,
while in the Active Service is presumed to have died in
Line of Duty and not as a result of his own misconduct
unless there is substantial evidence to rebut such
presumption. This was still binding upon PNP personnel.
It was concluded that Jaime died in the line of duty.
Zenaida also argued that the requirement of proof of a causal
relation between a claimant's ailments and his employment
and working conditions "admits of exceptions and must yield
to the higher interests of justice."
b. GSIS
the burden then lay on Zenaida to prove that the risk of
contracting the disease was increased by her late husband's
working conditions and employment as a member of the PNP.
Investigation Report fallaciously concluded that Jaime
contracted Hepatitis B in the course of his employment as
some of his co-workers tested positive. The ailments of Jaime
were not inherent among policemen and everybody was
susceptible to the disease regardless of one's work.
There was no substantial evidence pointing to a reasonable
connection, much less, a direct causal relation, between
Jaime’s ailments and the nature of his employment
c. ECC
echoed the arguments of GSIS.
- CA ruled in favor of Zenaida, citing the reports relied upon by
Zenaida, and adding that under the law, it is not required that
the employment [is] the sole factor in the growth, development
and acceleration of his illness. It is enough if his employment
had contributed, even in small degree, to the development or
acceleration of the disease.
Petitioner’s Claims:
- CA has forgotten that PNP investigation was only for purpose
of determining the line of duty status of the [deceased] and if
his ailment was work connected.
Hepatitis B cannot be acquired by mere mingling with other
people who test positive for the illness. Hepatitis B is not just
acquired by simple association. There was no medical
proof/evidence presented how the [deceased] could have
acquired his illness.
ISSUE
WON CA committed an error of law by misappreciating the legal
standard of what constitutes substantial evidence; and in
according full credence to the proceedings before the PNP
Board and thus shifting the burden of evidence to petitioner to
rebut private respondent's claim, when private respondent's
evidence was sorely wanting to justify the award of
compensation benefits under P.D. No. 626, as amended
HELD
YES
- there is no dispute that Hepatitis B is not listed as an
occupational disease under Annex "A" of the Rules on
Employees' Compensation. As such, private respondent's
burden of evidence before the ECC was to prove, by substantial
evidence, the causal relationship between her deceased
husband's illness and his working conditions. This she failed to
do.
- Zenaida merely relied on the PNP Reports, and nothing more,
to substantiate her claim. However, the PNP reports merely
contained sweeping statements and conclusions and treated
the matter in a most perfunctory manner. There was merely the
general averment that five out of 45 ODPL personnel contracted
Hepatitis B. There was no showing whatsoever as to the degree
of contact, if any, between the deceased and his office mates
who contracted Hepatitis B.
- Ang Tibay v CIR: mere uncorroborated hearsay or rumor does
not constitute substantial evidence. Substantial evidence is
more than a mere scintilla. It means such relevant evidence as
Labor Law 1
a reasonable mind might accept as adequate to support a
conclusion.
On PD 626 governing employees’ compensation benefits
- PD 626 abandoned the presumption of compensability and the
theory of aggravation under the Workmen's Compensation Act.
- for the sickness and resulting disability or death to be
compensable, the claimant must prove either of two (2) things:
(a) that the sickness was the result of an occupational disease
listed under Annex "A" of the Rules on Employees'
Compensation; or (b) if the sickness is not so listed, that the risk
of contracting the disease was increased by the claimant's
working conditions.
- claimant must prove this causal relation between the ailment
and working conditions by substantial evidence, since the
proceeding is taken before the ECC, an administrative or quasi-
judicial body. Within the field of administrative law, while strict
rules of evidence are not applicable to quasi-judicial
proceedings, nevertheless, in adducing evidence constitutive of
substantial evidence, the basic rule that mere allegation is not
evidence cannot be disregarded.
- in case of doubt in construction and interpretation of social
legislation statutes, the liberality of the law in favor of the
working man and woman prevails in light of the Constitution's
social justice policy.
On undeserving claims for compensation
- If diseases not intended by the law to be compensated are
inadvertently or recklessly included, the integrity of the State
Insurance Fund is endangered. Compassion for the victims of
diseases not covered by the law ignores the need to show a
greater concern for the trust fund to which the tens of millions
of workers and their families look to for compensation whenever
covered accidents, diseases and deaths occur.
- This stems from the development in the law that no longer is
the poor employee still arrayed against the might and power of
his rich corporate employer, hence the necessity of affording all
kinds of favorable presumptions to the employee. This
reasoning is no longer good policy. It is now the trust fund and
not the employer which suffers if benefits are paid to claimants
who are not entitled under the law. The employer joins the
employee in trying to have their claims approved. The employer
is spared the problem of proving a negative proposition that the
disease was not caused by employment.
- the new system instituted by the new law has discarded,
among others, the concept of "presumption of compensability
and aggravation" and substituted one based on social security
principles. The new system is administered by social insurance
agencies — the GSIS and the SSS — under the ECC. The
purpose of this innovation was to restore a sensible equilibrium
between the employer's obligation to pay workmen's
compensation and the employee's right to receive reparation
for work-connected death or disability.
Disposition Petition granted. Decision of CA reversed and set
aside. Decision of ECC reinstated.
DISTINCTION – DISABILITY
GSIS V CA (BELLA)
304 SCRA 243
PURISIMA; March 4, 1999
FACTS
- Romeo S. Bella was employed by the Bureau of Animal
Industry as a livestock inspector for 22 yrs. After that, he was
employed by the Department of Agriculture as Agriculturist II.
- On July 1995, Bella, who was then 56 years old, filed a
terminal leave of absence due to physical disability.
- His medical records revealed that he was suffering from Acute
Myocardial Infraction (a disease characterized by on- and- off
shortness of breath, and effort related chest pains) and was
confined at the Notre Dame Hospital from Sept 13, 1988 to Sept
A2010 - 107 - Disini
19, 1988 and at the Philippine Heart Center from Sept 6, 1994
to Sept 26, 1994
- For this, Bella filed with the GSIS a claim for compensation
benefits under P.D. 626 where the GSIS awarded him a
Temporary Total Disability income benefit during the periods of
July 16 to July 21, 1994 and Aug 24 to Aug 29, 1994, as well as
reimbursement for medical expenses.
- He was also granted a Permanent Partial Disability income
benefit equivalent to thirty-eight months for his Ischemic
Cardiomayopathy.
- Bella requested for the conversion of his benefits from
Permanent Partial Disability to Permanent Total Disability,
reasoning out that his ailments of Ischemic Cardiomayopathy
(characterized by recurring attacks of fainting accompanied by
headache, occassional loss of consciousness and amnesia) and
Chronic Obstructure Pulmonary Disease (patients typically have
chronic productive cough for many years, followed by slowly
progressive breathlessness with decreasing amounts of
exertion) rendered him unable to engage in any gainful
occupation for a continuous period exceeding 120 days, as
certified to by his five attending physicians.
- GSIS denied his request for Permanent Total Disability on the
ground that the degree of private respondent’s disability as
evaluated by petitioner’s medical officers, did not satisfy the
criteria for Permanent Total Disability. His MFR was also denied.
On appeal, the Employees Compensation Commission (ECC)
affirmed the Decision of the GSIS.
- Bella filed Petition for Review with the CA. CA reversed the
decision of the ECC.
ISSUE
WON the private respondent is entitled to permanent total
disability benefits
HELD
YES
-The Labor Code classifies employees’ disability into three
distinct categories, namely: a) temporary total disability;
[Art 191] b) permanent total disability; [Art 192] and c)
permanent partial disability. [Art 193]
- Section 2, Rule VII, of the Rules and Regulation Implementing
Title II, Book IV of the Labor Code defines and clarifies these
categories, as follows:
"SEC. 2. Disability. - (a) A total disability is temporary if as a
result of the injury or sickness the employee is unable to
perform any gainful occupation for a continuous period not
exceeding 120 days, except as otherwise provided for in Rule
X of these Rules.
(b) A disability is total and permanent if as a result of the
injury or sickness the employee is unable to perform any
gainful occupation for a continuous period exceeding 120
days except as otherwise provided for in Rule X
(c) A disability is partial and permanent if as a result of the
injury or sickness the employee suffers a permanent partial
loss of the use of any part of his body."
- In Vicente vs. Employees Compensation Commission, the
Court laid down the litmus test and distinction between
Permanent Total Disability and Permanent Partial Disability, to
wit:
"x x x while ‘permanent total disability’ invariably results
in an employee’s loss of work or inability to perform his usual
work, ‘permanent partial disability,’ on the other hand,
occurs when an employee loses the use of any particular
anatomical part of his body which disables him to continue
with his former work. Stated otherwise, the test of whether
or not an employee suffers from ‘permanent total
disability’ is a showing of the capacity of the employee to
continue performing his work notwithstanding the disability
he incurred. Thus, if by reason of the injury or sickness he
sustained, the employee is unable to perform his customary
job for more than 120 days and he does not come within the
coverage of Rule X of the Amended Rules on Employees
Compensability (which, in a more detailed manner, describes
what constitutes temporary total disability), then the said
Labor Law 1
employee undoubtedly suffers from ‘permanent total
disability’ regardless of whether or not he loses the use of
any part of his body.
"total disability does not mean a state of absolute
helplessness, but disablement of an employee to earn wages
in the same kind of work or a work of similar nature, that he
was trained or accustomed to perform, or any kind of work
which a person of his mentality and attachments could do."
- The fact that he was forced to retire at the early age of 56,
due to a sickness disabling him from performing his job as
Agriculturist II, qualifies his disability as a Permanent Total
Disability, though he lost no use of any particular anatomical
part of his body.
- Also, no less than five doctors certified that private
respondent’s illness disabled him from performing any gainful
occupation for a continuous period exceeding 120 days.
- It is then beyond cavil that the sickness of the private
respondent made him unable to perform any gainful occupation
for a continuous period exceeding 120 days, thus entitling him
to permanent total disability benefits.
Disposition petition DENIED, the Decision of CA affirmed
PERMANENT TOTAL DISABILITY
EMPLOYEES COMPENSATION COMMISSION V
SANICO
[PAGE 336]
GOVERNMENT SERVICE INSURANCE SYSTEM V CA
[PAGE 338]
SANTOS V EMPLOYEES COMPENSATION
COMMISSION
[PAGE 330]
NARAZO V EMPLOYEES COMPENSATION
COMMISSION
181 SCRA 874
PADILLA; February 6, 1990
NATURE
Petition for review of decision of Employees Compensation
Commission
FACTS
- Geronimo Narazo worked for 38 years as Budget Examiner in
the Office of the Governor in Negros Occidental whrere he
prepared the budget of the Province, financial reports and
reviewed or examined of the budget of some provincial and
municipal offices.
- May 14, 1984 – Geronimo died at age of 57. Before his death,
he had been confined in the hospital for urinary retention,
abdominal pain and anemia. He was later diagnosed to have
uremia. One of the causes of the disease is obstruction in the
flow of urinary waste products.
- Geronimo’s widow Amalia filed a claim with GSIS for death
benefits for the death of her husband under the Employees'
Compensation Law. The claim was, however, denied because
the cause of death of Narazo is not listed as an occupational
disease. There was also no showing that Geronimo’s job had
increased the risk of contracting uremia.
- Amalia asked GSIS to reconsider but her request was denied.
The Employees’ Compensation Commissin affirmed the GSIS
ruling on the ground that the ailments of the deceased could
not be attributed to employment factors. Medical opinion also
indicates that uremia is quite common among men over 50
regardless of occupation.
Petitioners’ Claim
A2010 - 108 - Disini
- Amalia claimed that although uremia is not considered an
occupational disease, Geronimo’s job as Budget Examiner
required long hours of work and he had to deal with stress and
pressure which caused him many times to delay urination and
this eventually led to the development of illnesses.
Respondents’ Comments:
- The ECC argues that Amalia did not show proof that uremia is
work-connected and that there was no medical basis for Amalia
to allege that it was her husband’s delayed urination which led
to his sickness.
ISSUE
WON Amalia’s claim for death benefits should be granted
HELD
YES
Ratio Compensable sickness is defined as any illness definitely
accepted as an occupational disease listed by the ECC or any
illness caused by employment subject to proof by the ernployee
that the risk of contracting the same is increased by working
conditions.
Reasoning
- A sickness or death caused by said sickness is compensable if
the same is listed as an occupational disease. If it is not so
listed, compensation may still be recovered if the illness was
aggravated by employment. However, it is incumbent upon the
claimant to show proof that the risk of contracting the illness
was increased by his working conditions.
- Uremia is not among the listed occupational diseases. To
establish the right to be compensated, Amalia must show proof
of reasonable work-connection, not necessarily direct causal
relation.
- The degree of proof required is merely substantial evidence
which means such relevant evidence as will support a decision,
or clear and convincing evidence.
- Geronimo’s work required him to delay his urination often
because he had to forego going to the restroom so as not to
interrupt the concentration required in his work.
- In the case of Ceniza v. ECC the Court held that “prolonged
sitting down and putting off urination result in stagnation of the
urine” which promote the growth of micro organisms which
could infect the urinary tract. Thus even if “these illnesses are
not directly caused by the nature of the duties…the risk of
contracting the same is certainly aggravated by their working
habits necessitated by demands of job efficiency.”
Disposition petition is GRANTED. The decision of the
Employees' Compensation Commission denying petitioner's
claim for benefits arising from the death of her husband, is
hereby REVERSED and SET ASIDE.
UNKNOWN CAUSE
RARO V EMPLOYEE’S COMPENSATION
COMMISSION
172 SCRA 845
GUTIERREZ JR; April 27, 1989
NATURE
Petition for review
FACTS
- The petitioner states that she was in perfect health when
employed by the Bureau of Mines and Geo-Sciences.
- About four (4) years later, she began suffering from severe
and recurrent headaches coupled with blurring of vision.
- Petitioner was diagnosed to be suffering from brain tumor. By
that time, her memory, sense of time, vision, and reasoning
power had been lost.
- A claim for disability benefits filed by her husband with the
Government Service Insurance System (GSIS) was denied.
Labor Law 1
- An appeal to the Employee’s Compensation Commission
resulted in the Commission’s affirming of the GSIS decision.
ISSUES
1. WON brain tumor which causes are unknown but contracted
during employment is compensable under the present
compensation laws
2. WON the presumption of compensability is absolutely
inapplicable under the present compensation laws when a
disease is not listed as occupational disease
HELD
1. NO
- The key argument of the petitioner is based on the fact that
medical science cannot, as yet, positively identify the causes of
the various types of cancer.
- The list of occupational diseases prepared by the Commission
includes some cancers as compensable. What the law requires
for others is proof. Petitioner questions this listing.
- The law, as it now stands requires the claimant to prove a
positive thing – that the illness was caused by employment
and the risk of contracting the disease is increased by the
working conditions.
- To say that since proof is not available, therefore, the trust
fund has the obligation to pay is contrary to the legal
requirement that proof must be adduced. The existence of
otherwise non-existent proof cannot be presumed.
2. INAPPLICABLE.
- The Workmen’s Compensation Act was replaced by a novel
scheme under the new Labor Code. The new law discarded,
among others, the concepts of “presumption of compensability”
and “aggravation”.
- Instead of an adversarial contest by the worker or his family
against the employer, we now have a social insurance scheme
where regular premiums are paid by employers to a trust fund
and claims are paid from the trust fund to those who can prove
entitlement.
- It is now the trust fund and not the employer which suffers if
benefits are paid to claimants who are not entitled under the
law. The employer joins the employee in trying to have their
claims approved. The employer is spared the problem of
proving negative proposition that the disease was not caused
by employment.
- The employee this time, assisted by his employer, is required
to prove a positive proposition, that the risk of contracting the
disease is increased by the working conditions
Compassion for the victims of diseases not covered by the law
ignores the need to show a greater concern for the trust fund to
which tens of millions of workers and their families look for
compensation whenever covered accidents, diseases, and
deaths occur.
Disposition AFFIRMED.
PERMANENT – TOTAL
BEJERANO V EMPLOYEES' COMPENSATION
COMMISSION
205 SCRA 598
PADILLA; January 20, 1992
NATURE
Petition for review on certiorari
FACTS
- Petitioner Jose Bejerano was a cash supervisor of the
Development Bank of the Philippines, Zamboanga City Branch
Office. Medical records disclose that sometime in 1985,
petitioner became ill with chronic obstructive lung disease. A
certain Dr. Salazar, in a medical certificate, classified
petitioner's disability as permanent total.
- Due to his disability, petitioner was forced to retire at the age
of sixty-two (62) on 31 December 1985 and received the sum of
A2010 - 109 - Disini
P60,890.57 corresponding to five (5) years lump sum of his
annuity.
- GSIS awarded petitioner Bejerano benefits for temporary total
disability and, eventually, permanent partial disability. Not
satisfied with the award, petitioner requested the GSIS for a
change of the classification of his disability benefits from
permanent partial to permanent total. Such request was denied
by the GSIS. The request for reconsideration was denied by
GSIS and also by ECC because the appellant's disability could
not be considered permanent total disability in the sense that
he is not completely incapable of engaging in gainful
occupation. Hence, this petition.
ISSUE
WON the petitioner’s disability is permanent total
HELD
YES
- It has been repeatedly held by this Court that "permanent
total disability means disablement of an employee to earn
wages in the same kind of work, or work of a similar nature that
she was trained for or accustomed to perform, or any kind of
work which a person of her mentality and attainment could do."
It does not mean state of absolute helplessness, but inability to
do substantially all material acts necessary to prosecution of an
occupation for remuneration or profit in substantially customary
and usual manner. Permanent total disability is the lack of
ability to follow continuously some substantially gainful
occupation without serious discomfort or pain and without
material injury or danger to life.
- It is therefore clear from the aforecited rulings that the loss of
one's earning capacity determines the disability compensation
one is entitled to. Thus, this Court ruled:
"In disability compensation, it is not the injury which is
compensated, but rather it is the incapacity to work resulting in
the impairment of one's earning capacity (Ulibas vs. Republic,
83 SCRA 819 Roma vs. WCC, 80 SCRA 1270)."
- A thorough examination of the records convinces us that
petitioner's claim is substantiated with enough evidence to
show that his disability is permanent and total. First, the
attending physician during the petitioner's treatment diagnosed
petitioner's condition as Chronic Obstructive Lung Disease and
classified petitioner s disability as permanent and total.
Second, the Medical Examiner's report on Claim for Disability
Benefits prepared by a Medical Examiner also classified
petitioner's disability as total and permanent. It is evident from
the foregoing that, as per his physician's opinion, petitioner is
totally incapacitated from engaging in any gainful occupation,
and that therefore his disability is permanent and total. In
earlier cases, this Court ruled that the physician's report of
sickness or accident substantiates the disability claim.
- It is also of importance to note that petitioner was forced to
retire at the age of 62 because of his physical condition. This,
again, is another indication that petitioner's disability is
permanent and total. As held by this Court, "the fact of an
employee's disability is placed beyond question with the
approval of the employee's optional retirement, for such is
authorized only when the employee is 'physically incapable to
render sound and efficient service' . . ."
Disposition Decision of the Employees' Compensation
Commission is MODIFIED and the GSIS is hereby ordered to pay
petitioner compensation benefits for permanent total disability
effective January 1986, which is the start of the period when his
earning capacity was impaired due to his disability
OCCUPATIONAL DISEASE
GOVERNMENT SERVICE INSURANCE SYSTEM V CA
[PAGE 338]
3.09 BASIS OF CLAIM
Labor Law 1
BASIS – INCREASED RISKS
RIÑOV EMPLOYEES COMPENSATION COMMISSION
331SCRA 596
PANGANIBAN; May 9, 2000
NATURE
Petition for review the decision of the ECC
FACTS
- Virgilio T. Riño Sr., husband of herein petitioner, was employed
by Allied Port Services Inc. as stevedore since July, 1982. His
duties included: (1) handling of steel cargoes; (2) loading and
unloading of silica sand; (3) handling, loading and unloading of
lumber products; (4) supervising other stevedores; and (5)
performing other related work.
- On July 19, 1992, Virgilio Riño collapsed while working at the
South Harbor, Manila. He was rushed to the Philippine General
Hospital (PGH) because of "melena, fever, chills and abdominal
pains 8 days [prior to confinement]. He died three days later.
According to the Medical Certificate issued by Fe B. Bais, chief
of the PGH Medical Records Division, the cause of death was
"uremia [secondary] to chronic renal failure. Chronic
glomerulonephritis.
- Petitioner Beberisa Riño, his spouse, filed a claim for death
benefits before the Social Security System (SSS). However, the
SSS denied the claim because according to them the cause of
death is not work related.
- On appeal, the ECC affirmed the findings of the SSS. Ruling
that petitioner failed to present relevant evidence to establish
the causal connection between the deceased’s ailment and his
work as stevedore.
ISSUE
WON petitioner’s claim for death benefits under P.D. No. 626, as
amended, shall prosper under the increased risk theory
HELD
NO
- The beneficiaries of an employee are only entitled to death
benefits if the cause of death is a sickness listed as
occupational disease by the ECC; or any other illness caused by
employment. In this case the employee’s ailment is not
connected with his work and not listed as occupational
diseases.
Ratio The primary and antecedent causes of Virgilio Riño’s
death are not listed as occupational diseases. Hence, petitioner
should have presented substantial evidence, or such relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusion, showing that the nature of her husband’s
employment or working conditions increased the risk of uremia,
chronic renal failure or chronic glomerulonephritis. This the
petitioner failed to do.
- Petitioner did not adduce any proof of a reasonable connection
between the work of the deceased and the cause of his death.
There was no showing that the progression of the disease was
brought about largely by the conditions in Virgilio’s job
- As we ruled in Sante v. Employees’ Compensation
Commission, a claimant must submit such proof as would
constitute a reasonable basis for concluding either that the
conditions of employment of the claimant caused the ailment or
that such working conditions had aggravated the risk of
contracting that ailment. What kind and quantum of evidence
would constitute an adequate basis for a reasonable man (not
necessarily a medical scientist) to reach one or the other
conclusion, can obviously be determined only on a case-to-case
basis. That evidence must, however, be real and substantial,
and not merely apparent; for the duty to prove work-causation
or work-aggravation imposed by existing law is real not merely
apparent.
A2010 - 110 - Disini
- Such bare allegation does not ipso facto make Virgilio’s death
compensable. Awards of compensation cannot rest on
speculations or presumptions. The beneficiaries must present
evidence to prove a positive proposition.
COMING AND GOING RULE
LENTEJAS VS EMPLOYEES COMPENSATION
COMMISSION
300 SCRA 484
FELICIANO; May 14, 1991
NATURE
Petition for review on certiorari
FACTS
- Victorio Lentejas, the husband of petitioner Rosa Lentejas,
entered the government service on 13 January 1968 as
Maintenance "Capataz" at the Bureau of Public Highways in
Calbayog City, Western Samar. He rose from the ranks until he
became a maintenance foreman in 1978, a construction
foreman in 1979, and eventually general foreman at the City
Engineer's Office of Calbayog City. His official working hours
were from 8:00 A.M. to 5:00 P.M. LLphil
- On 25 July 1984, Victorio as general foreman of the City
Engineer's Office, went to Barangay Banti, Tinambacan District,
Calbayog City, there to inspect work being done on a damaged
seawall protecting the shoreline against encroachment by the
sea. At around 4:30 P.M., being then (according to the police
report) on his way home from that place, Victorio was suddenly
attacked and stabbed with a knife by Arnulfo Luaton who
inflicted upon him multiple stab wounds on different parts of the
body causing his instantaneous death.
- Police investigation showed that the killing was brought about
by a personal grudge. The deceased Victorio and the killer
Arnulfo were owners of adjoining lots situated in San Vicente
St., Tinambacan District, Calbayog City and they were in
disagreement as to the correct boundary between their
respective lots. About six (6) months earlier, petitioner and
Arnulfo's father had a heated argument regarding this boundary
dispute.
- Because of Victorio's death, petitioner as the surviving spouse
filed with the Government Service Insurance System (GSIS) a
claim for compensation benefits under the provisions of
Presidential Decree No. 626, as amended. The GSIS denied her
claim upon the ground that the killing was not work-connected
since the motive of the assailant in slaying her husband was a
personal grudge. Petitioner filed a motion for reconsideration,
which motion was denied by the GSIS. This denial was elevated
by the petitioner to public respondent Employees'
Compensation Commission (ECC). The ECC, however, in its
decision dated 24 May 1989, affirmed the decision of the GSIS
denying petitioner's claim for compensation benefits on the
same basis that the cause of Victorio's death was not work-
connected.
ISSUE
WON petitioner’s death under the aforesaid circumstances is
compensable
HELD
- The Court resolved to grant due course to the Petition for
Review, and to REVERSE and SET ASIDE the decision of the
Employees' Compensation Commission dated 24 May 1989. The
case is REMANDED to the ECC and the GSIS for disposition
conformably with this Resolution
Ratio Under the Amended Rules on Employees' Compensation
promulgated by the ECC and relating to both government and
private sector employees, more particularly Section 1 of Rule III,
the requirements for compensability of an injury and the
resulting death are as follows:
Labor Law 1
"a) For the injury and the resulting death to be compensable,
the injury must be the result of an employment accident
satisfying all of the following conditions:
1. the employee must have been injured at the place where
his work requires him to be;
2. the employee must have been performing his official
functions:
3. if the injury is sustained elsewhere, the employee must
have been executing an order for the employer.
- It is not disputed that on 24 July 1984, Victorio Lentejas, a
general foreman at the City Engineer's Office, Calbayog City,
was assigned the task of inspecting the construction or
rehabilitation work then in process on the damaged seawall
along the shoreline of Barangay Banti. While he was on his way
from Barangay Banti, Arnulfo Luaton attacked and stabbed him
with deadly effect. He was dead when the police reached the
scene of the crime; the circumstances of Victorio's death were
related by an eyewitness to the police officers. Thus, there was
no definite evidence to show that the deceased was actually on
his way home at the time of the attack upon him. The killing
took place at 4:30 P.M., that is, during the deceased's official
hours of work and hence, Victorio might well have been on his
way back to the City Engineer's Office when he was set upon
and killed. He was, in other words, on official time and in the
course of performing his official functions when he was
attacked. The deceased was at a place where his work required
him to be, that is, at Barangay Banti and there is no evidence to
show that the route he took leaving the situs of the damaged
seawall was not a usual or convenient route from that place. He
was not, to borrow a phrase from the common law of torts, on
"a frolic of his own."
In a line of cases, the Court has held that an injury sustained
by the employee while on his way to or from his place of
work, and which is otherwise compensable, is deemed to
have arisen out of and in the course of his employment.
Under the foregoing cases, it is quite clear that although
Victorio might have been on his way home from Barangay
Banti at the time he was attacked and killed by Arnulfo
Luaton, that circumstance did not by itself operate to render
his death non-compensable. We note, at the same time, that
in all the cases noted above from Vda. de Torbela to Lazo, the
events which caused or precipitated injury or death did not
involve the intentional inflicting of harm or injury or death
upon the employee concerned. In the instant case, however,
as noted earlier, Victorio's death was the result of a
murderous assault upon him. Thus, the precise technical
issue here is whether or not the circumstance that Victorio's
death was the result of a criminal attack by another person,
not a member of the staff of the Calbayog City Engineer's
Office, had the effect of rendering his death non-compensable
although such death had occurred in the course of
performance of official functions. There is no question that
the deceased in the instant case did not foresee, and could
not have foreseen, the attack on himself when he undertook
to go to Barangay Banti to inspect and oversee the municipal
construction work then on-going in that place. In so far as the
mind and will of the victim were concerned, the homicidal
intent on the part of Arnulfo Luaton was as external and
fortuitous an event as a speeding mini-bus or a recklessly
negligent jeepney driver. In other words, The Court does not
think that the third person's criminal intent should be
regarded as a supervening cause having the effect of
nullifying the circumstance that, when Victorio was attacked
and killed, he was where his work required him to be and that
he was then in the course of performing his official duties.
3.10 PRESCRIPTIVE PERIOD
REMITTANCE
A2010 - 111 - Disini
BENEDICTO V ABAD SANTOS
[PAGE 334]
REGISTRATION
PEOPLE V MONTEIRO
192 SCRA 549
CRUZ; December 21, 1990
NATURE
Appeal from the order of the Court of First Instance of Laguna
FACTS
- The appellant is questioning the order of the Court of First
Instance of Laguna granting the motion to quash the
information filed against Salvador Monteiro alleging him to have
willfully, unlawfully, and feloniously failed to register to the
Social Security System, Elizabeth Collantes as member.
- The reason for this motion to quash was prescription.
- The trial court agreed with the appellee that the crime
charged could no longer be prosecuted because the offense
prescribed after four years.
The trial court reckoned the four-year prescriptive period from
the time the offense was committed.
- According to the Solicitor General, the prescriptive period
should have commenced from the time when the offense was
discovered.
- The appellee argues that the appellant cannot change its
theory on appeal from its original position that the offense was
a continuing one. He insists that the prescriptive period should
be counted from the date the alleged violation as this was not
concealed and did not have to be discovered. Furthermore, the
statements of Collantes were not admissible evidence because
they had not been formally offered. He also suggests that the
subsequent registration of Collantes with the SSS had the effect
of extinguishing the offense and that in any case the appeal
would put him in double jeopardy.
ISSUE
WON the prescriptive period should be counted from the time
the alleged offense was committed
HELD
NO
- The Court affirms the conclusion in the case of Benedicto v
Abad Santos, that the period of prescription for the offense of
failure to register with the SSS shall begin from the day of
discovery of the violation if this was not shown at the time of its
commission.
- The court also rejects the appellee’s claim that his subsequent
registration of Collantes with the SSS extinguished his current
liability. “If subsequent compliance with the law were sufficient
to condone past violation, then the penal clause might as well
be deleted from the statute” (okay mataray ang court!) The
court held that such interpretation would nullify the purpose of
the law, which is precisely to protect the members of the
working class.
Disposition Challenged order is set aside and the case is
remanded.
Labor Law 1
STATUTE OF LIMITATION
BUENA OBRA V SSS
401 SCRA 206
PUNO; April 9, 2003
NATURE
Appeal from the Decision of the CA as well as its subsequent
Resolution denying petitioner’s MFR
FACTS
- Juanito Buena Obra, husband of petitioner was employed at
Jollar Industrial Sales and Services Inc. as a dump truck driver.
He suffered a heart attack while driving a dump truck inside the
work compound, and died shortly thereafter. Petitioner Maria M.
Buena Obra immediately filed her claim for death benefits
under the SSS law. Petitioner was, however, unaware of the
other compensation benefits due her under PD 626, or the Law
on Employees’ Compensation. More than ten (10) years after
the death of her husband, she learned of the benefits under PD
626 through the television program of then broadcaster Ted
Failon who informed that one may claim for Employees
Compensation Commission (ECC) benefits if the spouse died
while working for the company. Petitioner filed with the SSS her
claim for funeral benefits under PD 626.
- The SSS denied the claim for funeral benefits ruling that the
cause of death was not work-connected, absent a causal
relationship between the illness and the job. Petitioner wrote to
the Executive Director of the ECC, appealing the denial of her
claim. The Commission declared that petitioner’s claim had
prescribed. The CA dismissed petitioner’s appeal, ruling that
petitioner's filing of her claim for SSS benefits shortly after
Juanito’s death did not suspend the running of the prescriptive
period for filing EC claims.
ISSUES
1. WON petitioner’s claim had prescribed
2. WON the cause of death was work-related
HELD
1. NO
Ratio When petitioner filed her claim for death benefits under
the SSS law, her claim for the same benefits under the
Employees’ Compensation Law should be considered as filed.
Reasoning
- Under the law, the employees’ compensation claim shall be
filed with the GSIS/SSS within a reasonable time as provided by
law. It should be noted that neither statute nor jurisprudence
has defined the limits of “reasonable time.” Thus, what is
reasonable time depends upon the peculiar facts and
circumstances of each case. The evidence shows that the
System failed to process her compensation claim. Under the
circumstances, the petitioner cannot be made to suffer for the
lapse committed by the System. It is the avowed policy of the
State to construe social legislations liberally in favor of the
beneficiaries.
2. YES
Ratio Petitioner’s husband was driving a dump truck within the
company premises when he suffered the heart attack. This is a
clear indication that severe strain of work brought about the
acute attack that caused his death.
Reasoning
- As the official agents charged by law to implement social
justice guaranteed by the Constitution, the ECC and the SSS
should adopt a liberal attitude in favor of the employee in
deciding claims for compensability especially where there is
some basis in the facts for inferring a work connection with the
illness or injury. It is only this kind of interpretation that can
give meaning and substance to the compassionate spirit of the
law.
A2010 - 112 - Disini
Disposition petition is GRANTED. The Decision of the CA and
its Resolution are hereby SET ASIDE. The SSS is directed to pay
petitioner the death/funeral benefits due her under the existing
law.
3.11 EXCLUSIVITY OF BENEFITS
EXCLUSIVITY
YSMAEL MARITIME CORP V AVELINO
397 SCRA 489
FERNAN; June 30, 1987
NATURE
Petition for certiorari
FACTS:
- Rolando Lim was a licensed second mate on a vessel owned
by petitioner Ysmael Maritime Corp. The vessel sank. Lim died.
- Lim’s parents filed an action against petitioner corp, alleging
that the death was due to petitioner’s negligence. Petitioner
filed a motion to dismiss the case, alleging that [1] that the
complaint stated no cause of action; [2] that respondent-
plaintiffs had received P4,160 from petitioner and had signed
release papers discharging petitioner from any liability arising
from the death of their son, and [3] that most significantly, the
respondents had already been compensated by the Workmen's
Compensation Commission [NCC] for the same incident, for
which reason they are now precluded from seeking other
remedies against the same employer under the Civil Code.
Judge Avelino denied the motion.
ISSUE:
WON respondent judge erred in not dismissing the case
HELD:
YES. At issue is the exclusory provision of Section 5 of the
Workmen's Compensation Act reiterated in Article 173 of the
Labor Code 7:
Sec. 5 Exclusive right to compensation. — The rights and
remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all
other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against
the employer under the Civil Code and other laws, because of
said injury,
Art. 173 Exclusive of liability. — Unless other wise provided, the
liability of the State Insurance Fund under this Title shall be
exclusive and in place of all other liabilities of the employer to
the employee, his dependents or anyone otherwise entitled to
receive damages on behalf of the employee or his dependents.
The payment of compensation under this Title shall bar the
recovery of benefits as provided for in Section 699 of the
Revised Administrative Code, Republic Act No. 1161, as
amended, Commonwealth Act No. 186, as amended, Republic
Act No. 610, as amended, Republic Act No. 4864, as amended,
and other laws whose benefits are administered by the System,
during the period of such payment for the same disability or
death, and conversely.
The Court adopted the ruling in Floresca vs. Philex Mining
Company. It ruled that the action is selective and the employee
or his heirs have a choice of availing themselves of the benefits
under the WCA or of suing in the regular courts under the Civil
Code for higher damages from the employer by reason of his
negligence. But once the election has been exercised, the
employee or his heirs are no longer free to opt for the other
remedy. In other words, the employee cannot pursue both
actions simultaneously.
Labor Law 1
DISPOSITIVE
Petition granted; civil case dismissed
OFFICIAL FUNCTIONS
HINOGUIN V ECC
170 SCRA 350
FELICIANO; April 17 1989
NATURE
This Petition for Review against the Decision of the Employees'
Compensation Commission ("ECC")
FACTS
- Sgt. Hinoguin and two (2) members of his Detachment, Cpl.
Rogelio Clavo and Dft. Nicomedes Alibuyog, sought permission
from Captain Frankie Z. Besas, Commanding Officer of "A"
Company to go on overnight pass to Aritao, Nueva Viscaya, "to
settle important matter thereat." Captain Besas orally granted
them permission to go to Aritao and to take their issued
firearms with them, considering that Aritao was regarded as "a
critical place," 2 that is, it had peace and order problems due to
the presence of elements of the New People's Army ("NPA") in
or in the vicinity of Aritao.
- Hinoguin was accidentally shot by Alibuyog after mistakenly
thinking that his gun’s safety lever was on safety. An
investigation conducted by H.Q. concluded that the shooting of
Sgt. Hinoguin was "purely accidental in nature." The
recommendation written by the Chairman who investigated
suggested that all benefits due the legal dependents of the late
Sgt. Lemick Hinogiun be given."
- Sometime in March 1986, petitioner filed his claim for
compensation benefits under P.D. No. 626 (as amended),
claiming that the death of his son was work-connected and
therefore compensable. This was denied 6 by the GSIS on the
ground that petitioner's son was not at his work place nor
performing his duty as a soldier of the Philippine Army at the
time of his death. GSIS denied it.
ISSUE
WON the death of Sgt. Hinoguin is compensable under the
applicable statute and regulations
HELD
YES
- It will be seen that because the Amended (Implementing)
Rules are intended to apply to all kinds of employment, such
rules must be read and applied with reasonable flexibility and
comprehensiveness. The concept of a "work place" referred to
in Ground 1 (See Art. 167 below), cannot always be literally
applied to a soldier on active duty status, as if he were a
machine operator or a worker in an assembly line in a factory or
a clerk in a particular fixed office. Obviously, a soldier must go
where his company is stationed. In the instant case, Aritao,
Nueva Viscaya was not, of course, Carranglan, Nueva Ecija.
Aritao being approximately 1-1/2 hours away from the latter by
public transportation. But Sgt. Hinoguin, Cpl. Clavo and Dft.
Alibuyog had permission from their Commanding Officer to
proceed to Aritao, and it appears to us that a place which
soldiers have secured lawful permission to be at cannot be very
different, legally speaking, from a place where they are
required to go by their commanding officer. We note that the
three (3) soldiers were on an overnight pass which, notably,
they did not utilize in full. They were not on vacation leave.
Morever, they were required or authorized to carry their
firearms with which presumably they were to defend
themselves if NPA elements happened to attack them while en
route to and from Aritao or with which to attack and seek to
capture such NPA elements as they might encounter. Indeed, if
the three (3) soldiers had in fact encountered NPAs while on
their way to or from Aritao and been fired upon by them and if
Sgt. Hinoguin had been killed by an NPA bullet, we do not
A2010 - 113 - Disini
believe that respondent GSIS would have had any difficulty in
holding the death a compensable one.
- It has already been pointed out above that the Line of Duty
Board of Officers of the 14th Infantry Battalion Headquarters
had already determined that the death of Sgt. Hinoguin had
occurred "in line of duty." It may be noted in this connection
that a soldier on active duty status is really on 24 hours a day
official duty status and is subject to military discipline and
military law 24 hours a day. He is subject to call and to the
orders of his superior officers at all times, 7 days a week,
except, of course, when he is on vacation leave status (which
Sgt. Hinoguin was not). Thus, we think that the work-connected
character of Sgt. Hinoguin's injury and death was not effectively
precluded by the simple circumstance that he was on an
overnight pass to go to the home of Dft. Alibuyog, a soldier
under his own command. Sgt. Hinoguin did not effectively cease
performing "official functions" because he was granted a pass.
While going to a fellow soldier's home for a few hours for a meal
and some drinks was not a specific military duty, he was
nonetheless in the course of performance of official functions.
Indeed, it appears to us that a soldier should be presumed to be
on official duty unless he is shown to have clearly and
unequivocally put aside that status or condition temporarily by,
e.g., going on an approved vacation leave. Even vacation leave
may, it should be remembered, be preterminated by superior
orders.
- A soldier must also assume the risk of being accidentally fired
upon by his fellow soldiers. This is reasonably regarded as a
hazard or risk inherent in his employment as a soldier.
"SECTION 1. Conditions to Entitlement. (a) The
beneficiaries of a deceased employee shall be entitled to an
income benefit if all of the following conditions are satisfied:
(1) The employee had been duly reported to the System;
(2) He died as a result of injury or sickness; and
(3) The System has been duly notified of his death, as well
as the injury or sickness which caused his death.
- His employer shall be liable for the benefit if such death
occurred before the employee is duly reported for coverage of
the System.
- Article 167 (k) of the Labor Code as amended defines a
compensable "injury" quite simply as "any harmful change in
the human organism from any accident arising out of and in the
course of the employment." The Amended (Implementing)
Rules have, however, elaborated considerably on the simple
and succinct statutory provision. Rule III, Section 1 (a) reads:
"SECTION 1. Grounds. (a) For the injury and the resulting
disability or death to be compensable, the injury must be the
result of an employment accident satisfying all of the
following grounds:
(1) The employee must have been injured at the place where
his work requires him to be;
(2) The employee must have been performing his official
functions; and
(3) If the injury is sustained elsewhere, the employee must
have been executing an order for the employer.
Disposition Decision of the GSIS taken through its Claim
Review Committee dated 20 November 1986 and the Decision
dated 24 May 1988 of the Employees' Compensation
Commission in ECC Case No. 3275, are hereby REVERSED and
the GSIS is hereby DIRECTED to award all applicable benefits in
respect of the death of Sgt. Lemick G. Hinogiun, to petitioner.
3.12 BENEFIT PROTECTION
3.13 DISPUTE SETTLEMENT