NLRC | 325 SCRA 758 | February 17, 2000 FACTS - Cheniver is a corporation operating its printing business in Makati. The respondents are members of the labor union and former employees of Cheniver. - June 5, 1992 – Cheniver informed its employees that it will transfer its operations to Batangas. Reasons for the transfer are expiration of lease contract on the premises of the Makati palnt, and local authorities’ action to force out 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: 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. PT&T v. NLRC | 456 SCRA 264 | G.R. No. 147002. April 15, 2005 F: Agnes Bayao and Mildred Castillo were hired by the Philippine Telegraph & Telephone Corporation (PT&T) in November 1991 and August 1995, respectively, both as account executives stationed in Baguio City. Both Bayao and Castillo received a Memorandum dated May 21, 1998 coming from Ma. Elenita V. Del Rosario, Vice-President of the Commercial Operations Group (COG) of PT&T, inviting them to consider a two to three-month assignment to the provinces of Rizal and Laguna in view of PT&T’s expansion in the aforesaid area. Bayao and Castillo refused the offer, on the ground that the transfer would entail additional expense on their part and there were no clear guidelines and procedures for its implementation. Meanwhile, the expansion project of PT&T failed to materialize due to lack of capital. PT&T realized that it needed to undertake measures against losses to prevent the company from going bankrupt, particularly by reducing its workforce from 2,500 to 900 employees. Pursuant thereto, it implemented a Voluntary Staff Reduction Program (VSRP) which was availed of by 478 employees. Failing to attain its target, PT&T implemented an extended VSRP, but still not enough employees availed of the program. PT&T decided to implement a temporary retrenchment of some employees dubbed as Temporary Staff Reduction Program (TSRP) lasting for not more than five and a half (5½) months, to commence from September 1, 1998 to February 15, 1999. Pursuant to the program, affected employees would receive financial assistance equivalent to 15 days salary and a loan equivalent to two months salary chargeable to the account of the employee concerned. Bayao and Castillo received a Letter from Del Rosario, dated August 21, 1998, informing them that the cumulative net losses of PT&T for the last four years had reached P293.4 million and that they were among the employees affected by the TSRP. When Bayao and Castillo reported for work on September 2, 1998, they were informed that the position of account executive no longer existed; in its stead, the positions of Service Account Representatives (SAR) and Service Account Specialists (SAS) were created per COG Bulletin Order No. 98-014 effective August 21, 1998, and had already been filled up.

That same day, Bayao and Castillo promptly filed a complaint for illegal dismissal with the NLRC, Regional Arbitration Branch, Cordillera Administrative Region, against PT&T and Delia Oficial in her capacity as manager for Baguio City. Labor Arbiter Monroe C. Tabingan rendered a Decision in favor of Bayao and Castillo. PT&T and Oficial interposed their appeal to the NLRC. On October 12, 1999, the NLRC issued its Resolution dismissing the appeal and affirmed the decision of the Labor Arbiter, deleting, however, the award of legal interest, exemplary damages, indemnity and attorney’s fees for lack of merit. On July 31, 2000, the CA issued its Decision dismissing the petition and affirmed the findings of the NLRC. The CA declared that there was no valid ground for retrenchment, considering that when Bayao and Castillo returned, their positions were already filled up; at the same time, PT&T did not inform its employees and the Department of Labor and Employment (DOLE) of the scheduled retrenchment at least one month before its implementation. A motion for reconsideration was filed, but the same was denied by the CA. Hence this petition. I: WON the retrenchment program implemented by petitioner PT&T is valid. H: Retrenchment 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. [12] It is a management prerogative resorted to by an employer to avoid or minimize business losses which is consistently recognized by the Court. 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. In this case, to prove that the company incurred losses, the petitioners presented its audited financial statements for the corporate fiscal years 1996 to 1998 and emphasized that, in the October 20, 1998 Audit Report prepared by SGV & Co., the auditing firm declared that petitioner PT&T incurred a substantial loss of about P558 million for the fiscal year ending June 30, 1998, resulting to a total deficit of about P574 million as of the same date; and that petitioner PT&T even negotiated with its creditors for the suspension of payments of its outstanding balances until the completion of an acceptable restructuring plan. The foregoing clearly indicates that the petitioner PT&T sufficiently complied with its burden to prove that it incurred substantial losses as to warrant the exercise of the extreme measure of retrenchment to prevent the company from totally going under. While an employer may have a valid ground for implementing a retrenchment program, it is not excused from complying with the required written notice served both to the employee concerned and the DOLE at least one month prior to the intended date of retrenchment. The purpose of this requirement is not only to give employees some time to prepare for the eventual loss of their jobs and their corresponding income, look for other employment and ease the impact of the loss of their jobs but also to give the DOLE the opportunity to ascertain the verity of the alleged cause of termination.

In the case at bar, the memorandum of Del Rosario, the vice-president of the COG, to respondents Bayao and Castillo informing the latter that they were included in the TSRP to be implemented effective September 1, 1998 was dated August 21, 1998. The said memorandum was received by Castillo on August 24, 1998 and Bayao on August 26, 1998. The respondents had barely two weeks’ notice of the intended retrenchment program. Clearly then, the one-month notice rule was not complied with. At the same time, the petitioners never showed that any notice of the retrenchment was sent to the DOLE. The petitioners’ adherence to the above pronouncement of the Court is misplaced. The particular issue involved in the said decision was the duration of the period of temporary lay-off, and not the compliance with the one month notice requirement. 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. The NLRC found that GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work. 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. There is also nothing in the records to prove that a written notice was ever given to the DOLE as required by law. Interestingly enough, the evidence on record indicates that respondents Bayao and Castillo were not merely temporarily laid-off. The October 26, 1998 Letter of Del Rosario addressed to the respondents clearly stated that the latter were to be considered separated from the company effective August 31, 1998 and that they were each being extended a separation package. It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish, we must not distinguish). However, the employer’s failure to comply with the one month notice requirement prior to retrenchment does not render the termination illegal; it merely renders the same defective, entitling the dismissed employee to payment of indemnity in the form of nominal damages. Based on prevailing jurisprudence, the amount of indemnity is pegged atP30,000.00. Finally, since petitioner PT&T was able to establish that it incurred serious business losses, justifying the retrenchment, the final requisite is the payment of separation pay. Pursuant to Section 283 of the Labor Code, as amended, the

retrenchment having been effected due to serious business losses, respondents Bayao and Castillo are each entitled to one month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year. Petition partially granted. WILTSHIRE FILE CO INC v. NLRC | 193 SCRA 665 | February 7, 1991 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 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. - 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. De Ocampo v. NLRC, 213 SCRA 652 F: Petitioners Cecile de Ocampo, et. al. are employees of private respondent Baliwag Mahogany Corporation. They are either officers or members of the Baliwag Mahogany Corporation Union-CFW, the existing collective bargaining agent of the rank and file employees in the company. Private respondent Baliwag Mahogany Corporation is an enterprise engaged in the production of wooden doors and furniture and has a total workforce of about 900 employees. In 1988, private respondent Baliwag Mahogany Corporation (company) and Baliwag Mahogany Corporation Union-CFW (union) entered into a collective bargaining agreement containing, among other things, provisions on conversion into cash of unused vacation and sick leaves; grievance machinery procedure; and the right of the company to schedule work on Sundays and holidays. In November, 1989, the union made several requests from the company, one of which was the cash conversion of unused vacation and sick leave for 1987-1988 and 1988-1989. Acting on the matter, the company ruled to allow payment of unused vacation and sick leaves for the period of 1987-1988 but disallowed cash conversion of the 1988-1989 unused leaves. The company issued suspension orders affecting twenty (20) employees for failure to render overtime work on December 30, 1989. The suspension was for a period of three (3) days effective January 3, 1996 to January 5, 1990. On the same day, the union filed a notice of strike on the grounds of unfair labor practice particularly the violation of the CBA provisions on non-payment of unused leaves and illegal dismissal of seven (7) employees in November, 1989. On January 13, 1990, the company issued a notice of termination to three (3) employees or union members, namely, Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz, of the machinery department, allegedly to effect cost reduction and redundancy. The members of the union conducted a picket at the main gate of the company on January 18, 1990. On the same day, the company filed a petition to declare the strike illegal with prayer for injunction against the union, Cecile de Ocampo, Wilfredo San Pedro and Rene Aguilar. An election of officers was conducted by the union on January 19, 1990. Consequently, Cecile de Ocampo was elected as president.

During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) on January 22, 1990 relative to the notice of strike filed by the union on January 3, 1990, the issue pertaining to the legality of the termination of three (3) union members was raised by the union. However, both parties agreed to discuss it separately. Subsequently, in a letter dated January 28, 1990, the union requested for the presence of a NCMB representative during a strike vote held by the union. The strike vote resulted to 388 votes out of 415 total votes in favor of the strike. Consequently, the union staged a strike on February 6, 1990. On February 7, 1990, the company filed a petition to assume jurisdiction with the Department of Labor and Employment. On February 16, 1990, the company filed an amended petition, praying among other things, that the strike staged by the union on February 6, 1990 be declared illegal, there being no genuine strikeable issue and the violation of the no-strike clause of the existing CBA between the parties. The Secretary of Labor in an order dated February 15, 1990, certified the entire labor dispute to the respondent Commission for compulsory arbitration and directed all striking workers including the dismissed employees to return to work and the management to accept them back. The company filed an urgent motion for assignment of a sheriff to enforce the order of the Secretary. In an order dated February 22, 1990, the Secretary of Labor directed Sheriff Alfredo Antonio, Jr., to implement the order. On February 23, 1990, the sheriff, with the assistance of the PC/INP of San Rafael, removed the barricades and opened the main gate of the company. Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against Cecile de Ocampo, Timoteo Mijares, Modesto Mamesia and Domingo Silarde by the local police authorities on February 24, 1990. On February 25, 1990, the company caused the publication of his return to work order in two (2) newspapers, namely NGAYON and ABANTE. In its letter dated February 27, 1990, the union, through its President Cecile de Ocampo, requested the Regional Director of DOLE, Region III to intervene in the existing dispute with management. Meanwhile, the company extended the February 26, 1990 deadline for the workers to return to work until March 15, 1990. The respondent Commission rendered a decision on October 23, 1990, declaring the strikes staged on January 18, 1990 and February 6, 1990 illegal. Such decision prompted the company to file a motion for reconsideration substantially on the ground that public respondent seriously erred in not dismissing the employees particularly the union officers, who participated in the illegal strike. Petitioners filed an opposition to the company's motion for reconsideration and subsequently a supplemental comment/opposition to motion for reconsideration. I: Whether or not there is legal basis for declaring the loss of employment status by petitioners on account of the strike in respondent Company. H: Court finds the petition devoid of merit. The Solicitor General claims that it is undisputed that the union resorted to illegal acts during the strike arguing that

private respondent's personnel manager specifically identified the union officers and members who committed the prohibited acts and actively participated therein. Moreover, the Solicitor General maintains that the illegality of the strike likewise stems from the failure of the petitioners to honor the certification order and heed the return-to-work order issued by the Secretary of Labor. Unrebutted evidence shows that the individual petitioners defied the return-towork order of the Secretary of Labor issued on February 15, 1990. As a matter of fact, it was only on February 23, 1990 when the barricades were removed and the main gate of the company was opened. Hence, the termination of the services of the individual petitioners is justified on this ground alone. Anent the contention that the respondent Commission gravely abused its discretion when it allowed the presentation of additional evidence to prove the loss suffered by the company despite the fact that they were mere afterthoughts and just concocted by the company, time and again, We emphasize that "technical rules of evidence are not binding in labor cases. Labor officials should use every and reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process" (Philippine Telegraph and Telephone Corporation v. National Labor Relations Commission, G.R. No. 80600, March 21, 1990, 183 SCRA 451, 457). We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement 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 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. The employer had no legal obligation to keep in its payroll more employees, than are necessary for the operation of its business. (Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249, February 7, 1991; 193 SCRA 665,672). The 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. In the same case, We ruled that "(t)he characterization of (petitioners') services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of (private respondent) 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". In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. Petition dismissed.

Maya Farms Employees Organization v. NLRC, 239 SCRA 508 F: Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the Liberty Mills group of companies whose undertakings include the operation of a meat processing plant which produces ham, bacon, cold cuts, sausages and other meat and poultry products. Petitioners, on the other hand, are the exclusive bargaining agents of the employees of Maya Farms, Inc. and the Maya Realty and Livestock Corporation. On April 12, 1991, private respondents announced the adoption of an early retirement program as a cost-cutting measure considering that their business operations suffered major setbacks over the years. The program was voluntary and could be availed of only by employees with at least eight (8) years of service. Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of the program. Accordingly, the program was amended to reduce the minimum requirement of eight (8) years of service to only five (5) years. However, the response to the program was nil. There were only a few takers. To avert further losses, private respondents were constrained to look into the companies' organizational set-up in order to streamline operations. Consequently, the early retirement program was converted into a special redundancy program intended to reduce the work force to an optimum number so as to make operations more viable. In December 1991, a total of sixty-nine (69) employees from the two companies availed of the special redundancy program. On January 17, 1992, the two companies sent letters to sixty-six (66) employees informing them that their respective positions had been declared redundant. The notices likewise stated that their services would be terminated effective thirty (30) days from receipt thereof. Separation benefits, including the conversion of all earned leave credits and other benefits due under existing CBAs were thereafter paid to those affected. On January 24, 1992, a notice of strike was filed by the petitioners which accused private respondents, among others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to arrive at a settlement. On February 6, 1992, the two companies filed a petition with the Secretary of Labor and Employment asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration. Thus, on February 12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor certified the case to herein public respondent for compulsory arbitration. On March 4, 1992, the parties were called to a hearing to identify the issues involved in the case. Thereafter, they were ordered to submit their respective position papers.

In their position paper, petitioners averred that in the dismissal of sixty-six (66) union officers and members on the ground of redundancy, private respondents circumvented the provisions in their CBA. Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of Companies. Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were constrained to hire the services of counsel in order to protect the workers' rights. On their part, private respondents contend that their decision to implement a special redundancy program was an exercise of management prerogative which could not be interfered with unless it is shown to be tainted with bad faith and ill motive. Private respondents explained that they had no choice but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they denied that the program violated CBA provisions. NLRC favored the company. I: WON there was grave abuse of discretion amounting to lack or in excess of jurisdiction with the factual findings of public respondent H: The termination of the sixty-six employees was done in accordance with Article 283 of the Labor Code. The basis for this was the companies' study to streamline operations so as to make them more viable. Positions which overlapped each other, or which are in excess of the requirements of the service, were declared redundant. We fully agree with the findings and conclusions of the public respondent on the issue of termination. A close examination of the positions retained by management show that said positions such as egg sorter, debonner were but the minimal positions required to sustain the limited functions/operations of the meat processing department. In the absence of any evidence to prove bad faith on the part of management in arriving at such decision, which records on hand failed to show in instant case, the rationality of the act of management in this regard must be sustained. 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. Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of termination to the workers was disregarded and that the same substituted with separation pay by private respondents. As found by public respondent, written notices of separation were sent to the employees on January 17, 1992. The notices expressly stated that the termination of employment was to take effect one month from receipt thereof. Therefore, the allegation that separation pay was given in lieu of the 30-day notice required by law is baseless. Petition dismissed.

GOLDEN THREAD KNITTING INDUSTIRES v. NLRC | 304 SCRA 720 | March 11, 1999 FACTS - several employees of Golden Thread Knitting Industries (GTK) were dismissed for different reasons. 2 employees were allegedly for slashing the company’s products (towels), 2 for redundancy, 1 for threatening the personnel manager and violating the company rules, and 1 for abandonment of work. - The laborers filed complaints for illegal dismissal. They allege that the company dismissed them in retaliation for establishing and being members of the Labor Union. GTK, on the other hand, contend that there were valid causes for the terminations. The dismissals were allegedly a result of the slashing of their products, rotation of work, which in turn was caused by the low demand for their products, and abandonment of work. WRT to the cases involving the slashing of their products and threats to the personnel manager, the dismissals were in effect a form of punishment. - The labor arbiter ruled partially in favor of GTK. He said that there was no showing that the dismissals were in retaliation for establishing a union. He, however, awarded separation pay to some employees. - NLRC, however, appreciated the evidence differently. It held that there was illegal dismissal and ordered reinstatement. ISSUE: WON there was illegal dismissal HELD: YES Ratio Dismissal is the ultimate penalty that can be meted to an employee. It must therefore be based on a clear and not on an ambiguous or ambivalent ground. Reasoning - WRT to the case involving slashing of towels, the employees were not given procedural due process. There was no notice and hearing, only outright denial of their entry to the work premises by the security guards. The charges of serious misconduct were not sufficiently proved. - WRT to the employees dismissed for redundancy, there was also denial of procedural due process. Hearing and notice were not observed. Thus, although the characterization of an employee’s services is a management function, it must first be proved with evidence, which was not done in this case. the company cannot merely declare that it was overmanned. - WRT to the employee dismissed for disrespect, the SC believed the story version of the company (which essentially said that the personnel manager was threatened upon mere service of a suspension order to the employee), but ruled that the dismissal could not be upheld. “the dismissal will not be upheld where it appears that the employee’s act of disrespect was provoked by the employer. xxx the employee hurled incentives at the personnel manager because she was provoked by the baseless suspension imposed on her. The penalty of dismissal must be commensurate with the act, conduct, or omission to the employee.” - The dismissal was too harsh a penalty; a suspension of 1 week would have sufficed. “GTK exercised their authority to dismiss without due regard to the provisions of the Labor Code. The right to terminate should be utilized with extreme caution because its immediate effect is to put an end to an employee's present means of livelihood while its distant effect, upon a subsequent finding

of illegal dismissal, is just as pernicious to the employer who will most likely be required to reinstate the subject employee and grant him full back wages and other benefits. Disposition Decision AFFIRMED LOPEZ SUGAR CORP v. FED OF FREE WORKERS PHILIPPINE LABOR UNION ASSOCIATION (PLUA NACUSIP) | 189 SCRA 179 | August 30, 1990 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 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. - 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 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. Flight Attendants and Stewards Association of the Philippines v. PAL, 559 SCRA 252 F: On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion. In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PAL's fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel. Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PALFASAP Collective Bargaining Agreement (CBA) in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual employee's efficiency rating and seniority. PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew member's overall performance for the year 1997 alone. The factors taken into account on whether the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew member's being physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed. While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services of

140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular. On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel. Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per Securities and Exchange Commission (SEC) Order dated June 23, 1998 in SEC Case No. 06-98-6004. On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan, made an offer to transfer shares of stock to its employees and three seats in its Board of Directors, on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be suspended for 10 years, but it was rejected by the employees. On September 17, 1998, PAL informed its employees that it was shutting down its operations effective September 23, 1998 despite the previous approval on June 23, 1998 of its rehabilitation plan. On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two days later, PAL employees, through the Philippine Airlines Employees Association (PALEA) board, sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Lucio Tan, however, rejected this counter-offer. In a referendum conducted on October 2, 1998, PAL employees ratified the proposal. On October 7, 1998, PAL resumed domestic operations and, soon after, international flights as well. Meanwhile, in November 1998, or five months after the June 15, 1998 mass dismissal of its cabin crew personnel, PAL began recalling to service those it had previously retrenched. Several of those retrenched were called back to service. In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a recovery on its own while keeping its options open for the entry of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business and financial restructuring plan, which required the infusion of US$200 million in new equity into the airline. On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the latter. On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended and Restated Rehabilitation Plan" of PAL. In said order, the cash infusion of US$200 million made by Lucio Tan on June 4, 1999 was acknowledged. Respondent PAL is ordered to pay the separation benefits to those complainants who have not received their separation pay and to pay the balance to those who have received partial separation pay. I: WON CA decided the case a quo in a way contrary to law and/or jurisprudence and WON PAL’s retrenchment scheme was justified. H: It is a settled rule that in the exercise of the Supreme Court's power of review, the Court is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties during trial. However, there are several exceptions to this rule such as when the factual

findings of the Labor Arbiter differ from those of the NLRC, as in the instant case, which opens the door to a review by this Court. The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid reductions in the work force 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. The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified. Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal FIRST ELEMENT: 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. The law speaks of 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 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 expected losses that would have been incurred had operations been continued, may not amount to serious business losses mentioned in the law. The employer must 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 or that it expected no abatement of its losses in the coming years. The employer must also exhaust all other means to avoid further losses without retrenching its employees. Retrenchment is a means of last resort; it is justified only when all other less drastic means have been tried and found insufficient. In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel. Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program. It embarked on the mass dismissal without first undertaking a well-considered study on the proposed retrenchment scheme. This view is underscored by the fact that previously, PAL terminated the services of 140 probationary cabin attendants, but rehired them almost immediately and even converted their employment into permanent and regular, even as a massive retrenchment was already looming in the horizon.

Also, the claim that PAL saved P24 million monthly due to the implementation of the retrenchment program does not prove anything; it has not been shown to what extent or degree such savings benefited PAL, vis-a-vis its total expenditures or its overall financial position. Likewise, its claim that its liabilities reached P90 billion, while its assets amounted to P85 billion only - or a debt to asset ratio of more than 1:1 - may not readily be believed, considering that it did not submit its audited financial statements. All these allegations are selfserving evidence. FOURTH ELEMENT: 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. Concededly, retrenchment to prevent losses is an authorized cause for terminating employment and the decision whether to resort to such move or not is a management prerogative. However, the right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that the hiring of new employees and subsequent rehiring of "retrenched" employees constitute bad faith; that the failure of the employer to resort to other less drastic measures than retrenchment seriously belies its claim that retrenchment was done in good faith to avoid losses; and that the demonstrated arbitrariness in the selection of which of its employees to retrench is further proof of the illegality of the employer's retrenchment program, not to mention its bad faith. When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its employees, it could not be said that it acted in a manner compatible with good faith. It offered no satisfactory explanation why it abandoned Plan 14; instead, it justified its actions of subsequently recalling to duty retrenched employees by making it appear that it was a show of good faith; that it was due to its good corporate nature that the decision to consider recalling employees was made. FIFTH ELEMENT: 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. In selecting employees to be dismissed, 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. The appellate court held that there was no need for PAL to consult with FASAP regarding standards or criteria that the airline would utilize in the implementation of the retrenchment program; and that the criteria actually used which was unilaterally formulated by PAL using its Performance Evaluation Form in its Grooming and Appearance Handbook was reasonable and fair. Indeed, PAL was not obligated to consult FASAP regarding the standards it would use in evaluating the performance of the each cabin crew. However, we do not agree with the findings of the appellate court that the criteria utilized by PAL in the actual retrenchment were reasonable and fair. SC has repeatedly enjoined employers to adopt and observe fair and reasonable

standards to effect retrenchment. This is of paramount importance because an employer's retrenchment program could be easily justified considering the subjective nature of this requirement. The adoption and implementation of unfair and unreasonable criteria could not easily be detected especially in the retrenchment of large numbers of employees, and in this aspect, abuse is a very distinct and real possibility. This is where labor tribunals should exercise more diligence; this aspect is where they should concentrate when placed in a position of having to judge an employer's retrenchment program. Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered the year 1997. This makes the evaluation of each cabin attendant's efficiency rating capricious and prejudicial to PAL employees covered by it. In sum, PAL's retrenchment program is illegal because it was based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and unreasonable when implemented. It failed to take into account each cabin attendant's respective service record, thereby disregarding seniority and loyalty in the evaluation of overall employee performance. Quitclaims executed as a result of PAL's illegal retrenchment program are likewise annulled and set aside because they were not voluntarily entered into by the retrenched employees; their consent was obtained by fraud or mistake, as volition was clouded by a retrenchment program that was, at its inception, made without basis. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. The amounts already received by the retrenched employees as consideration for signing the quitclaims should, however, be deducted from their respective monetary awards. As to PAL's recall and rehire process (of retrenched cabin crew employees), the same is likewise defective. Considering the illegality of the retrenchment, it follows that the subsequent recall and rehire process is likewise invalid and without effect. A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. We do not see how respondent Patria Chiong may be held personally liable together with PAL, it appearing that she was merely acting in accordance with what her duties required under the circumstances. Being an Assistant Vice President for Cabin Services of PAL, she takes direct orders from superiors, or those who are charged with the formulation of the policies to be implemented. Petition granted. Manatad v. PT&T, 548 SCRA 64 F: In September 1988, petitioner was employed by respondent Philippine Telegraph and Telephone Corporation (PT&T) as junior clerk with a monthly salary of P3, 839.74. She was later promoted as Account Executive, the position she held until she was temporarily laid off from employment on 1 September 1998.

Petitioner temporary separation from employment was pursuant to the Temporary Staff Reduction Program adopted by respondent due to serious business reverses. On 16 November 1998, petitioner received a letter from respondent inviting her to avail herself of its Staff Reduction Program Package equivalent to one-month salary for every year of service, one and one-half month salary, pro-rated 13th month pay, conversion to cash of unused vacation and sick leave credits, and Health Maintenance Organization and group life insurance coverage until full payment of the separation package. Petitioner, however, did not opt to avail herself of the said package. On 26 February 1999, petitioner received a Notice of Retrenchment from respondent permanently dismissing her from employment effective 16 February 1999. Petitioner filed illegal dismissal before the Labor Arbiter. Petitioner submitted evidence that the respondents have no grounds for retrenchment and that the company is not suffering from serious losses. However, the respondent also submitted financial reports to sustain its ground of a valid retrenchment. The Labor Arbiter held in favor of the petitioner which was affirmed by the NLRC. It further noted that the Department of Labor and Employment (DOLE) was not notified by the respondent of its retrenchment program as required by law. On appeal to CA, the decision of the NLRC was reversed. It held that the company is suffering serious financial losses as reflected on its financial statements submitted and prepared by independent auditors of the company. Hence, this petition. I: Whether there is a valid retrenchment by the respondent company H: Pertinent provision is Article 283 of the Labor Code. For a valid retrenchment, the following requisites must be complied with: (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 month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one-month pay or at least one- half month pay for every year of service, whichever is higher. The financial statements reflect that respondent suffered substantial loss in the amount of P558 Million by 30 June 1998. The Report of SGV & Co. substantiates the alleged precarious financial condition of the respondent. The financial statements audited by independent external auditors constitute the normal method of proving the profit and loss performance of a company. The respondent complied with the requisite notices to the employee and the DOLE to effect a valid retrenchment. Petitioner failed to refute that she received the written notice of retrenchment from respondent on 16 November 1998. Although respondent failed to furnish DOLE with a formal letter notifying it of the retrenchment, it still substantially complied with the requirement. Since the National Conciliation and Mediation Board, the reconciliatory arm of DOLE, supervised the negotiation for separation package, we agree with the Court of Appeals that it would be superfluous to still require respondent to serve notice of the retrenchment to DOLE. In fact, even granting arguendo that respondent was not experiencing losses, it is still authorized by Article 283[26] of the Labor Code to cease its business operations. Explicit in the said provision is that closure or cessation of business

operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop anyone. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management prerogative to close or cease its business operations, just because said business operations are not suffering any loss or simply to provide the workers continued employment. North Davao Mining v. NLRC (1996) 254 SCRA 721 Facts: Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company’s closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty days’ pay for every year of service. Moreover, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, and some 58 kilometers from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other separated employees for additional separation pay; back wages; transportation allowance; hazard pay; etc., amounting to P58, 022,878.31. Issue: WON the time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. Held: Hours spent by complainants in collecting salaries shall be considered compensable hours worked. It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages. Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Place of payment. - (a) As a general rule, the place of payment shall be

at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in commuting all the time in collecting complainants’ salaries, would justify the granting of backwages equivalent to 2 days in a month. ESCAREAL v. NLRC (PHILIPPINE REFINING CO INC) | 213 SCRA 472 | September 2, 1992 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 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 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 (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. SY v. CA | 398 SCRA 301 | February 27, 2003 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 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. Assailed in the present petition are the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration. Villaruel v. Yeo Han Guan | GR 169191 | June 1, 2011 F: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint[3] for payment of separation pay against Yuhans Enterprises.

Subsequently, in his Amended Complaint and Position Paper dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees. On the other hand, respondent averred in his Position Paper[5] that petitioner was hired as machine operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. Aggrieved, respondent filed an appeal with the NLRC which also dismissed the petition. On March 31, 2003, the Third Division of the NLRC rendered its Decision dismissing respondent's appeal and affirming the Labor Arbiter's Decision. In the CA, petition was partially granted. I: WON respondent, in fact, dismissed petitioner from his employment. H: The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter. On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment:first, the only cause of action in petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement.

In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation. Resignation is 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 and he has no other choice but to disassociate himself from his employment. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy. In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his employer. Since petitioner was not terminated from his employment and, instead, is deemed to have resigned there from, he is not entitled to separation pay under the provisions of the Labor Code. But we must stress that this Court did allow, in several instances, the grant of financial assistance 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 the present case, respondent had been employed with the petitioner for almost twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner.

Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served best if respondent will be given some equitable relief. Thus, the award of P100, 000.00 to respondent as financial assistance is deemed equitable under the circumstances. Petition denied. AGABON v. NATIONAL LABOR RELATIONS | 442 SCRA 573 | November 17, 2004 FACTS - On January 2, 1992, petitioners Jenny Agabon and Virgilio Agabon were hired as gypsum board and cornice installers by respondent Riviera Home Improvements, Inc., a corporation engaged in the business of selling and installing ornamental and construction materials. Seven (7) years later, on February 23, 1999, their services were terminated on the ground of abandonment of work. Apparently, petitioners were subcontracting installation jobs for another company and were frequently absent from work. Thus, when petitioners reported for work on February 23, 1999, respondent company refused to reemploy them unless they agree to work on a “pakyaw” basis. Petitioners demurred since this would mean losing their benefits. They were given their walking papers without according them the twin requirements of notice and hearing. Respondent company stated that they abandon their jobs. Hence, petitioners filed a complaint for illegal dismissal and payment of money claims against respondent company. - On December 28, 1999, the Labor Arbiter held that the dismissal of petitioners was illegal and ordered respondent company to pay them backwages, holidy and service incentive leave pay, and separation pay in lieu of reinstatement. On appeal, the NLRC reversed the decision of the Labor Arbiter and ruled that the latter erred in awarding backwages and separation pay to petitioners who deliberately abandoned their work. On certiorari, the Court of Appeals affirmed the findings of the NLRC but ordered respondent company to pay petitioners their money claims. ISSUES 1. WON petitioners were illegally dismissed from the service 2. WON private respondent should be held liable for non-compliance with the procedural requirements of due process HELD 1. NO. Ratio: To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s representative in connection with the employee’s work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. - In this case, Agabon abandoned their job. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the

employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. 2. YES - Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights. * It is worth noting that this ruling has evolved through times. > Prior to 1989 - the rule was that a dismissal or termination is illegal if the employee was not given any notice. > In the 1989 case of Wenphil Corp. v. National Labor Relations Commission where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. > On January 27, 2000, in Serrano - violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. Reasoning a. Constitutional due process is different from statutory due process. The former protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. b. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case. Disposition DENIED. But the private respondent is ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for noncompliance with statutory due process. Jaka Food Processing Corp. v. Pacot, GR 151378, March 28, 2005 Facts: - Respondents were employees of Jaka because the company was in dire financial straits. - However, the termination was effected without Jaka complying with the requirement regarding the service of written notice upon the employees and the DOLE at least one month before the intended date of termination. - The respondents filed a complaint with the Labor Arbiter who ruled in favor of the respondents. - The NLRC initially affirmed the decision of the Labor Arbiter but subsequently reversed it decision upon the filing of a Motion for Reconsideration. On appeal, the Court of Appeals reversed the decision of the NLRC based on the ruling of the SC in the case of Serrano vs. NLRC.

Issue: What are the legal implications when an employee is dismissed without complying with the notice requirement under the Labor Code? Held: - The difference between this case and the case of Agabon vs. NLRC is that this case involves an authorized cause (particularly retrenchment) under Art. 283 while the Agabon case involves a just cause under Art. 282. The difference between the two is that in a just cause, the employee is the direct cause of the termination, while in an authorized cause, the main actor is usually the employer. - Because of the distinction, the SC held that if the dismissal is based on a just cause under 282 and the employer failed to comply with the notice requirement, the sanction on the employer should be tempered because the dismissal was initiated by an act imputable to the employee. On the other hand, if the cause of the dismissal is one of the authorized causes under 283, failure of the employer to comply with the notice requirement should merit a stiffer sanction because the dismissal process was initiated by the employer’s exercise of management prerogative. In this case, the dismissal of the respondents was indeed caused by retrenchment due to financial losses of the company (one of the authorized causes). Therefore, Jaka is ordered to pay P50,000 as indemnity (this is greater than the P30,000 indemnity for failure to comply with the notice requirement if the dismissal is due to a just cause as held in the case of Agabon). Perez v. PT&T, GR 152048, April 7, 2009 Facts: - Perez and Doria were employed by PT&T as shipping clerk and supervisor, respectively. Pursuant to an unsigned letter, investigations were commenced by the company, yielding findings that hipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition. Petitioners were placed on preventive suspension for 30 days. The 15-day suspension was extended twice. A memorandum was issued charging criminal charges against petitioners and mandating their dismissal for falsification of documents. Thus, petitioners filed a complaint for illegal suspension and illegal dismissal. - Labor Arbiter: found that the 30-day extension of petitioners’ suspension and their subsequent dismissal were both illegal. - NLRC: Reversed. CA: Affirmed NLRC Issues: 1. Was there just cause for dismissal? 2. Was due process observed? 3. Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? 4. Were petitioners illegally suspended? Held: -No. Without undermining the importance of a shipping order or request, we find respondents’ evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. Other than their bare allegations and

the fact that such documents came into petitioners’ hands at some point, respondents should have provided evidence of petitioners’ functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee. -No. Respondents’ illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. - Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed "substantially," not strictly. This is recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period. In this case, petitioners contended that they were not paid during the two 15day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution. Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose. GLAXO WELLCOME PHILIPPINES INC v. NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA, 453 SCRA 256 | March 11, 2005

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 reassessed 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. - 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 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. King of Kings v. Mamac, G.R. No. 166208, June 29, 2007 Facts: Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC employees including respondent formed the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI and excluded from the election. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president.

Respondent was required to accomplish a “Conductor’s Trip Report” and submit it to the company after each trip. As a background, this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company issues an “Irregularity Report” against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee. Upon audit of the October 28, 2001 Conductor’s Report of respondent, KKTI noted an irregularity. It discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that day’s trip, the windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report. On November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against the company. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that his dismissal was effected without due process. In its April 3, 2002 Position Paper, KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis. On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondent’s Complaint for lack of merit. Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision, respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos (P10, 000) for failure to comply with due process prior to termination. CA: held that there was just cause for respondent’s dismissal. Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.

Issue: WON CA erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent. Held: The petition is partly meritorious. Non-compliance with the Due Process Requirements: Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of employment under the Labor Code; and second, procedural––the manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a “just cause.” This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with. To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. [15] This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. (3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.

Respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTI’s “standard” charge sheet is not sufficient notice to the employee. Third, no hearing was conducted. Sanction for Non-compliance with Due Process Requirements: After a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC. However, the doctrine in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages. Thus, for non-compliance with the due process requirements in the termination of respondent’s employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages. Thirteenth (13th)-Month Pay: Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year. Petition partly granted. Uniwide Sales Warehouse Club v. NLRC, 547 SCRA 222 Facts: Amalia P. Kawada is an employee of Uniwide. Sometime in 1998, Uniwide received reports from the other employees regarding some problems in the departments managed by the private respondent. Thus, on March 15, 1998, Uniwide, through Store Manager Apduhan, issued a Memorandum addressed to the private respondent summarizing the various reported incidents signifying unsatisfactory performance on the latter’s part which include the commingling of good and damaged items, sale of a voluminous quantity of damaged toys and ready-to-wear items at unreasonable prices, and failure to submit inventory reports. Uniwide asked private respondent for concrete plans on how she can effectively perform her job. She was constantly being bombarded with memorandum seeking to explain the reports of incidents. She was unable to answer them. It got to a point that she was being shouted at because of her unsatisfactory performance. On August 2, 1998, Apduhan issued a Memorandum received on the same day by Edgardo Kawada, the husband of private respondent, advising the latter of a hearing scheduled on August 12, 1998 to be held at the Uniwide Office in Quirino Highway, and warning her that failure to appear shall constitute as waiver and the case shall be submitted for decision based on available papers and evidence.

Respondent did not attend the hearing and was terminated. She then filed for an illegal dismissal because she constructively dismissed which is the reason for her failure to attend the hearing. Issue: Was there constructive dismissal? Respondent argues that since the investigation was conducted after she was constructively dismissed. Therefore, according to her, there was no point to still attend the investigation set on August 12, 1998. Hence there was denial of due process. Held: - Case law defines constructive dismissal as a cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. - The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances. It is an act amounting to dismissal but made to appear as if it were not. In fact, the employee who is constructively dismissed may be allowed to keep on coming to work. Constructive dismissal is therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of employees in order to protect their rights and interests from the coercive acts of the employer. - In the present case, private respondent claims that from the months of February to June 1998, she had been subjected to constant harassment, ridicule and inhumane treatment by Apduhan, with the hope that the latter can get the private respondent to resign] The harassment allegedly came in the form of successive memoranda which private respondent would receive almost every week, enumerating a litany of offenses and maligning her reputation and spreading rumors among the employees that private respondent shall be dismissed soon. The last straw of the imputed harassment was the July 31, 1998 incident wherein private respondent’s life was put in danger when she lost consciousness due to hypertension as a result of Apduhan’s alleged hostility and shouting. The Court finds that private respondent’s allegation of harassment is a specious statement which contains nothing but empty imputation of a fact that could hardly be given any evidentiary weight by this Court. Private respondent’s bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence. - 2.) The termination of private respondent was grounded on the existence of just cause under Article 282 (c) of the Labor Code or willful breach by the employee of the trust reposed on him by his employer or a duly authorized representative. Private respondent occupies a managerial position. As a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Wallem Maritime Services Inc. v. NLRC | G.R. No. 108433 | October 15, 1996 F: Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local manning agent, Wallem Maritime

Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a vessel of Liberian registry. Pursuant to the contract of employment, private respondent was employed for ten (10) months covering the period February 26, 1989 until December 26, 1989 with a monthly salary of two hundred seventy-six US dollars (US $276); hourly overtime rate of one dollar and seventy-two cents (US $1.72), and a monthly tanker allowance of one hundred twenty-seven dollars and sixty cents (US $127.60), with six (6) days leave with pay for each month. On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took place between private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one hand, and a cadet/apprentice officer of the same nationality as the captain of the vessel on the other hand. The master entered the incident in the tanker’s logbook. As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they lost no time in lodging separate complaints for illegal dismissal with the POEA. According to the affidavit private respondent executed before a POEA administering officer, the following facts led to the filing of the complaint. At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking the manifold of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same nationality as the vessel’s captain (Singh), approached them. He ordered Gurimbao to use a shovel in draining the water which, mixed with oil and dirt, had accumulated at the rear portion of the upper deck of the vessel. Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was prohibited by the laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions of the port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the water. To avoid trouble, Gurimbao used a shovel in throwing the dirty water into the sea. Having finished his job, Gurimbao complained to private respondent about the “improper and unauthorized act” of the cadet/apprentice. The two went to the cadet/apprentice who was idly standing in a corner. They reminded him that as a mere apprentice and not an officer of the vessel, he had no right whatsoever to order around any member of the crew. However, the cadet/apprentice reacted violently - shouting invectives and gesturing “as if challenging” the two to a fight. To prevent him from “intimidating” them, private respondent pushed twice the cadet/apprentice’s chest while Gurimbao “mildly hit” his arm. Frantic and shouting, the cadet/apprentice ran to the captain “who happened to witness the incident” from the cabin’s window. The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew), they went to the captain’s cabin. The captain told them to pack up their things as their services were being terminated. They would disembark at the next port, the Port of Ube, from where they would be flown home to the Philippines, the repatriation expenses to be shouldered by them. The two attempted to explain their side of the incident but the captain ignored them and firmly told them to go home. Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members, addressed to Capt. Diño, attesting to their innocence. At the Port of Ube, an agent of the company handed them their plane tickets and

accompanied them the following day to the Fukoka Airport where they boarded a Cathay Pacific airplane bound for Manila. A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Diño and conferred with him and Mr. James Nichols. The latter told private respondent that they could not secure a reimbursement of their repatriation expenses nor could they get their salaries for the month of June. Private respondent, in a letter addressed to Capt. Diño, asked for a reconsideration of their dismissal but the latter did not respond. Frustrated, private respondent sought the assistance of a lawyer who wrote Wallem a demand letter dated August 28, 1989 but the same was ignored.[4] Petitioners, defending their position, alleged that the incident was not the first infraction committed by the two. In his aforementioned decision of September 14, 1990 finding private respondent’s dismissal to be illegal. Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was not afforded due process. The warnings allegedly given to complainant were not submitted in evidence. Likewise, no investigation report was presented to prove that complainant was given the opportunity to air his side of the incident. It is also noteworthy to mention that complainant was able to describe with particularity the circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not sufficient to warrant his dismissal.” NLRC affirmed the decision of the POEA, adopting as its own the latter’s findings and conclusions. I: WON private respondent was validly dismissed. No. H: An employer may dismiss or lay off an employee only for just and authorized causes enumerated in Articles 282 and 283 of the Labor Code. However, this basic and normal prerogative of an employer is subject to regulation by the State in the exercise of its paramount police power inasmuch as the preservation of lives of citizens, as well as their means of livelihood, is a basic duty of the State more vital them the preservation of corporate profits. One’s employment, profession, trade or calling is a property right within the protection of the constitutional guaranty of due process of law. The ship captain’s logbook is vital evidence as Article 612 of the Code of Commerce requires him to keep a record of the decisions he had adopted as the vessel’s head. Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of employment entered into by petitioners and private respondent, the offense described by the logbook entry may well fall under insubordination and may constitute assaulting a superior officer “with the use of deadly weapon” punishable with dismissal if the victim is indeed a “superior officer.” However, an “apprentice officer” cannot be considered a “superior officer.” An apprentice is a person bound in the form of law to a master, to learn from him his art, trade, or business, and to serve him during the time of his apprenticeship.

Physical violence against anyone at any time and any place is reprehensible. However, in cases such as this, where a person’s livelihood is at stake, strict interpretation of the contract of employment in favor of the worker must be observed to affirm the constitutional provision on protection to labor. Moreover, the aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it leaves so many questions unanswered. Although private respondent candidly admitted in his affidavit having hit Sason on the chest twice, he did not admit using a spanner. Hence, as the typewritten excerpts from the “logbook” were the only pieces of evidence presented by petitioners to support the dismissal of private respondent, have no probative value at all, petitioners’ cause must fail. Petitioners’ failure to substantiate the grounds for a valid dismissal was aggravated by the manner by which the employment of private respondent was terminated. It must be borne in mind that the right of an employer to dismiss an employee is to be distinguished from and should not be confused with the manner in which such right is exercised. Dismissal from employment must not be effected abusively and oppressively as it affects one’s person and property. Neither is the ship captain’s having witnessed the altercation an excuse for dispensing with the notice and hearing requirements. Serving notice to private respondent under the circumstances cannot be regarded as an “absurdity and superfluity.” The petition at bar is DISMISSED. Lopez v. Alturas Group of Companies, GR 191008, April 11, 2011 F: Quirico Lopez was hired by respondent Alturas Group of Companies in 1997 as truck driver. Ten years later or sometime in November 2007, he was dismissed after he was allegedly caught by respondent’s security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was then assigned to him. When questioned, petitioner allegedly admitted to the security guard that he was taking out the scrap iron consisting of lift springs out of which he would make axes. Petitioner, in compliance with the Show Cause Notice dated December 5, 2007 issued by respondent company’s Human Resource Department Manager, denied the allegations by a handwritten explanation written in the Visayan dialect. Finding petitioner’s explanation unsatisfactory, respondent company terminated his employment by Notice of Termination effective December 14, 2007 on the grounds of loss of trust and confidence, and of violation of company rules and regulations. In issuing the Notice, respondent company also took into account the result of an investigation showing that petitioner had been smuggling out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt it to file a criminal case for Qualified Theft against him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier filed another criminal case for Qualified Theft against petitioner arising from the theft of the scrap iron. Petitioner thereupon filed a complaint against respondent company for illegal dismissal and underpayment of wages. Labor Arbiter held that petitioner’s dismissal was justified, for he, a truck driver, held a position of trust and

confidence, and his act of stealing company property was a violation of the trust reposed upon him. NLRC set aside said decision. I: WON there were invalid dismissal and underpayment of wages H: Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and the legality of the manner of dismissal which constitutes procedural due process. [12] As to substantive due process, the Court finds that respondent company’s loss of trust and confidence arising from petitioner’s smuggling out of the scrap iron, confounded by his past acts of unauthorized selling cartons belonging to respondent company, constituted just cause for terminating his services. Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a position of trust who are proven to have breached the trust and confidence reposed on them. Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent company goods and property, and consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of responsibility. Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered. Important: After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation(which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure. Petitioner was given the opportunity to explain his side when he was informed of the charge against him and required to submit his written explanation with which he complied. Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have been afforded counsel or advised of the right to counsel. In petitioner’s case, there is no showing that he requested for a formal hearing to be conducted or that he be assisted by counsel. An employee’s acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the employer’s interest resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an employee does not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely substantial evidence. Petition is denied. Aurelio v. NLRC, 221 SCRA 432

F: Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in June 1917 with a basic salary of P600.00 a month. In October 1979, petitioner was appointed Dean of the College of Nursing with a starting salary of P3, 000.00 a month. In September 1981, petitioner was promoted to College Administrator or Vice-President for Administration, retaining concurrently her position of Dean of the College of Nursing, with an increased salary of P3, 500.00 per month. She was later promoted to Executive Vice-President with the corresponding salary of P7, 500.00. On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was elected Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner and her husband, Oscar Aurelio. On May 30, 1988, petitioner's husband, then in the United States, was removed as Auditor of the college. Without prior notice, petitioner's office was stripped of its facilities. Petitioner's salary was reduced from P7, 500.00 to P5,000.00 then to P2,500.00 a month, among others. Because of the indignities and humiliation suffered by the petitioner, she wrote a letter on September 20, 1988 informing the President of Northwestern College that she was going on an indefinite leave, Petitioner sent a copy of the above letter to the Secretary of Education, Culture and Sports praying for assistance. The representatives of the Regional Director submitted their official findings and recommendations confirming the truth of the allegations of petitioner in her September 20, 1988 letter. The DECS also confirmed the willingness of petitioner to withdraw her indefinite leave of absence. The matter of petitioner's resumption of her position as Dean of the College of Nursing was addressed by the DECS to the attention of respondents but Private respondents did not answer. They refused to accept petitioner. On November 16, 1988, petitioner filed her complaint for illegal dismissal against private respondents and prayed for reinstatement plus backwages, moral and exemplary damages, and attorney's fees. At the arbitration level, petitioner and private respondents submitted their respective position papers. On December 29, 1989, the labor arbiter issued a decision dismissing the complaint. On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the corporation in Laoag City. Since their election into office, the Board members have taken effective control of the management of the college and have regularly exercised their corporate powers. The new Board conducted a preliminary audit which revealed that the college was financially distressed, unable to meet its maturing obligations with its creditor bank. The new management headed by its President, Ben Nicolas, embarked on a realignment of positions and functions of the different department in order to minimize expenditures. As a result of the audit, NWC was compelled to abolish the administrative positions held by petitioner, which she did not contest. I: WON the dismissal of the petitioner was for a just and valid cause

H: Respondent had alleged and submitted evidence of irregularities of complainant during her tenure at the college. The complainant instead of refuting the charges cited alleged irregularities committed by the respondents in their respective offices. It must be emphasized that the rules of dismissal for managerial employees are different from those governing ordinary employees for it would be unjust and inequitable to compel an employer to continue with the employment of a person who occupies a managerial and sensitive position despite loss of trust and confidence. At the very least, the relationship must be considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of irregularities were sufficiently substantiated thus justifying petitioner's separation. Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two positions, petitioner violated the Administrative Manual for Private Schools. Thus, the respondent had no other recourse but to take away one of the positions from her or abolish the same. Undoubtedly, the College Board of Directors has the authority to reorganize and streamline the operations of the college with the end in view of minimizing expenditures. The NLRC found that complainant was a managerial employee who has to have the complete trust and confidence of respondents. However, we find that complainant was not accorded notice and investigation prior to termination. Except for the allegation on constructive dismissal, this petition is a repetition of what petitioner had already alleged below and which the labor arbiter and the NLRC dismissed for lack of merit. Petitioner's claim of constructive dismissal stems from her alleged removal from the positions of Administrator, Vice President for Administration and Executive Vice President. The management of NWC rests on its Board of Directors including the selection of members of the faculty who may be allowed to assume other positions in the college aside from that of teacher or instructor. In 1988, when the then new Board of Directors abolished the additional positions held by the petitioner, it was merely exercising its right. The Board abolished the positions not because the petitioner was the occupant thereof but because the positions had become redundant with functions overlapping those of the President of the college. The Board realized that the college was violating the Administrative Manual for Private School which requires that all collegiate departments should have a full-time head. The Board of Directors of NWC merely exercised rights vested in it by the Articles of Incorporation. Petitioner failed to refute the evidence proffered by NWC before the labor arbiter. In her appeal to the NLRC, petitioner also failed to rebut the findings of the labor arbiter. In the instant petition, she has again failed to overturn private respondents' evidence as well as the findings of the labor arbiter which were affirmed by the NLRC. Petitioner's application for an indefinite leave of absence was not approved by the college authorities, but this notwithstanding, she failed to follow-up her application and did not report for work. Believing she was dismissed, petitioner filed the complaint for illegal dismissal, illegal deductions, underpayment,

unpaid wages or commissions and for moral damages and attorney's fees on November 16, 1988. As pointed out earlier, the rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not necessarily the same as those applicable to termination of employment of ordinary employees. Both the labor arbiter and the public respondent NLRC found that there is some basis for respondent NWC's loss of trust and confidence on petitioner. The dismissal of the petitioner was for a just and valid cause. It appears on record that the investigation of petitioner's alleged irregularities was conducted after the filing of the complaint for illegal dismissal. Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process. The Board of Directors, composed of the individual private respondents herein, has the power granted by the Corporation Code to implement a reorganization of respondent college's offices, including the abolition of various positions, since it is implied or incidental to its power to conduct the regular business affairs of the corporation. The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied. When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith. WHEREFORE, the decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED Golden Donuts, Inc. v. NLRC, G.R. Nos. 113666-68, January 19, 2000 FACTS: Private respondents were the complainants in three consolidated cases submitted with the Labor Arbiter. Complainants were members of the KMDDCFW whose CBA with the corporation expired. During the negotiations, the management panel arrived late causing the union panel to walk out. The management addressed a letter of apology to the union and requested for negotiations to resume. The union panel did not show up despite letters from management advising the former of the CBA meetings. The union struck. A compliant was filed by Golden Donuts to declare the strike illegal. Counsel for the union and strikers pleaded for a compromise whereupon both parties would desist from continuing their cases against each other. The Labor Arbiter rendered a decision upholding the dismissal of private respondents and ruling that they were bound by the compromise agreement entered into by the union with petitioners. Private respondents appealed to the NLRC, claiming that the union had no authority to waive or compromise their individual rights and they

were not bound by the compromise agreement entered into by the union with petitioners. ISSUE: Whether or not a union may compromise or waive the right to security of tenure and money claims of its minority members, without the latter’s consent. HELD: No. Absent a showing of the union’s special authority to compromise the individual claims of private respondents for reinstatement and backwages, there is no valid waiver of the aforesaid rights. The judgment of the Labor Arbiter based on the compromise agreement does not have the effect of res judicata upon private respondents who did not agree thereto since the requirement of identity of parties is not satisfied. A judgment upon a compromise agreement has all the force and effect of any other judgment and is conclusive only upon parties thereto and their privies. Private respondents have not waived their right to security of tenure nor can they be barred from entitlement of their individual claims. Since there was no evidence that private respondents committed any illegal act, petitioner’s failure to reinstate them after the settlement of the strike amounts to illegal dismissal. Cabigting v. San Miguel Foods, GR 167706, Nov. 5, 2009 F: Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel Corporation, Feeds and Livestock Division (B-Meg) on February 16, 1984 and after years of service, he was promoted as inventory controller. On June 26, 2000, respondent San Miguel Foods, Inc., through its President, Mr. Arnaldo Africa, sent petitioner a letter informing him that his position as sales office coordinator under its logistic department has been declared redundant. Simultaneously, respondent terminated the services of petitioner effective July 31, 2000, and offered him an early retirement package. Thereafter, petitioner was included in the list of retrenched employees (for reason of redundancy) submitted by respondent to the Department of Labor and Employment. Petitioner was surprised upon receipt of the letter because he was not a sales office coordinator, and yet he was being terminated as such. Accordingly, petitioner refused to avail of the early retirement package. Prior to petitioner’s termination on July 31, 2000, he was an inventory controller, performing at the same time the function of a warehouseman. Furthermore, petitioner was an active union officer of respondent’s union but upon his termination, was only a member thereof. With the support of his union, petitioner filed a Complaint questioning his termination primarily because he was not a sales office coordinator, but an inventory controller, performing the functions of both an inventory controller and a warehouseman. In reply, respondent reiterated its declaration that petitioner’s position as sales office coordinator was redundant as a result of respondent’s effort to streamline its operations. Labor Arbiter (LA) rendered a Decision, where it ruled that petitioner was illegally dismissed. Accordingly, the LA ordered respondent to pay petitioner backwages, separation pay in lieu of reinstatement and attorney’s fees. NLRC rendered a Decision affirming the LA’s finding that petitioner was illegally

dismissed by respondent. CA rendered a Decision partially granting respondent’s petition I: WON “strained relations” bar petitioner’s reinstatement. H: Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the 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. In Globe-Mackay Cable and Radio Corporation v. National Labor Relations Commission, this Court discussed the limitations and qualifications for the application of the “strained relations” principle, in this wise: x x x If, in the wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. In order for the doctrine of strained relations to apply, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. After a perusal of the LA Decision, this Court finds that the LA had no hard facts upon which to base the application of the doctrine of strained relations, as the same was not squarely discussed nor elaborated on. Also, it is of notice that said issue was addressed by the LA in just one sentence without indicating factual circumstances why strained relations exist. The same is also true for the CA Decision which disposed of the issue in just one sentence without any elaboration. Accordingly, this Court is of the opinion that both the LA and the CA based their conclusions on impression alone. Finally, it is noted that the position of warehouseman and inventory controller still exists up to date. The nature of the controversy where the parties to this case were engaged is not of such nature that would spawn a situation where the relations are severely strained between them as would bar the complainant to his continued employment. Neither may it be said that his position entails a constant communion with the respondent such that hostilities may bar smooth interactions between them. There is no basis for an award of separation pay in lieu of reinstatement.

The claim of respondent is not meritorious. This Court shares petitioner’s view that the words allegedly imputing malice and bad faith towards the respondent cannot be made a basis for denying his reinstatement. The doctrine of strained relations has been made applicable to cases where the employee decides not to be reinstated and demands for separation pay. The same, however, does not apply to herein petition, as petitioner is asking for his reinstatement despite his illegal dismissal. In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise between parties as a result of litigation, but the same does not always constitute strained relations in the absence of proof or explanation that such indeed exists. Petition is granted. BUSTAMANTE v. NLRC | 265 SCRA 1 | March 15, 1996 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 - 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. Palteng v. UCPB, GR 172199, February 27, 2009 F: Palteng was the Senior Assistant Manager/Branch Operations Officer of UCPB. After conducting a diligence audit, the Internal Audit and Credit Review Division reported that Palteng committed several offenses under the Employee Discipline Code in connection with Mercado’s (a client) Past Due Domestic Bills Purchased (BP). Palteng explained that at the time the BP accommodation was extended, she was not aware that Mercado’s Omnibus Line has been reduced to P50 Million and that it contained a P5 Million sublimit on BP. Nevertheless, she accepted full responsibility for granting the BP accommodation against Mercado’s personal checks beyond her authority. While she admitted committing a major offense that may cause her dismissal, she claimed that it was an honest mistake. Palteng was dismissed with forfeiture of all benefits. Palteng filed a complaint for illegal dismissal. The Labor Arbiter declared her dismissal illegal, entitling her to, among others, full backwages from the time of her dismissal until finality of judgment. The CA modified the decision, declaring that backwages should be computed until the labor arbiter’s decision. I: Is Palteng entitled to backwages? H: No. An employee who is illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges as well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. However, in the event that reinstatement is no longer possible, the employee may be given separation pay instead. Reinstatement and payment of backwages are distinct and separate reliefs given to alleviate the economic setback brought about by the employee’s dismissal. The award of one does not bar the other. Backwages may be awarded without reinstatement, and reinstatement may be ordered without awarding backwages. In a number of cases, the Court, despite ordering reinstatement or payment of separation pay in lieu of reinstatement, has not awarded backwages as penalty for the misconduct or infraction committed by the employee. In the case at bar, petitioner admitted that she granted the BP accommodation against Mercado’s personal checks beyond and outside her authority. The Labor Arbiter, the NLRC and the Court of Appeals all found her to have committed an "error of judgment," "honest mistake," vis-à-vis a "major offense." Since petitioner was not faultless in regard to the offenses imputed against her, she is entitled to separation pay only, without backwages.

Phil Tobacco Flue Curing v. NLRC, 300 SCRA 37 These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat Group, and for illegal dismissal and underpayment of separation pay by [the] Luris group, with prayers for damages and attorney’s fees against the above respondents. F: There are two groups of employees, namely, the Lubat group and the Luris group. The Lubat group is composed of petitioner’s seasonal employees who were not rehired for the 1994 tobacco season. At the start of that season, they were merely informed that their employment had been terminated at the end of the 1993 season. They claimed that petitioner’s refusal to allow them to report for work without mention of any just or authorized cause constituted illegal dismissal. In their Complaint, they prayed for separation pay, back wages, attorney’s fees and moral damages. On the other hand, the Luris group is made up of seasonal employees who worked during the 1994 season. On August 3, 1994, they received a notice informing them that, due to serious business losses, petitioner planned to close its Balintawak plant and transfer its tobacco processing and redrying operations to Ilocos Sur. Although the closure was to be effective September 15, 1994, they were no longer allowed to work starting August 4, 1994. Instead, petitioner awarded them separation pay computed according to the following formula: total no. of days actually worked ----------------------------------------------------- x daily rate x 15 days total no. of working days in one year In their Complaint, they claimed that the computation should be based not on the above mathematical equation, but on the actual number of years served. In addition, they contended that they were illegally dismissed, and thus they prayed for back wages. Against these factual antecedents, the labor arbiter ordered the petitioner to pay complainants’ separation pay differential plus attorney’s fees in the total amount of P3,092,896.76. Dissatisfied with said Decision, Philippine Tobacco and the complainants filed their respective appeals before the NLRC. As noted earlier, the NLRC affirmed the labor arbiter’s Decision. Before this Court, only Philippine Tobacco filed the present recourse, as the complainants did not question the NLRC Decision. Issues: In the Court’s view, three issues must be tackled: First, did petitioner prove “serious business losses,” its justification for the nonpayment of separation pay? Second, was the dismissal of the employees valid? Third, how should the separation pay of illegally dismissed seasonal employees be computed? Held: First Issue: Serious Business Losses Not Proven

Article 283 of the Labor Code prescribes the requisites and the procedure for an employee’s dismissal arising from the closure or cessation of operation of the establishment. It must be noted that the present case involves the closure of merely a unit or division, not the whole business of an otherwise viable enterprise. Although Article 283 uses the phrase “closure or cessation of operation of an establishment or undertaking,” this Court previously ruled in Coca-Cola Bottlers (Phils.), Inc. v. NLRC that said statutory provision applies in cases of both complete and partial cessation of the business operation. Petitioner did not actually close its entire business. It merely transferred or relocated its tobacco processing and redrying operations. Moreover, it was also engaged in, among others, corn and rental operations, which were unaffected by the closure of its Balintawak plant. Tested against the aforecited standards, we hold that herein petitioner was not able to prove serious financial losses arising from its tobacco operations. A close examination of its Statement of Income and Expenses and its recasted version thereof, which were presented in support of its contention, suggests its failure to show business losses. On the contrary, the Statement of Income and Expenses shows that the selling and administrative expenses pertain not only to the tobacco business of petitioner, but also to its corn and rental operations, and that the interest expenses pertain to all of its business operations. In fact, the aforementioned Statement shows that there was a net gain from operations in each year covered by the report. In other words, the recasted financial statement effectively modified the Statement of Income and Expenses by deducting from the tobacco operations alone the operating costs pertaining to all businesses of petitioner. The contention of petitioner that tobacco was its main business does not justify the devious contents of the recasted financial statement. It is difficult to accept that it could not have incurred any expense in its other operations. Common sense revolts against such proposition. Second Issue: Lubat Group Illegally Dismissed Petitioner illegally dismissed the members of the Lubat group when it refused to allow them to work during the 1994 season. It follows that the employeremployee relationship between herein petitioner and members of the Lubat group was not terminated at the end of the 1993 season. From the end of the 1993 season until the beginning of the 1994 season, they were considered only on leave but nevertheless still in the employ of petitioner. Petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat group and the payment of their back wages. However, since reinstatement is no longer possible as petitioner has already closed its Balintawak plant, respondent members of the said group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month pay, or one month pay for every year of service, whichever is higher. It must be stressed that the separation pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure or cessation of the employer’s business, in either of which the separation pay is equivalent to at

least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher. Third Issue: Amount of Separation Pay The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes “one year of service,” Book Six does not specifically define “one year of service” for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this to the case at bar, we hold that the amount of separation pay which respondent members of the Lubat and Luris groups should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year. The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for 303 days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in connection with separation pay, a fraction of at least six months shall be considered one whole year. Under these provisions, an employee who worked for only six months in a given year -- which is certainly less than 303 days -- is considered to have worked for one whole year. NLRC Decision is affirmed with modifications. National Federation of Labor vs. NLRC | G.R. No. 127718 (March 2, 2000) Facts: Petitioners are employees of the Patalon Coconut Estate in Zamboanga. With the advent of the RA No. 6657 or the Comprehensive Agrarian Reform Law, the government sought the compulsory acquisition of the land for agrarian reform. Because of this, the private respondents who are owners of the estate decided to shut down its operation. Petitioners did not receive any separation pay. Now, the petitioners pray, with the representation of their labor group, claiming that they were illegally dismissed. They cite Article 283 of the Labor code where an employer “may” terminate the employment of any employee due to the installation of labor saving devices, redundancy, and retrenchment to prevent losses or the closing or cessation of operation. Petitioners became coowners of the land and subsequently filed complaints for illegal dismissal. The Regional Arbitration Branch of the NLRC dismissed the charge for illegal dismissal but ordered the payment of separation pay. The NLRC reversed the decision. Issues: a. Whether or not the Court should apply the legal maxim verbal legis in construing Article 283 of the Labor Code as regards its applicability to the case at bar. b. W/N an employer that was compelled to cease its operation because of compulsory acquisition by the government of its land purposes of agrarian reform is liable to pay separation pay its affected employees. Held: a. Yes, the legal maxim is applicable in this case. The use of the word “May,” in its plain meaning, denotes that it is directory in nature and generally permissive

only. Also, Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees. The Patalon Coconut Estate was closed down because a large portion of the said estate was acquired by the DAR pursuant to the CARP. The severance of employer-employee relationship between the parties came about involuntarily, as a result of an act of the State. Consequently, complainants are not entitled to any separation pay. Reasoning: Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. Policy: Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the article. b. No. The peculiar circumstance in the case at bar involves neither the closure of an establishment nor a reduction in personnel as contemplated in Article 283. The closure contemplated in 283 is a voluntary act on the part of the employer as may be gleaned for the wording, “the employer MAY also terminate,” denoting that it is directory in nature. The Labor Code does not contemplate a situation where the closure is forced upon the employer. As such, petitioners are not entitled to separation pay as private respondents did not voluntary shut down operation as they even sought to be exempted from the coverage of RA 6657.

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